What is the Nifty Future and How to Trade it?

What is the Nifty Future and How to Trade it? Gill Broking

Nifty Future is a derivative instrument based on the National Stock Exchange’s index Nifty. Since this instrument derives its value solely from the index’s market value, it is known as a pure derivative type instrument. The Nifty Future can be traded in the form of contracts that dictate a transaction on a future date at predetermined prices. Due to its stability and a higher probability of earning profits, Nifty Future has become a popular instrument of choice among traders. 


Nifty Futures are future instruments attached with the NSE-50’s index Nifty. The prices for

Nifty Future contracts are solely bound to the Nifty index on the national stock exchange and hence this contract is of a pure derivative type. Like all indices in the National Stock Exchange, the prices of this index vary according to market conditions. Nifty futures are considered to be highly rewarding in terms of investment, especially for intraday trading.

How to trade in Nifty Future?

To be able to trade in Nifty Future at the stock exchange, you will need to get a trading account opened with a registered stockbroker. To do this, you should take into account the brokerage fees being charged by different brokers, annual maintenance fees, and the trade margins like SPAN and exposure margins. Also, you will need to open a Demat account and get it linked to your trading account. Once you are through with these steps, as an intelligent trader you should always weigh out the pros and cons before making any transaction. Similarly, you need to perform an informed analysis of the stock market before getting yourself a Nifty Future position.  

The first step would be to set aside the amount that you are willing to risk in the market. Like all other assets listed on the stock exchange, the Nifty index is prone to market risks too and you should never enter a contract that may lead you to lose an amount that is more than you can afford. So, it is important to set your financial goals in stone first. 

The next step is to place a trade order. You can either buy or sell a certain amount of indices. If it is your first transaction, the first step would be to buy the indices. You can directly go to the brokerage firm’s portal and place your order to buy or sell via your trading account. Here, you can specify the units of indices that you want to buy or sell. Then the order will be placed with your depository participant. The DP will check in the stock exchange and confirm if your order can be accepted. Once accepted, the specified amount will be deducted or credited to your Demat account based on the type of transaction. 

A holding statement will be generated too wherein you can see and track your positions and all the transactions that have been done via your account. This statement helps you report any discrepancy in your order and curb any inconsistencies.

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