5 days ago

Why Most Retail Traders Should Avoid F&O Trading

Futures and options, or F&O, are complex investments that can make gains and losses much bigger.

Sebi says nearly 88 out of every 100 individual traders lost money in FY26.

Traders lost a total of Rs 91,685 crore, even though this was less than the previous year.

Many people trade too often or use too much borrowed exposure.

Fees and other transaction costs can also reduce their returns.

Some option buyers lose money even when the market moves in the expected direction.

F&O trading is better suited to people who understand the risks and can afford to lose their trading money.

People with debt, limited savings or important financial goals should generally avoid it.

Anyone repeatedly borrowing money or trading to recover losses should consider stopping and using simpler investments instead.

Key facts

FY26 losing traders: 87.7% of individual equity-derivatives traders incurred losses.
FY26 aggregate net losses: Rs 91,685 crore.
Change from FY25: Aggregate net losses fell about 18% from a revised Rs 1.12 trillion.
Same-day index-options turnover: About 59% of index-options turnover involved contracts expiring the same day.
Transaction costs: Individual traders incurred about Rs 25,000 crore in transaction costs in FY26.
Suggested single-trade risk limit: One expert advises risking no more than 1% to 2% of total capital on a single trade.
Key warning signs: Borrowing to cover losses or margins and trading to recover losses should prompt investors to consider stopping.

rediff.com · 5 days ago