Bank Nifty Index Trading

There are many things you should know before you trade into bank nifty bank nifty is a theme-based sectorial index.

Important things about Bank Nifty: 

In bank nifty you can trade in futures and options and lot size is 25 bank nifty is volatile compare to nifty. The simple reason behind that is, it is a the sectoral theme-based index and nifty is combined of many different sectors.

1. Sectorial Representation: It consist of 12 stock and top 6 weightage in bank nifty is

1. HDFC Bank, 28.66 %

2. ICICI Bank, 23.54 %

3. Kotak Mahindra bank 10.18 %

4. Axis bank 10.01 %

5. SBI bank 9.85 %

6. IndusInd Bank 5.91 %

This above top 6 stocks is covering around 90 % of the bank nifty weightage. If this above stocks are moving in one direction, then there are then bank nifty will be following the direction.

2. High liquidity: The Bank Nifty is one of the most actively traded indices in India, due to which it's very highly liquid. Traders can easily buy and sell positions in the index.

3. Volatility: The Bank Nifty is known for its high volatility, making it an attractive index for traders looking to profit from short-term price movements due to which many trader prefer to trade in Bank nifty than Nifty as its more volatile then Nifty.

If you want good momentum in directional option trading then you can prefer bank nifty but it is suggested to the experienced trader if you are a beginner who is starting then don’t prefer bank nifty. Once you have traded in nifty and you got a very good experience. Then you can go and trade in bank nifty. Long story short bank nifty is high-risk as its more volatile.

Option Buying Idea:

As an option buyer, you have to catch the right momentum in the market. If not, then you will not be able to make a decent amount of profit, and there is a high probability that, if you don’t catch the momentum into the market, due to time and delta decay, you will be making a loss.

Option Selling Idea:

In option selling, the advantage of making profit is even in the sideways market, which can’t be done, and in future trading.

i) The concept of directional option selling: Option sellers can profit even when the market is not moving because they benefit from delta decay and time decay as the option's value declines.

ii) Non-directional Trading: Trading based on not predicting the market's one-sided movement Two common non-directional strategies are short straddle (Ce ATM and Pe ATM selling) and short strangle (PE and CE selling at different strike prices). But just knowing about straddle and strangle is not enough; you also need to know the best entry time, exit time, stop loss, and before stop loss exit. Everything we have given in our option strategy courses, which will definitely help you be a profitable trader, is available in both English and Hindi.

Conclusion:

Bank nifty is a important part of Indian Market as its representing the performance of Bank nifty sector. Trader can use the exposure of the whole banking sector in one roof and can also diversify. It's important to note Bank Nifty can be volatile and it should be traded with caution, do your own research before taking any trading decision..

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