Trading Guide: NIFTY, BANK NIFTY, SENSEX & F&O Stocks

How to Trade in NIFTY, BANK NIFTY, SENSEX & Other F&O Stocks

This guide explains how to trade in NIFTY, BANK NIFTY, SENSEX, and other F&O stocks. We cover basics, instruments, strategies, options, risk management, and important checklists.

1. Market Basics

• Pre-open: 9:00 – 9:15 AM
• Market hours: 9:15 – 3:30 PM
• Post-close: 3:40 – 4:00 PM

What moves the market? Global indices, USD/INR, crude oil, RBI policy, corporate earnings, FII/DII flows, and derivatives positioning (Open Interest, PCR, Max Pain).

2. Instruments & Contract Structure

NIFTY 50

• Underlying: NIFTY 50 index
• Expiry: Weekly & Monthly
• Settlement: Cash settled
• Used for: Hedging, directional bets, spreads

BANK NIFTY

• More volatile than NIFTY 50
• Sensitive to RBI policy and banking news
• Popular for intraday option strategies

SENSEX

• Based on BSE SENSEX index
• Liquidity lower compared to NSE contracts
• Can be used for diversification

Stock F&O

• Physical settlement at expiry
• Lot sizes differ by stock
• Watch corporate actions and results

3. Options Essentials

• Delta: Sensitivity to price movement
• Gamma: Speed of Delta change
• Theta: Time decay (option sellers gain)
• Vega: Impact of volatility (IV)

Common strategies: Long Call/Put, Debit/Credit spreads, Iron Condor, Butterfly, Calendar spreads.

4. High Probability Setups

• Opening Range Breakout (ORB): Trade after 9:15–9:30 range with volume confirmation.
• VWAP + Previous Day High/Low: Buy above VWAP and PDH, sell below VWAP and PDL.
• Inside Day: Breakout after range compression.
• Non-Directional Theta Plays: Iron Fly or Iron Condor when market is stable.

5. Execution & Risk Management

• Risk per trade: 0.5%–1% of capital
• Daily max loss: 2%–3% of account
• Always place Stop Loss (SL)
• Avoid overtrading and averaging losses
• Consider brokerage, STT, GST, and slippage

6. Checklists

Pre-Market

• Check global markets
• Review news/events
• Mark PDH/PDL, gaps, round levels

During Market

• Wait for confirmation (retest, volume)
• Follow loss limits
• Keep a trading journal

Post-Market

• Review trades
• Note mistakes & improvements
• Update watchlist for next day

7. Common Strategies Table

Strategy	Type	Best For	Conditions	Risk
ORB + Retest	Directional	Momentum Days	Bias + Volume	Medium
VWAP Reversion	Directional	Range Days	Reject extremes	Low–Medium
Iron Fly	Theta	Stable Sessions	Low realized vol	Defined
Debit Call Spread	Directional	Trend Continuation	IV moderate	Defined
Short Strangle	Theta	Sideways Market	No major events	High (undefined)

8. FAQs

Which is better for beginners? NIFTY is smoother than BANK NIFTY. Start with small risk and low lots.

Weekly or Monthly Options? Weekly = fast decay, higher risk. Monthly = smoother, good for spreads.

What to avoid? Overtrading, averaging losses, trading without SL, ignoring events.

Glossary: PDH = Previous Day High, PDL = Previous Day Low, IV = Implied Volatility, OI = Open Interest, Max Pain = Strike where option sellers benefit most.

Disclaimer: Trading in derivatives involves high risk. This content is for educational purposes only, not financial advice.