Futures and options is not the cup of tea for all the participants who holds demat and trading account. Traders especially retail traders are the ones who are losing money and are in constant trials to be in profit. During the Span of 5years, Volumes in F&O are increasing at exponential growth, making NSE as the most traded derivative market in the World.
WHY TRADERS TRADE IN F&O?
Traders are aware that 90% lose their money in Futures and Options, but still they trade in F&O, because all traders want to become millionaires in single day.
OPTIONS IS THE ONLY DERIVATIVE WHERE YOUR RETURNS CAN BE FROM 0 TO UNLIMITED TIMES, EVEN YOU CAN LOSE YOUR TOTAL CAPITAL.
- Traders trade in F&O Especially in options as the capital requirement is low, as low as 100/- can be traded.
- Traders in options can earn up to 10000 times returns in single day, where banks pay you 3-4% interest for one year.
- High Volatility makes it more attractive.
- Options can move from 1 to 1000points in one minute.
- Emotions make trader to trade for higher returns.
WHY TRADERS LOSE MONEY IN OPTIONS?
- Psychology and emotions make trader to trade and lose money in F&O.
- High Volatility makes trader to trade with high volumes and lose money.
- Lack of risk management.
- In F&O, position sizing is very important, and most traders are unaware of it.
- In F&O, decisions has to be taken instantly to exit or to add, where most of the traders lack.
IF 90% TRADERS LOSE MONEY, THEN WHO ARE MAKING MONEY?
While retail investors lose money, Large HNI Investors and FII are the one who trap retail investors and make money in F&O.
Basically, FIIs are located in tax free islands like Cayman Island and Mauritius.
CONCLUSION:
By Chance, if you are lucky and made profit in F&O,then government is all set to collect almost 30% tax in your profit, although they collect taxes like STT, EXCHANGE TAX,STAMP DUTY ETC.
Instead of trading in F&O, If you play in casino you can avoid taxes and save your money. Trading is Casino, if you are a Gambler.