NIFTY TRADER - PowerPoint PPT Presentation

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NIFTY TRADER

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High PCR means the market is bullish because the option writers are inclined to write puts. Low PCR means bearish sentiment – because option writers are not willing to write puts but instead write calls. – PowerPoint PPT presentation

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Title: NIFTY TRADER


1
What is SGX Nifty?
  • SGX Nifty, also known as a Singapore Nifty,
    involves taking position in the Singapore
    Exchange on Futures contracts . The Futures
    contracts settlement is based on the NIFTY
    settlement price in the Indian stock exchange
    NSE. This gives international investors the
    flexibility of betting on Indian markets without
    having to setup or register the entity with the
    Indian authorities. Singapore exchange is the
    leading exchange of Asia allowing investors to
    take positions in different products based on the
    futures which are traded on the exchange. Apart
    from India the exchange also allows one to take
    positions in FTSE, China A50 index, MSCI Asia,
    MSCI Hongkong, MSCI Singapore, MSCI Taiwan
    ,Nikkei 225, Strait Times etc.

2
Advantages of SGX nifty
  • The Nifty has the highest liquidity both in the
    case of futures and options categories. High
    liquidity makes it easy for investors to easily
    enter or exit their positions.
  • Stocks can drop 30-50 in a single day as it
    doesn't have any filters. On the other side,
    Nifty rarely have fallen more than 5. Traders
    who positioned in Nifty have a much lower risk as
    compared to stock traders.
  • For individual stocks, an investor has to track
    the companys developments closely. A close eye
    has to be kept on the sector, because many times,
    due to technological advances, a whole sector
    suffers.

3
Put Call Ratio Tracker
  • High PCR means the market is bullish because the
    option writers are inclined to write puts. Low
    PCR means bearish sentiment because option
    writers are not willing to write puts but instead
    write calls.
  • The put-call ratio (PCR) is a popular tool
    specifically designed to gauge the overall
    sentiment (mood) of the market. The ratio is
    calculated by dividing the number of traded put
    options by the number of traded call options. As
    this ratio increases, it can be interpreted to
    mean that the investors are putting their money
    into put options rather than call options.
  • An increase in traded put options signals that
    investors are either starting to speculate that
    the market will move lower, or starting to hedge
    their portfolios in case of a sell-off.

4
Why should a trader bother about PCR and Nifty
Open Interest?
  • The put-call ratio (PCR) is primarily used by
    traders as a contrarian indicator when the values
    reach relatively extreme levels. This means that
    many traders will consider a large ratio a sign
    of a buying opportunity because they believe that
    the market holds an unjustified bearish sentiment
    and it will adjust to normal soon, once the short
    covering begins. Unfortunately, there is no magic
    number that indicates that the market has created
    a bottom or a top, but generally traders will
    anticipate this by looking for spikes in the
    ratio or for when the ratio reaches levels that
    are outside of the normal trading range.
  • An increasing ratio is a clear indication that
    investors are starting to move toward instruments
    that gain when prices decline rather than when
    they rise. Since the number of call options is
    found in the denominator of the ratio, a
    reduction in the number of traded calls will
    result in an increase in the value of the ratio.
    This is significant because the market is
    indicating that it is starting to dampen its
    bullish outlook.
  • Regarding Nifty Open Interest, it provides good
    support and resistance levels for the series.
    Traders usually look for Nifty Open interest
    highest OI strikes. These strikes are important
    to determine support and resistance.

5
Helpful Tools to be used in trading
  • Pivot CalculatorGet daily pivot values for most
    popular Nifty stocks. Use these tools to make
    your Nifty technical analysis much easier. This
    tool features Standard pivot points, Camarilla
    pivot points, Woodies Pivot points and Demark
    Pivot Points and displays all in one single view
    for ease of traders. The data is updated
    everyday.Use these One-in-All Pivot Point
    Calculator to identify Support and Resistance of
    Nifty and other major NSE stocks.
  • Fibonacci CalculatorKeep Track of multiple
    retracement level with this completely
    customizable Fibonacci Calculator. You can track
    upto 4 retracement levels and even change
    retracement percentages.This calculator lets you
    keep track of important Support and Resistance
    for Nifty and any other stock. Just key in High,
    Low values and you get important Fibonacci
    Support/Resistance numbers.
  • Advanced Fibonacci CalculatorKeep Track of
    multiple retracement level with this completely
    customizable Fibonacci Calculator. You can track
    upto 4 retracement levels and even change
    retracement percentages. Advanced features help
    you to identify the next Support Resistance
    levels based on your filters. It will calculate
    (and display) all the important levels and
    highlight the levels that meet your filter
    criteria.
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