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.
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.
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
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