“In options trading, you don’t protect your money with luck — you protect it with rules.”

Introduction

Making money in the stock market is not difficult.
Staying disciplined is difficult.
And this becomes even more true when we talk about F&O (Futures & Options) trading.

Most beginners think F&O is a shortcut to fast profits —
but the reality is:

“Wrong trades don’t wipe your account. Wrong risk management does.”

This guide explains the risks, margins, rules, trader psychology, and strategies in the simplest possible English.

What Is F&O Trading? (Simple Explanation)

1. Futures

  • You buy/sell a contract

  • Price movement affects your capital fully

  • Big profits = big losses risk

2. Options

  • Option Buyer: Pays premium, loss is limited

  • Option Seller: Receives premium, but risk is unlimited

Most beginners choose option buying, but on expiry day, 90% of options go to zero.

Why F&O Is So Risky for Beginners?

1️⃣ High Leverage = High Loss Potential

You get a large position with small capital.
A small move against you = big loss.

2️⃣ Overtrading Kills More Traders Than Losses

One good profit builds overconfidence → bad trades start → account drains.

3️⃣ Volatility Is Unpredictable

Even if the price moves in your direction, the option premium can fall because of time decay and IV crush.

4️⃣ Expiry Pressure

Weekly expiry destroys beginners.
Options lose value rapidly in the last hours.

Margins & Costs (Most Traders Don’t Know This)

✔ Futures Margin

  • Need only 15–20% margin

  • But loss happens on the full lot value

✔ Option Buying Cost

  • Only premium required

  • But premium can become zero by expiry

✔ Option Selling Margin

  • Requires high margin

  • High risk

  • Not recommended for beginners

The 6 Golden Rules Nobody Tells Beginners

Rule #1 – Always Trade With a Stop Loss

SL is not optional.
Without SL → account blow-up.

Rule #2 – Take Only 1–2 Trades Per Day

More trades = more mistakes + more losses.

Rule #3 – Trade Only in Trendy Markets

Trending market = high probability trades
Sideways market = account destruction

Rule #4 – Avoid Trading on Big News Days

Avoid:

  • Budget

  • RBI Policy

  • US Inflation Data

  • Fed Meetings

Rule #5 – Never Average a Losing Position

Averaging losers is the easiest way to wipe out your capital.

Rule #6 – Exit Before Expiry Hour

Option premiums destroy in the last 30–60 minutes of expiry.

Best Beginner Strategy: 20–50 EMA Trend Strategy

How it works:

  • When price is above 20 EMA & 50 EMA → consider Call buying

  • When price is below 20 EMA & 50 EMA → consider Put buying

  • Volume spike confirms direction

Stop Loss:

Previous candle high/low.

A simple, clean, reliable strategy for beginners.

Big Mistakes You Must Avoid

❌ Trading based on emotions
❌ Following random Telegram/YouTube tips
❌ Starting F&O with very small capital
❌ Revenge trading
❌ Expecting “jackpot trades” daily

Conclusion

F&O trading becomes profitable when you:

  • Stop overtrading

  • Follow strict risk management

  • Trade only with the trend

  • Take only high-quality setups

Always remember:

“Your goal is not to beat the market. Your goal is to survive long enough to understand it.”