Bank Nifty Future Trading Tips

Bank Nifty TipsLearning the trading Business: In last posts, we discuss Bank Nifty future contract specification and capital requirement for trading. If you are beginners then you should only start trading with one lot size (i.e 40 units) to first understand the market mechanism and to check how well their trading strategies perform. Once you are able to understand the market and fulfill margin requirement than increase your lot size. This process is known as learning the trading business.

Risk Management: When you start trading in high leveraged and a volatile product like Bank Nifty, the priority should be capital protection, so develop risk management mechanism. Always protect your trade by using a stop loss. Take a smaller risk of 20-40 points, or according to your risk profile. Do not enter the trade if you can not decide where to place your stop loss. It will generally help you to achieve a higher end of risk: reward ratio.

Returns: The return depends on the expectation and trading style. Calculate return:risk ratio. In the beginning target on achieving 2:1 means, if you are taking a stop loss of 30 points than the target, will be 60 points. As you market knowledge improves you can increase this ratio 3:1 then 4:1, etc ….

Always analyze the chart of big time frames then get into intraday charts, understand what patterns market is showing. Do not trade when the market is violent. I advise to paper trading initially, to get the understanding of futures market.