A recent study by the Securities and Exchange Board of India (SEBI) has revealed that 93% of individual traders in the Futures and Options (F&O) segment suffered significant losses between FY22 and FY24. The combined losses for these traders amounted to ₹1.8 lakh crore, with each trader losing an average of ₹2 lakh. The report highlights that only 7% of traders managed to turn a profit, while a mere 1% earned profits exceeding ₹1 lakh.
Interestingly, the study also draws attention to the growing influence of algorithmic trading, which accounted for 97% of Foreign Portfolio Investors’ (FPI) profits and 96% of proprietary traders’ profits during the same period. These entities capitalized on the technology to rake in billions, while individual investors, particularly younger traders under 30 and those from Beyond Top 30 (B30) cities, were hit hardest. Despite enduring consecutive losses, over 75% of these traders continued trading, driven by the hope of recovering their investments.
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The findings are particularly concerning given that over 75% of the individual traders had an annual income of less than ₹5 lakh, raising questions about the financial risk management strategies being used. SEBI’s report underscores the need for stronger regulatory measures to protect retail investors from the high risks of F&O trading.
