How to trade in Nifty Futures?

Investing in Futures requires you to sign a derivative contract that derives its value from an underlying asset. You can either buy or sell it at a fixed price for delivery at a specified time. These contracts are an obligation for the buyer to buy and receive the underlying asset when the futures contract expires. Nifty Futures is a derivative form, an underlying asset of which is the Nifty50 index.
With a rise in the index value, there is a corresponding rise in the value of the futures contract and vice versa. Nifty50 is also amongst India's most traded and most liquid Futures contracts. Let us discuss it in detail.
Contract
Under the Futures contract, there are Call and Put Options. Under a Call Option, the contract owner can buy the Nifty index within a given period and at the price mentioned. The owner is not obligated to execute the option. On the other hand, a Put Option allows the contract owner to sell a Nifty index with no obligation to execute it.
How do you trade?
While trading in Nifty 50 today, reach out to a broker and open a Trading Account. However, you can use the National Stock Exchange for trading in these as they offer higher liquidity. Follow this guide:
Be cautious
You get a 10% margin for standard trades, whereas a 5% margin applies for intraday trades. It is better to be cautious about leveraged positions because of profit and loss multiplications. Knowing the risk involved in leverage is essential to use profit targets appropriately and stopping losses.
Evaluate the spread
Careful assessment of the spread over spot price is essential to understand the exact reason. Buy the Futures at a slow pace, even if there is a steep premium compared to the spot price. This spread may be because of overpricing. Such occurrences are common. Make a note of aggressive selling through discounted trading.
Go through the open interest data
Before buying Nifty Futures, look closely at the open interest data to better assess trend accumulation. It gives insights into the open interest's direction to further make an informed investment decision.
Other investments
Like Nifty 50, you can also invest in a Sovereign Gold Bond, a substitute for investments in physical gold. You must pay the issue price in cash to the authorised broker of the Securities and Exchange Board of India. Upon redemption, the money gets deposited into your registered Bank Account. The RBI, on behalf of the Indian Government, issues them, and they get traded on the stock exchange.
Conclusion
Investors can apply for the bond through SEBI-authorised trading members, NSE financial advisors, and other channels specified by RBI. Without handling risks, fill in the application forms available with the trading members, authorised agents, and the RBI.