"Investor must know and appreciate that trading in Equity shares, derivatives contracts or other instruments traded on the Stock Exchange, which have varying element of risk, is generally not an appropriate avenue for someone of limited resources and low risk tolerance. You should therefore carefully consider whether such trading is suitable for you in the light of your financial condition. Investors are also advised not to be influenced by enticing and catchy investment related advertisements by advisors with vested interest. Please do not trade based on such free advice assuring guaranteed return and floating via SMS or e-mail. Please take informed decision on investing your hard earned money. In case you trade on Stock exchanges and suffer adverse consequences or loss, you shall be solely responsible for the same and Stock exchanges/ Clearing Corporations and/or SEBI shall not be responsible, in any manner whatsoever, for the same and it will not be open for you to take a plea that no adequate disclosure regarding the risks involved was made or that you were not explained the full risk involved by the concerned stock broker. The investor shall be solely responsible for the consequences and no contract can be rescinded on that account. You must acknowledge and accept that there can be no guarantee of profits or no exception from losses while executing orders for purchase and/or sale of securities including derivative contracts being traded on Stock exchanges."
It must be clearly understood by you that your dealings on Stock exchanges through a stock broker shall be subject to your fulfilling certain formalities set out by the stock broker, which may inter alia include your filling the know your client form, reading the rights and obligations, etc., and are subject to the Rules, Byelaws and Regulations of relevant Stock exchanges/ Clearing Corporations, guidelines prescribed by SEBI and in force from time to time and Circulars as may be issued by Stock exchanges /Clearing Corporations and in force from time to time.
In the derivatives market, the amount of margin is small relative to the value of the derivatives contract so the transactions are 'leveraged' or 'geared'. Derivatives trading, which is conducted with a relatively small amount of margin, provides the possibility of great profit or loss in comparison with the margin amount and hence transactions in derivatives carry a high degree of risk. You should therefore completely understand the following statements before actually trading in derivatives and also trade with caution while taking into account one's circumstances, financial resources, etc. If the prices move against you, you may lose a part of or whole margin amount in a relatively short period of time. Moreover, the loss may exceed the original margin amount.