1 week ago
SEBI Study Reveals Why Retail F&O Traders Keep Losing
SEBI studied how individual investors traded equity futures and options.
It found that most retail traders lost money in FY26.
Fewer people traded than before, but the total losses were still very large.
Investors with little or no money invested in equities made up much of the losses.
Most traders bought options, especially contracts close to their expiry date.
Selling options was the only strategy group with positive median returns.
Many people kept losing even after several years of experience.
The study suggests that trading too frequently with limited financial resources can create a cycle of losses.
SEBI’s latest studies found that 87.7% of individual equity F&O traders lost money in FY26.
Active individual traders fell about 20% to 78.6 lakh, while new entrants declined nearly 40%.
Traders still suffered aggregate net losses of approximately Rs91,685 crore, with average losses near Rs1.17 lakh.
Traders with small or no equity portfolios accounted for most losses and often traded more intensely relative to their resources.
Option buying, short-expiry contracts and continued trading after repeated losses were associated with weaker outcomes.
- Who
- Individual equity F&O traders, along with proprietary traders and foreign portfolio investors, were examined in studies by the Securities and Exchange Board of India (SEBI).
- What
- SEBI released studies on the profitability and trading behavior of individual participants in the equity derivatives market.
- Where
- The studies concern India’s equity derivatives market.
- When
- The latest findings cover FY26; the earlier comparison study covered FY22 through FY24.
- Why
- The studies sought to measure retail profitability and identify trading behaviors associated with persistent losses.
Key facts
- Loss-making traders
- 87.7% of individual traders lost money in FY26.
- Aggregate retail losses
- Approximately Rs91,685 crore in net losses during FY26.
- Average loss
- About Rs1.17 lakh per individual trader.
- Active traders
- The number declined from 98.1 lakh in FY25 to 78.6 lakh in FY26.
- Small-portfolio traders
- Nearly 78% of traders had equity portfolios below Rs1 lakh and accounted for about 70% of aggregate losses.
- Trading strategy
- Nearly 97% predominantly bought options, while around 2% predominantly sold options.
- Transaction costs
- Individuals incurred approximately Rs25,000 crore in FY26, taking the FY22–FY26 total to about Rs1 lakh crore.
Sources
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