28 May 2012

NIFTY FUTURE BUY SELL SIGNALS



Nifty Future varies with Nifty Spot level most of times..this difference is known as Premium or Discount which can be used as trading signal.

1. If Nifty future is trading higher than nifty spot, then nifty future is trading with premium.

2. Second case, if nifty future trades lower than nifty spot level, then we conclude nifty future is trading with discount.


PREMIUM= nifty future - spot nifty
DISCOUNT = spot nifty - nifty future

also these premium and discounts converges to zero at the closing date of future ie on last thrusday of every month.

At this stage you have learnt to find if nifty future is trading at premium or discount. How to use it in actual trading here are points:
1. Premium shows
 near term demand and is more likely that nifty future will trade higher in coming sessionsSo when nifty future is quoting premium over nifty spot then, nifty is buying opportunity and more trade idea will be enter long position.BUY SIGNAL

2. Discount shows
 just opposite to premium; in case of discount, supply is higher than demand. It suggests nifty future is likely to correct soon. Trading idea is short sell nifty future when future quotes lower as compared to nifty spot. SELL SIGNAL

11 comments:

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  6. As per Federal bank technical research report one should go short in this counter. Federal bank is looking quite weak at current level and is expected to fall further. Positional traders can go short in Federal bank from current level for good gains.

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