Disappointed by Leverage Limitations in Indian Futures Trading: Insights from Reliance Futures Backtesting

**Helluuu fellow traders,** I wanted to share some insights from my backtesting and real-life trading experiences with Reliance Futures and get your thoughts. I recently ran a backtest on a year's worth of data (Dec 13, 2023 - Dec 24, 2024) and was feeling great about the results. **Here’s a summary:** * **Total trades:** 18 * **Wins:** 14 * **Losses:** 4 * **Win rate:** 77.77% * **Total net profit:** 54.68% Given that my strategy is consistent and has delivered a solid win rate, I was calculating the potential profits assuming I leveraged 10x (based on my capital). Let me break it down: * **Starting capital:** Rs. 2,10,000 * **Trading with 1/3rd of capital:** Rs. 70,000 * **With 10x leverage:** Rs. 7,00,000 * **Actual net profit:** Rs. 3,82,760 (Calculation: Rs. 7,00,000 \* 54.68%) * **After fees, etc., expected profit:** \~Rs. 3,50,000 (This is what I'm assuming. The fees might be a lot more than I expect. Please correct me if I'm wrong.) So, by the end of the year, the capital would grow to around **Rs. 5,60,000**. Exciting, right? Well, not so fast. **Here’s where the harsh reality set in:** 1. **No leverage for overnight positions:** In my backtesting, the least time taken for me to close a position was 4 days, with some trades extending to 20 days. Unfortunately, leverage doesn’t apply to trades carried overnight. This limitation hit me hard because it entirely disrupts the profit calculations I made above. 2. **Max leverage capped at 5x (for intraday):** Even if I adapted to shorter intraday trading (which is far from my strategy), the maximum leverage I could get is 5x. **TL;DR:** These two factors are disappointing because they significantly reduce the profitability of futures trading for strategies like mine. It makes me question the extent of limitations imposed by SEBI under the guise of– "*Protecting retail traders from losses"*. # Comparison: US Market In India, SEBI regulations limit the amount of leverage available, significantly impacting your position size. In contrast, U.S. markets allow for the same leverage (e.g., 10x or more) overnight without penalty. I’d love to hear from you all: * How do you deal with such restrictions on leverage for overnight trades? * Are there alternative instruments or brokers that allow more flexibility? * For those who trade Reliance Futures or similar stocks, how do you adapt to these challenges? Anyway, I’d be happy to hear what you all have to say. Feel free to ask more questions. **P.S.:** I know, I know—one year of backtesting isn’t sufficient to rely on a strategy entirely. In fact, I planned on backtesting for 2022, 2021, and going back even further on TradingView. But as soon as I had those aforementioned, *beautiful enlightenments,* I suddenly felt… enlightened enough to stop. :)