1. Nature of derivatives trading
Futures and options (F&O) are leveraged, time-sensitive instruments. Option premiums can decay rapidly and can fall to zero, particularly close to expiry. Prices can move sharply and gap between trades. Buying options limits the maximum loss on a position to the premium paid plus charges, but losing the full premium is a common outcome.
2. SEBI study on individual F&O traders
The Securities and Exchange Board of India (SEBI) has published studies on the profitability of individual traders in the equity F&O segment. Those studies found that a large majority of individual traders incurred net losses, and that transaction costs added significantly to those losses. We strongly encourage you to read SEBI's findings before trading: SEBI research publications.
3. No advice, no guarantee
- PraxAlpha is software for executing trading rules you select and configure, through your own broker account.
- PraxAlpha and CloudPrax are not investment advisers or research analysts and do not provide investment advice, recommendations or tips.
- No strategy, signal, analytic or insight is a prediction or a guarantee of any outcome.
- No returns, profits, accuracy or win rates are promised or implied, on this site or in the app.
4. Automation and technology risk
Automated trading carries risks in addition to market risk, including:
- software defects, configuration errors or unexpected strategy behaviour;
- delays or failures in market data, our servers, internet connectivity, the Kite Connect API, Zerodha or the exchange;
- orders being rejected, partially filled, filled at prices different from those expected (slippage), or not placed at all;
- broker session expiry, which prevents new orders until you reconnect;
- automated exits, limits and square-off not executing as intended in fast, illiquid or halted markets.
5. Limits help, but do not eliminate risk
Daily profit/loss limits, fund limits and automatic square-off help you enforce rules you have set. They are checked by software against the best available data and act through your broker. They cannot guarantee that a loss will stay within a limit, and the realised result of a day may exceed the limit you configured.
6. Your responsibilities
- Trade only with money you can afford to lose.
- Understand each strategy you enable and the settings you choose.
- Monitor your Zerodha account during market hours and be ready to act directly in Kite.
- Comply with SEBI, exchange and broker rules applicable to you, including any rules on algorithmic trading.
- Account for brokerage, exchange charges, STT, stamp duty, GST and income tax.
7. Acknowledgement
By using PraxAlpha you confirm that you have read and understood this Risk Disclosure, the Terms of Service and the Privacy Policy, and that you accept full responsibility for all trading decisions and outcomes in your account.