* High liquidity
= When there is no shortage of buyers or sellers for an in-demand thing, it is easy to get in or get out of its trade even in most volatile situations.
* No wild fluctuations
= When you are highly leveraged the last thing you want is a wild adverse movement! Since, nifty is the weighted average of more than one stock from more than one sectors, it ensures that there are no shocks! (However, you should always be prepared with a plan for such an eventuality)
* Luxury of mini-Nifty (not available in stock futures)
= When you don't want to take big-ticket position or when you want to enter or exit in steps, this advantage is priceless.
* Nifty is always moving
= Unlike some stocks, nifty is almost always moving. It is because it is a mix of the movements of several sectors. So, if one sector is not moving, some other sector is. In nifty you don't get stuck like you do in a sick or moody sector.
* Less margin, high leverage
= If lack of money is stopping you from financial freedom then leverage is a blessing for you! And since fluctuations in nifty are not that wild as compared to stocks, the leverage allowed is also much large (often as large as 10 times). A word of caution : Leverage is a double-edged sword. If it can crown a beggar, it can also bankrupt a king! Leverage sensibly!
* Technical indicators work best on nifty!
= Fundamental sneezes can cause pneumonia to technical charts of stocks. But in case of nifty, it is just results in mild fever. Since effect of fundamental distortions is least on Nifty, technical indicators can predict nifty movements more accurately and reliably.
* Nifty movements can be better estimated from global cues.
= All global indices are relatives of each other. Stocks are not. They are mob. So, it is easier and more accurate to predict nifty movement from the charts of FTSE or Nasdaq or Nikkei etc than predicting a stock's movement.
* Diversification is in-built
= when Satyam collapsed, those who were having all their money it, collapsed too. Similarly, those who had all their money in Aban also got badly bruised when Aban Pearl sank. That is why, wise men ask you to diversify. But since nifty is already an average of fifty stocks, it is already "pre-diversified".
* Easy to study, easy to master
= If you opt for stocks, you always have to constantly brush-up your information and analyses for dozens and hundreds of them. But if you trade in nifty, you save a hell lot of energy and time and effort! All you have to read and study everyday is Mr.Nifty. I almost remember every contour on the nifty graph by heart by now!
* Option of options
= What an option! Not so lucrative and abundant in stocks!
1 comment:
Few years back, had i been taught all these things, wow - the learning curve would have been smaller for me.
Any way, nice one sirji, as usual
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