âœ”ï¸ The Trade time
• Not all F&O stocks out there are perfect for trading
• Low participation leads to low volumes & illiquidity
✔ï¸Illiquid assets
• Squaring off positions becomes challenging due to illiquidity
• Out of The Money (OTM) options contracts come at a high cost
✔ï¸Expiry period
• Volatility tends to witness a massive spike during expiry
• Refrain from entering into new positions near expiry
✔ï¸Take baby steps
• Better to start slow & increase your position size later
• Leverage can help you multiply both - profits & losses
✔ï¸Hidden aspects
• Stick to contracts that are highly liquid in nature
• Check if it is easy to square off the position
These are some common mistakes a new derivative trader tends to make. Have you ever encountered any red flags one can avoid before starting the F&O journey?
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Posted On: 29 Dec 2022 11:00 AM