The best trading strategy to find Nifty and

Bank nifty direction before market open

Before going to strategy let’s know about Nifty. What is index and how to
trade it? What are trend and its role in technical analysis? How can you
learn technical analysis and different trading strategy? There will be a
question why will I trade in nifty if I am trading in stocks.

Nifty is index of Indian stock market and comprises top 50 companies.

Broadly it indicates Indian economy health. So its trend is most important
and top company will follow its trend. Those who trade in Nifty future and
Options they closely follow Nifty trend which is posted daily before
market open. This trend shows overall market trend which helps technical
trader to trade both in stocks and options. Knowing the trend of a
particular stock may not give you success. We will discuss with examples
to understand better.

Nifty direction helps future trader. Nifty future is derivative of Nifty index.
Its lot size is 75 and expiry date is every month last Thursday. So future
follows the exact technical pattern of index trend. For this reason future
traders always track index trend to trade. Let’s take examples to
understand why it is so important.
Example 1
Let’s say you are trading in stocks. Stock trend is positive for the day. But Nifty
trend posted daily here is indicating negative trend. Now this sentiment and trend
will change trend of stock and you will be confused. So in technical analysis first
index trend analysis is done and then stocks are searched with same technical
pattern of Nifty.

Example 2
Index Option trader closely follows Nifty future as Nifty option trend depends upon
Nifty technical direction. Most trader trade in option but without technical analysis it
is nearly impossible to get profit in option as option is most critical derivative. Most
trader use chart of a particular strike contract where as they should use Nifty
future live technical chart to do analysis. Here technical trend is required which is
posted daily before market open to learn.

Example 3
In a bearish market positional trader get trapped. Technical trader use trend of
Nifty and Bank nifty to analyze trend and moves out with no loss but general trader
get trapped. Stock trader use direction of Nifty to hedge their position to minimize
loss. Bearish signal in Nifty indicates to square off position to avoid loss. Bank nifty
movement also depends upon Index trend, so technical trend of Nifty is most
important factor in Indian stock market.