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Why Trade NSE Nifty 50
& CNX IT Index Futures |
Why Trade NSE Nifty 50 & CNX IT Stock Index Futures
Why Trade NSE Nifty 50 & CNX IT Stock Index Futures?
Because it is difficult for most investors to select and invest only in the top performing stocks, investing in products that track stock indices, which provide exposure to the whole market or a sector of the market rather a few individual stocks has become increasing popular.
The advantage of indexing is available in mutual funds and exchange-traded funds. But, you should consider stock index futures instead for two main reasons:
flexibility and leverage.
Stock index futures have attracted many new traders, and for good reason. These innovative futures contracts can serve you in a number of ways, and be used with a variety of trading strategies and different financial objectives.
As you'll read later, the reasons to trade stock index futures are numerous and compelling. You can use them to take action on your opinion of the market, manage risk and gain exposure to various market sectors efficiently and cheaply.
TOP REASONS TO TRADE STOCK INDEX FUTURES
- Add flexibility to your investment portfolio.
Stock index futures add flexibility to your portfolio as a hedging and trading instrument.
- Create the possibility of speculative gains using leverage.
Because a relatively small amount of margin money controls a large amount of capital represented in a stock index contract, a small change in the index level might produce a profitable return on your investment if you're right about the market's direction.
- Provide hedging or insurance protection for a stock portfolio in a
falling market.
Although the stock market climbed steadily in 2003, it later became apparent that there is no guarantee that it will always do so. Even though you don't expect a fire in your house or an accident with your automobile, you buy insurance in case that should happen. You can also
get "insurance" for your stock portfolio by using stock index futures to protect against the day a decline might come. And, unlike purchasing options as insurance, there is no time value erosion of the futures position.
- Maintain your stock portfolio during stock market corrections.
You may not need "insurance" all of the time, but there are certain times when you would like less exposure to stocks. Yet, you don't want to sell off part of a stock portfolio that has taken you a long time to put together and looks like a sound, long-term investment program.
- Sell as easily as you can buy.
One of the major advantages of futures markets, in general, is that you can sell contracts as readily as you can buy them and the amount of margin required is the same. Mutual funds do not specialize in bear market approaches by short selling stocks but, and also it is not
possible for individuals to short sell stocks in a falling market to make money.
- Transfer risk quickly and efficiently.
Whether you are speculating, looking for insurance protection (hedging), or temporarily substituting futures for a later cash transaction, most stock index futures trades can be accomplished quickly and efficiently.
Many mutual funds require investors to wait until the end of the day to see at what price they were able to purchase or sell shares. With today's volatility, once-a-day pricing may not give you the maneuverability to take positions at exactly the time you want. Stock index futures give you the opportunity to get into or out of a position whenever you
want.
The TradingPicks.com Futures Trading Newsletter Will Provide You With
Proven BUY and Short SELL Signals for the NSE Nifty 50 and CNX
IT Index Futures to extract profits from both
uptrends and downtrends in bull or bear markets in India.
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