Rule zero: survive first
The maths of loss is brutal: lose 50% and you need +100% just to get back to even. Professional traders obsess over risk before returns for exactly this reason. Your first job in markets is not to make money — it is to make sure no single mistake can take you out of the game.
Position sizing — the 1–2% rule
Decide the maximum you’ll lose on any one trade — commonly 1–2% of capital. If you have ₹5 lakh and risk 1% (₹5,000), and your stop-loss is ₹10 below entry, your size is 500 shares. Size flows from the stop, not from conviction.
For long-term portfolios the same idea becomes diversification: spread across companies, sectors and asset classes (equity, debt, gold) so one blow-up cannot sink you. Index funds diversify by default.
Stop-losses and exits
A stop-loss is a pre-decided exit that caps damage when you’re wrong. Place it where your trade idea is invalidated (below support, beyond volatility bands) — not at a random round number — and never widen it after entry. Trailing stops protect profits as a position moves your way.
The behavioural traps
- Revenge trading — doubling up after a loss to “get it back”.
- Averaging down blindly — adding to losers without a thesis.
- FOMO entries — buying because everyone on social media is.
- Tip-based trading — acting on unsolicited WhatsApp/Telegram tips (also a fraud red flag — see Safety & Security).
- Overconfidence after wins — increasing size just when discipline matters most.
Antidotes: a written plan for every position (entry, stop, target), a trading journal, fixed risk per trade, and periodic portfolio reviews — your PCJ RM can help set these up.
Key terms
Drawdown
The fall from a portfolio’s peak — deep drawdowns take disproportionately long to recover.
Risk-reward ratio
Expected profit vs amount risked; consistently taking 1:2+ setups lets you profit even with a 50% hit rate.
Volatility
How violently a price swings — size smaller in more volatile instruments.
Asset allocation
The equity/debt/gold split that drives most of a long-term portfolio’s outcome.
Test yourself
1. After a 50% loss, getting back to even needs…
Half the capital must double — that is +100%.
2. The 1–2% rule refers to…
It caps how much any single trade can cost you.
3. A stop-loss should be…
It is set before entry, at the level that proves the idea wrong.
4. Best defence against a single stock blowing up your portfolio…
Spreading across assets means no single failure is fatal.
FAQs
For direct equity, 15–25 well-researched names gives most diversification benefit; beyond that an index fund often does the job better.
Yes — 6+ months of expenses in liquid instruments, so market dips never force you to sell.
To us at grievance@pcjholdings.in and via the exchange/SEBI channels listed on our Grievance Redressal page.
A stop loss is an order that automatically exits your position if the price crosses a level you set, capping your loss. For traders it is essential — it turns an unlimited risk into a known, small one. Decide your exit level before you enter a trade, not after the price starts falling.
No. PCJ does not run a research desk and does not provide any investment advice, tips or recommendations. We provide the trading platform, market data and execution only; your Relationship Manager assists with account and service support, not with what to buy or sell. Every investment decision is entirely your own — SEBI registration and NISM certification do not guarantee returns, and no honest broker will promise them.
Futures and options are contracts whose value depends on an underlying asset — a stock, index, commodity or currency pair. A future is an agreement to buy or sell at a fixed price on a future date. An option gives you the right — but not the obligation — to do so, for a price called the premium. They are tools for hedging and trading, and they carry leverage, which magnifies both profit and loss.
Very. SEBI's own study found that about nine out of ten individual F&O traders lost money, with sizeable average losses. Leverage means a small market move against you can wipe out a large part of your capital. If you still want to trade derivatives, start small, learn payoff structures, always use stop losses, and never trade with money you cannot afford to lose.
Margin is the deposit the exchange requires you to keep with the broker to take a leveraged position. It ensures you can honour your obligations if the market moves against you. Margins change with volatility, and if your losses eat into the margin, you get a margin call asking for more funds — failing which the position may be squared off.
SEBI requires brokers to collect income proof before activating derivative segments because F&O involves leverage and is suitable only for investors who can bear the risk. A recent salary slip, six months' bank statement, ITR acknowledgement or demat holdings statement usually works.
Muhurat trading is a special one-hour trading session that exchanges hold on Diwali evening, considered an auspicious time to invest. The exact timing is announced by NSE and BSE each year. It is a symbolic session — liquidity is thinner than normal hours, so trade thoughtfully.
Yes. PCJ Holdings is a SEBI-registered stock broker and a depository participant with NSDL, and a member of NSE, BSE and MCX since 2006. Your shares are not held by us — they sit in your own demat account with the depository (NSDL) in your name. Your funds are kept in client bank accounts that are separate from the company's own money, as SEBI rules require. Exchanges also run regular inspections of every member broker.
Educational content for general awareness only — not investment, trading or tax advice. Investments in securities market are subject to market risks; read all related documents carefully. Figures/rates are indicative for FY 2025-26 and may change.