You must have often seen that most of the People or traders. Most of them are seen doing index trading. Whether it is Nifty or Bank Nifty. Have you ever wondered why this happens? If you are also confused about whether we should do Stock Trading or Index Trading then definitely Read the full post till the end. Because it will clear all your mind’s doubts. So let’s start
Focus on Index Trading:-
The first reason why so many professional traders Prefer Index Trading. Or Why They pay more attention to Index Trading. It is the word focus. Whenever You Swift in between different asset classes again and again. So, it takes a lot of time for you to understand or crack them. Whereas when you talk about only and only anyone Broader Index, and take it. Then your Focus becomes completely clear. And your trading efficiency also increases with that. Remember instead of focusing on multiple things at once, It is better if we focus on a single thing, If we focus on only one thing. And that’s why it happens on the basis of our learning. Our learning or growth will increase only when we focus on a single thing.
Liquidity in Index Trading:-
The next reason, that why so many pro traders pick Index trading. That is because of liquidity. See, whenever we talk about derivatives the segment of the future, or options. Then you have to understand that the most liquidity or the most volume you will get only and only in the Index. That two broadly in two indexes, first is Nifty and second is Bank Nifty. So no matter whether you take an option or the future the most volume always remains in it. Because there is very good volume here, almost all the time, many pro-traders start preferring it. Because a lot of times they go for stock-specific options. Then they felt struck, and there were more chances of getting struck because of a lack of liquidity.
Efficient Entry and Exit:-
Our third major advantage also comes from this same point. That is entering and exiting with multiple lots. See when you talk about stock-specific futures or options, after a limit now even if you have a lot of money, a lot of cash. But you put limitations on your hands, specifically in Intraday. And you won’t be able to carry more quantities, and if you take heavy quantities then slippages also increase with Stock-based futures and options. And there are chances that big traders pay lakhs as a cost in these slippages. But pro traders in the index easily enter and exit with lakhs of lots also some people take the help of algorithms, some take the help of Excel sheets and some do it manually.
Advantages of Stock Trading:-
By the way, what do you guys prefer? Definitely write in the comment box about stock trading or index trading why you prefer that, and tell that too. I love to know the reasons for this let’s move on to our next point which is about strategies and their effectiveness. What happens is that when you trade on stocks, multiple factors are involved. Like operator’s activity or some news-driven or quarter result is there even sometimes insider trading like persons who were insiders were trading or some long-term investor might think one day that man today, if I would like to make a profit-booking, then due to all these multiple factors, the price action changes for any stock but if we talk about a broader index then the technicals were not so bad there. It remains apt until unless there is the presence of any mega-event like policies day or something else all these things don’t happen every time, once in a month at max okay? So that’s why, making returns in the index or making additional returns and the Number of certainties are more in comparison to others i.e. stock-specific options.
Introduction to Volatility
By the way, if you want Adventure in your life, then like this video as soon as possible Baba ji’s grace will remain and life will remain full of adventure. Before we move towards the coming point, understand why the pro-traders prefer Indexes and whether Should we not prefer stocks? I will answer it all But first, let me help out some Beginners out here.
Importance of a Good Demat Account
There are two major ways to earn money in today’s time The first one in which you work for someone else Second, when you invest in assets and your value keeps on growing even when you are sleeping its value keeps on increasing only salary is not sufficient now it will be possible only when you have a good demat account in which you will invest and for that, we have Motilal Oswal. You can open a free demat account in the Motilal Oswal app and without paying any account maintenance charge you can operate your account here They have an experience of more than 30 years and there are more than 22 lakh active users.
Taking Advantage of Swings
And it is nothing but swings, the swings that come yes, especially intra-day swings volatility is considered as an investor’s enemy but volatility is considered a friend of the trader and a friend of the experienced trader and when we talk about the index you get a swing of 100, 200, 300 points or 500, 1000 points on some days with ease specifically if I talk about bank nifty option then as a professional trader, you can make good money here with this, now moving towards our next point, we will read the extent of manipulation now you see for yourself. We have a complete list and playlist of scam series on our channel there we talked about these big scams, which have become a panic in the financial market and had exposed them.
Security and Hedging Strategies
Have you ever heard of a case where someone made allegations about the operator or any allegations about manipulators that these people should be manipulating the index on a daily basis? No, right? but for sure, you always had found stock-specific. So Somewhere if I talk about security level then Index trading will give you more in comparison to stock-specific options an insider or operator will know more in comparison to you and me that’s why a lot of people prefer it.
Conclusion and Stock Trading Advantages
There is one more thing that helps you in this index trading which is hedging strategies even if I talk about all options selling strategies then all the non-directional strategies get a lot of exposure through Index trading when we talk about strategies or strangles, so it is a natural thing that it is a bit difficult to apply them to the stock. Unless those stocks are those who never move at all Some stocks, NO, we are not going to take names at all so the traders who want to use non-directional options strategies, are unfortunately left with no other way than index options hence index options again come in the limelight.
Stock Trading Versus Index Trading
So there were very few reasons why so many pro-traders prefer index trading over stock trading Is stock trading so bad? Well, No We always try to keep a balanced view on our channel here also we will see some pointers that what are the advantages you can have if you are doing stock trading instead of index trading first it is a Variety look, Whenever you do index trading, there will be no variety you have only two indexes i.e bank nifty and nifty, where there is liquidity And if it went to sideways as it happens in some years if it went sideways then you will not be able to make any money In such a situation, stock trading comes like a buffet where there are multiple varieties from multiple opportunities, So you can prefer them Secondly stocks are better for the proper swing to See sometimes the move of an index depends on multiple things like market makers, global sentiments, policies, fund actions, FFIDI, etc
If you have studied this then you are fine, you make money, but at the same time there are few stock-specific things where even in individual stocks if you pick up around the support and the broader market is not performing well sooner or later you can make good money with the help of swing trading Third, the most important stock-specific action, it is the flexibility in cash whenever you talk about the whole index, you have the option mostly to trade in futures and options, Although there are ATF’s, you won’t get upswing better than that, if you are talking about trading and not investing then there are better alternatives So the problem becomes that even if a new beginner comes then, unfortunately, he gets trapped in the clutches of leverages because future and options are always a leverage instrument