but one thing i would like to know from u is the point u mentioned that (I know you mentioned that Nifty Spot is appropriate, but sometimes the vague/invisible opening high or low of spot (due to NSE policy) can upset the whole calculation; and most of the days will be impossible to trade)
i just want that u put some light on this point
till today i have never traded in futures and options and to be frank i am not aware of how its works .spot is my stronghold .
When such a scenario comes during live trading hours, I'll post it over here..
The problem is only with Nifty Spot (Cash) price & not with stocks in the cash market.
During my beginner days (or even now, when I feel like taking a small position in stocks - rarely trade in stocks), I realised that one big advantage Cash mkt. has over fut. market is that there's flexibility in lot size...
If you have capacity of buying only 100 shares & lot size in Futures is 400, then it's better to stick to your money management rules, and go in for cash market....as it is, for intraday trading, brokers allow to leverage in cash mkts too...
Once can add bit-by-bit, & one can even exit bit-by-bit as per levels/prices.
From intraday trading point of view, Futures has better participation/liquidity in the same stock & if you deal in large no. of shares, then it's better to switch to Futures, as there's very remote chance of slippage in price (not getting the exact price which you wanted)...
(obviously, one can also carry the position over-night, but that's outside the purview of intraday trading).
Options is not at all suitable for intraday trading.
There's also Mini Nifty Future (lot size=20) along with regular Nifty Future (lot size=50), if someone wants to have a smaller lot size/contract size in case of Nifty.
This feature is still not available in case of stocks, where contract sizes are about Rs 3 lac & above....
I'll share one personal experience here about what exactly prompted me to shift from cash market to futures market in case of stocks (nifty came in my trading life & radar after 2 months down the line of my learning phase)
As aforesaid, I began with A group stocks in Cash market for intraday trading. I had fixed trade value of each stock at Rs 50,000 per trade. 1% target = Rs 500...
That means, if i want atleast Rs 3000 at end of day, I would require 6 profitable trades of Rs 500 each. (I had no system or any reason, no CA / TA knowledge - I still dread about those days
)
Any loss-making trade would eat the profit of earlier profitable trade... Because of that, I had to over-trade sometimes beyond 6 trades.... and obviously, most days would begin well & end in bad losses
Without bringing in emotions & other learning phase, & coming back to the point, I experienced that sometimes, in Cash market, for orders of Rs. 50000, my order used to be not fully executed due to lack of opposite -side order at my LIMIT PRICE order. Sometimes, if I had purchased 100 shares, then if I had to sell them @ say Rs 120.50, I would notice that only 75 shares used to get executed @ 120.50 & balance 25 used to remain in the system due to lack of demand @ that price.
This was more hurting when Rs 120.50 was my stop loss price, and the next available price for balance 25 shares was Rs 120/- or less... increasing the loss.
On some occasions, I used to forget I have such balance shares which are not yet squared-off.
I left share trading thinking it is not my cup of tea. During my two-months break, I came to know about Futures.... I saw distinct advantages over Cash market...
1. Contract size is atleast 3lacs, depending on the scrip. So, instead of playing football with 6 scrips of Rs 50000/- each in cash market, why not focus on ONLY ONE scrip in futures market with contract size about Rs 3 lac, and with ONLY ONE PROFITABLE TRADE OF 1%, MY DAY'S TARGET OF Rs 3000/- is taken care of. THIS WAS THE MAIN ATTRACTION TO ME. JUST FOCUS & CONCENTRATE ON ONLY ONE SCRIP & TRY TO JUICE OUT 1% OF MOVEMENT IN ABOUT 5 TRADING HOURS (ie juicing out 5-10 minutes of price movement within 300+ minutes of trading in one session). Playing the fishing game, waiting patiently with the fishing rod & striking when the iron is hot (mostly this happens post 1:30pm, as most of you must have realised)
2. Since lot sizes are fixed, very less chance of price slippage, as illustrated above.
3. More leveraging possible.
4. (not connected with intraday trading)= Possible to carry trades over-night, which is not possible in cash market, especially if you have a shorts position.
The reason no. 1, as mentioned above, drove me to this forum for learning Chart Analysis & Technical tools, and fine-tuning the art of intraday trading, so that my one, single trade hits the target, and I switch off the system at that very moment - no over-trading., or spend the rest of time for screen-trading experience.
I am not telling that this happens in Cash market only, or Futures market is superior. I have simply shared my experience and my views. It is subjective & also depends on one's learning stage...
As mentioned in 1st para, I believe that one should
"learn in cash market - earn in futures market"
