The markets for stocks and shares are vast and slightly confusing, but the concept of nifty futures helps various investors ease their trading progress. Nifty futures is an index futures contract; more appropriately, the Nifty 50-Index Futures is a compilation of the fifty most demanded stocks enlisted on the National Stock Exchange of India. nifty future helps people predict the Nifty 50 index and earn profit from the prediction made.  

When you engage in trading in nifty futures, you are pretty much in a position to bet whether Nifty 50 Index will go up or down. Trading in this way enables people to make profits in the stock markets not only in periods of upturn but in periods of downturn as well. 

The benefits of trading in the nifty futures

What cannot escape the attention of investors who would like to diversify their portfolio is the fact that there are some important benefits to trading nifty futures. Some of these advantages include:  

• Leverage your investment  

Leverage means that you can handle a large position for a much smaller amount of money than otherwise would be possible. In contrast to nifty, if you invest in nifty futures, you do not need to purchase the face value of the contract. However, you pay a margin, which is the guaranteed amount, which is the percentage of the total value of the contract. And this can bring the most possible revenues, even if you start with a quite limited amount of money. 

• Hedging against losses  

Holding a position in nifty futures has another advantage: trading, which facilitates hedging. Presumably, hedging is helpful for you because you can shield your other investments from a decline.  

For example, if you invest in Nifty 50 companies and are worried about a crash, you can hedge with nifty futures. If the market goes down, losing your stocks may be compensated by your gains from your futures contract.  

• Market liquidity  

Nifty futures has a high turnover ratio; in fact, it is one of the most active markets where one can always find a counterparty ready to trade. This means that it is possible to easily begin or stop participating in a specific trade without having to search for individuals to trade with. Liquidity also makes it easy to price the securities fairly on the market because many people are involved, making it hard for the price to become skewed.  

• Understanding the risks  

Opportunity is not the only game at hand when trading nifty futures; there is equal risk involved. Trading in the market can sometimes be risky, and it is wise to do some research before engaging in trades. This is evident in controlling your risk through the application of stop losses as well as having a laid-out strategy.  

Conclusion

 Thus, nifty futures is one form of derivative product, and therefore, its value would depend upon the value of some underlying asset, which in the current case would be a stock index, the Nifty 50. That’s to say, nifty futures allows freedom, prospects of better returns under various market conditions, and the possibility of minimising the risk involved in the market in proportion to one’s experience. There are enough platforms for one to practice some trading in derivatives, especially using nifty futures as the entry point to derivative trading. 5Paisa, for example, will give you basic tools that allow you to immediately start trading in derivatives.