A Future contract is an agreement between the buyer and the seller for buying or selling a lot of NIFTY on a future date. Buying a Nifty Future you have to pay the margin amount of about 15% of the total price of the lot. But this margin amount is most likely to be changes every day depending on the variation of the price in the market.
Nifty Futures Tips For Money Management Rules for Trading:
Use Trailing Stop Loss to Protect Capital
Before initiating a trade you should always decide the amount of money you are prepared to lose should the trade go wrong. You must honestly answer this question: What would happen if I lose X% of my money? Would it affect my mental well-being, my family life, my lifestyle, etc.? You must be emotionally and financially prepared to face the consequences of being stopped in your trade. You should also weigh the odds of each trade. Usually, an average person has about 50:50 odds of making money on any trade. A Nifty futures trade which is based on technical analysis and market insight and understanding improves the odds in your favor to 60:40. So if ten trades are executed, six of them are likely to make money. Two out of ten may initially go in the predicted direction but then lose. The other two are likely to lose straightway.
Can we increase these odds to 80:20? We can do so by placing break-even stops at the right place corresponding to the amount of initial risk you are willing to take on a trade. By doing so, you cannot lose eight times out of ten. If you do not lose eight times out of ten, and lose only 20 points the other two times, you will end up a winner.
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