What Not To Do During F&O Trading: A Beginner's Guide



Based on my experience in F&O trading here is a small write-up prepared for beginners in F&O trading, hope beginner F&O traders find this useful.

  1. Never go for naked options, it is the riskiest strategy. Even if you are almost certain about movement based on some news/events, you can never predict market. Always have a strategy in place and follow a strict profit target or Stop Loss for exit. I prefer spread based strategies – Bull Put Spread, Bear Call Spread, Bull Call Spread, Bear put Spread, The Iron Corridor etc which will help you to estimate potential risk-reward ratio even before you start!
  1. Never use your entire capital in one single trade, you may lose everything. Many small profits are always safer and achievable than one-time wonders which can cost you heavily if market moves other way.
  1. Read a lot, learn as much as possible. I will recommend the following books/courses for the beginners,

i.   E-Book/Kindle - Options Trading Strategy Guide by Roji Abraham

ii.   Udemy Course - Option Trading Basics by Hari Swaminathan

  1. Try your learnings in virtual trading platforms first before you actually start trading.

 

 

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