Position Sizing for F&O Traders After SEBI Margin Rules

When margin requirements rise, the same trading capital supports less notional exposure per lot. Traders who don't recalculate their position sizing rules after a margin change often end up risking a larger share of their account than they intend to, without realizing it.

A simple, durable rule is to size positions as a fixed percentage of account capital at risk — commonly 1-2% per trade — rather than a fixed number of lots. This way, when margin requirements rise and each lot effectively "costs" more capital, the number of lots you can take adjusts automatically to keep your actual risk exposure constant.

It's worth distinguishing margin required from risk taken — margin is what a broker blocks to hold the position, but your actual risk is the maximum you'd lose if the trade goes fully against you (which for undefined-risk strategies like naked option selling can be far larger than the margin itself).

Rebuilding a position-sizing rule around percentage-of-capital risk, rather than lot count or margin availability, is the single change most likely to prevent a large single loss from doing outsized damage to an account.