Now Reading: SEBI study: 96.5% of F&O traders lose money, only 0.5% profit
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SEBI study: 96.5% of F&O traders lose money, only 0.5% profit
A new SEBI study reveals that 96.5% of individual traders in futures and options (F&O) lose money over four years. Only 0.5% of those who traded for five years made profits every…
A new SEBI study reveals that 96.5% of individual traders in futures and options (F&O) lose money over four years. Only 0.5% of those who traded for five years made profits every year. After one year, 91% of traders had already lost money.
The study found that 93% of traders buy options without selling them, treating cheap options like lottery tickets. Around 90% of these buyers lost money. The median quarterly profit was Rs 4,366 while the median loss was Rs 10,525. Traders accepted losses more than twice the profits they booked.
Rachana Baid of the National Institute of Securities Markets has suggested measures to improve safeguards. These include showing traders their full trading record at login, lower limits for beginners, and yearly loss limits set during onboarding. SEBI should test these ideas through controlled trials before making new rules.
Indian Opinion Analysis
The study exposes a structural asymmetry in India's F&O market. Under SEBI's own regulatory framework, the exchange-traded derivatives market has seen a surge in retail participation since 2020, when contract sizes were reduced and new expiry cycles introduced. The data shows that repeated losses do not drive traders out: instead, cognitive biases such as the gambler's fallacy and overconfidence keep them trading. SEBI has already tightened product rules on expiry days and minimum contract sizes. The next frontier, as the study notes, is behaviour. The regulator's controlled trials on disclosures and loss limits, if adopted, would mark a shift from policing products to policing user experience. The key test will be whether SEBI mandates real-time loss displays on trading screens, a step brokers have resisted. The study's findings will feed into the market regulator's consultation paper expected later this year.
Source: livemint.com
This story was synthesised by AI from the source linked above.
