9 Out of 10 F&O Traders Faced Staggering Losses: SEBI Report

A recent report by the Securities and Exchange Board of India (SEBI) has shed light on the heightened lossed faced by individual traders in the futures and options (F&O) market. Over the past 3 financial years, these F&O traders collectively suffered a staggering loss of ₹1.8 lakh crore, with an overwhelming majority suffering average losses of ₹2 lakh each.

The report further highlighted the disparity between individual traders and institutional investors. While the top 3.5% of loss-making traders endured an average loss of ₹28 lakh each, proprietary traders and foreign portfolio investors (FPIs) collectively generated gross trading profits of ₹61,000 crore during the same period. This stark contrast can be attributed, in part, to the widespread use of algorithmic trading by institutional players, which accounted for a significant portion of their profits.

Individual traders not only faced substantial losses but also incurred significant transaction costs. Despite spending an average of ₹26,000 per person on F&O transaction costs in FY24, a large percentage of loss-making traders continued to participate in the market.

The SEBI report also revealed that the demographics of individual F&O traders have evolved in recent years. There has been a notable increase in the participation of younger traders and individuals from smaller cities. However, the majority of traders continue to have relatively low incomes, with over 75% declaring an annual income of less than ₹5 lakh.

These findings underscore the challenges faced by individual investors in the F&O market and emphasise the need for a cautious approach to trading.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.