How to do Bank NIFTY Intraday Option Trading?
Investing in the share market begins with understanding its essential basics. Most investors know there are two big stock exchanges in India wherein all investing or trading takes place.
The first is the National Stock Exchange (NSE). The second is the Bombay Stock Exchange (BSE). NIFTY is the stock index for NSE and comprises a list of the top 50 companies from different sectors. Sensex is the stock index for BSE and has a list of the top 30 companies from different sectors.
Through this article, let us try and understand how you can do bank NIFTY intraday options trading.
What is Intraday Trading?
When you buy and sell stocks within a day, it refers to intraday trading. A trader must square off of all positions before the closing of the market. The objective of buying stocks is not an investment. Instead, they are a means of making profits by leveraging the movement of the stock index. Even though it is a risky approach, traders can use it to earn quick profits from the share market.
What are Options?
Options give the investor the right to either buy or sell shares before a predetermined date. As a seller, you must follow the rules of the transaction.
What is Bank NIFTY?
Bank NIFTY is an index that comprises a group of top 12 companies from the banking sector. These companies are mostly liquid and have large market capitalization. Bank NIFTY is important because it gives investors a benchmark for the market performance of the Indian banking sector.
Bank NIFTY Intraday Option Trading
An investor can do intraday option trading in both NIFTY as well as bank NIFTY. A trader needs to open a position at the beginning of the day and close it before the end of the market day. The process you need to follow to fulfil an intraday trade is similar to intraday options trading. You need to consider two factors while trading intraday:
- Volume:Volume refers to the total number of traders who buy and sell the stocks over a specific length of time, mostly one day. A high volume of the stock means that it is more active. The volume of a particular share is available for traders easily. You can view it on your trading screen. Information relating to the volume of shares is available on almost all financial sites. The stock you choose for bank nifty intraday trade should have sufficient volume. A high volume gives traders the freedom to sell it off whenever they want.
- Price Fluctuations:You must not expect a share to undergo significant price fluctuations in a day. However, the prices of some shares waver enough for you to earn a good profit if you invest in them. Thus, make sure you select a share whose price fluctuates enough to help you make a profit within a day.
Most retail traders trade in stock options on an intraday basis. Options are volatile. If you, by any chance, notice an opportunity to make an intraday trade, you must not let it go. Short-term traders rely on price movements in intraday shares and other technical charts to identify the best time to enter or exit a trade. They implement trading strategies based on such analysis and exploit short-term price fluctuations.
Bank NIFTY is an attractive script for investors who are interested in earning profits quickly. But its volatile nature demands investors to be careful against the risk. There are several ways in which you can trade bank NIFTY options. And, with the help of the right bank NIFTY tips and intraday trading strategies, you can improve your chances of profits and make more successful trades.
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How to do Intraday Trading?
If you’re reading this, you are probably well-versed in the basics of intraday trading.Just as a refresher, the concept of day trading revolves around the sale and purchase of stocks and other financial instruments in the span of a day. Since all positions are squared-off before the market shuts, the ownership of shares does not change as a result of these trades. Therefore, intraday trading is a short-term investment strategy.
Intraday Stock Tips: How to Select Stocks for Intraday
Intraday trading is growing in popularity among market participants. It can be a profitable journey with the right knowledge and strategies. The practice requires traders to move ahead with discipline in a variety of areas. A vital area of discipline is intraday stock selection.
Frequently Asked Questions
The different ways in which you can invest in the two indexes. These include spot trading, index funds trading, and derivatives trading.
The purchase of bank nifty is possible from the derivatives market of NSE. In Options Trading, you can buy it as a Call or Put at a particular strike price. In Futures trading, you can buy it in a specific lot.
NIFTY consists of the top 50 companies from the National Stock Exchange (NSE). These companies also include some banks. Bank Nifty, on the other hand, is a list of only the top 12 banks from NSE. When compared with bank nifty, NIFTY remains smooth, calm, and composed on most trading days. However, there is a volatile swing in bank nifty on many trading days.
The basic difference between regular trading and intraday trading lies in the timing of the delivery of the shares. If the delivery is completed over several days, it is regular trading. On the other hand, if it is done on the same day with no change in ownership owing to the trade, it is an intraday trade.