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Naked Trading vs. Defined Risk: The Mindset Every Trader Needs, Says Shubham Agarwal
M
Moneycontrol•26-09-2026, 16:28
Naked Trading vs. Defined Risk: The Mindset Every Trader Needs, Says Shubham Agarwal
- •SEBI reports show most individual traders lose money in derivatives, with 87.7% losing in FY26 and 90.9% in FY25, totaling significant net losses.
- •Many traders, especially those buying options, are attracted by quick returns and overlook potential losses, often trading without a clear risk understanding.
- •Naked trading, while offering large profit potential, can lead to rapid, unexpected losses due to timing, volatility, or time decay, even if market direction is correctly predicted.
- •Defined-risk option strategies allow traders to pre-determine maximum losses by combining calls and puts, prioritizing capital protection over chasing high returns.
- •Adopting a mindset focused on controlled risk and systematic trading, rather than just winning days, is crucial for long-term survival and stability in the market.
Key Questions Answered
In FY26, 87.7% of individual traders lost money in the derivatives market, which was slightly better than the 90.9% recorded in FY25.
The combined net loss for individual traders reached about ₹91,685 crore in FY26, compared to roughly ₹1.12 lakh crore the previous year.
About 92% of individual losses in FY26 came specifically from options trading, with nearly 97% of individual traders mainly buying options.
