Equity F&O: 9 Traders in 10 Lost Money in FY 22 – SEBI Study

A study by SEBI released on 25 January 2023 said that 90% of active traders in the EQUITY futures & Options segment incurred average losses of Rs 1.25 lakh during financial year 2022. But this is just the first part of this eye-opening report.

The above information gives us pause to wonder what made these people rush to the riskiest of financial products to try their hand. One reason is the jaw-dropping claims made by some option traders on YouTube and Twitter.

Just do a quick search on YouTube with the words “Option Trading CR crores Profit” and you will see so many people who claim to have made crores, some of them with zero risk!

Even assuming that all of them actually made those fabulous riches in a very short time, they number perhaps by a dozen or two, whereas we have over 40 lakh traders who lost money to these profitable traders and to the brokers by way of commissions and transaction costs.

What is the point of this post, you may ask? It is merely to highlight that traders should first learn how to trade regular cash markets and try to become consistently profitable there. The skill set required for option trading is slightly different, but traders need to learn how to control their emotions, how to control their losses, and how to be selectively active. Only then should they consider trading derivatives, and even then, only if they have adequate risk capital. The option traders who make several crores are trading other people’s money, and those who give them the risk capital are already super rich. The money these rich people give to discretionary traders is likely only a small percentage of their overall wealth. No one in their right mind will trade options for money that the family needs for a comfortable living.

Note: If you would like to read the SEBI report in full, here is the link:

https://www.sebi.gov.in/media/press-releases/jan-2023/sebi-underlines-the-need-for-analysis-and-disclosure-of-risks-of-trading-in-fando_67542.html