| Any individual trader can also trade in the Futures and | | | | let him forget and ignore all the potential risk of |
| Options of an Index or a stock which requires less | | | | trading F & O. He will forget he might lose his |
| capital margin with the same profit margin. By saying | | | | entire capital if the market behaves contrary to his |
| this, one should not abandon their entire position in | | | | speculation and shock him with a sudden change of |
| Equities and Debt Securities Investment and jump | | | | trend. This way, Mr A got burnt and went broke |
| right into trading F & O. Because, you will always | | | | after series of losses he made in his F & O |
| be tempted to do it. There are some odds which | | | | trades which he keeps on doing as it's only way he |
| many traders faced and get burnt while they shift | | | | will recover his past losses. No any other legitimate |
| their much secured investment into a high risk way | | | | investment plan can regain what he had lost. And |
| of F & O trading. It is all about control and self | | | | now there's the most dangerous thing which every |
| discipline that one must learn and check before | | | | stock traders experience, the hauntings of past |
| starting to trade F & O. Let me tell you a fact | | | | losses affecting present trades. For every future |
| as an example here:- | | | | trades, the trader always count and calculate his past |
| Mr. A is a trader who was buying equities and fixed | | | | losses to be regained from that trade which starts |
| deposits of a particular company called XYZ. He | | | | giving him some profit. He will wait & wait even |
| usually books profit at a rate of around 5% | | | | though that particluar trade already made it's highest |
| maximum of the invested capital in a month. Let's | | | | mark. Because he's calculating the profit amount to |
| say he had invested 10,000/- and books 500/- in a | | | | leverage his past loss. Once, the position started |
| month. Sometimes he didn't book any and even | | | | giving away the profit, he will get upset for not |
| incurred loss if the market goes down. He get bored | | | | booking at a higher profit margin earlier and stand |
| and started to trade in the F & O section of the | | | | confused whether to book or not or wait for a |
| same company XYZ. Now, with the same 10,000/- | | | | second time rise which didn't happened and end up |
| capital he gets 5 times more buying margin than it did | | | | the position with the lowest profit or no profit or |
| in equity. At the same time, he books profit in days | | | | even loss. |
| and doesn't need to wait for a month, and most | | | | So, the best thing Mr.A could have done with a |
| surprisingly he even gets profit when the market | | | | capital of 10,000 in the stock market is:- |
| goes down too as there's a product which he can | | | | * Invest 5000/- in FD or Debt Security |
| buy that earns profit when the stock falls down. It's | | | | * Invest 3000/- in Equity |
| when he thought " What was I doing with Equity or | | | | * Invest 2000/- in F & O by limiting an amount |
| Debt or some Lazy Securities when this F & O | | | | of 500/- in a single trade keeping a bearable 50/- as |
| trade easily gives 5 times profit with the same capital | | | | stop loss. |
| involved?" Now, he started to break all his secured | | | | He must realise that his total investment now has an |
| investements and pumps them into the F & O | | | | earning potential what he was getting earlier with |
| trades thinking he can build a fortune within a few | | | | Equities & Debts with the surplus of some more |
| months which will take many years if he trades with | | | | income from the 75% capital in Equities & Debts. |
| Equity or Debt or Fixed Deposits. | | | | Look from the angle of an equity trader, never look |
| This hope of getting an amazing amount of profit will | | | | from the F & O trading angle. |