We will cover what SEBI data reveals about F&O trading in India.

The Story

What is common between poker and F&O Trading?
In both, the winner takes it all. And people who lose often keep playing with the hope of recovering losses.

SEBI’s latest report on F&O trading reflects a similar pattern.

On 23rd September, it came up with a report revealing that between FY22 and FY24, 93% of over 1 crore individual F&O traders lost an average of ₹2 lakh each.

The top 3.5% of loss-makers (~4 lakh traders) saw average losses of ₹28 lakh per person.

The most shocking part of the report?

Despite facing consecutive losses in FY22 and FY23, over 75% of loss-making traders continued trading in FY24.

So, what compels them to keep going?

What makes it addictive?

F&O trading, just like gambling, taps into the brain’s reward system. The thrill of potential gains, combined with the risk of losing money, releases adrenaline and dopamine.

It often pushes people to take more risks, hoping to recover and experience the excitement again, making it easy to get trapped in a cycle of unnecessary risk-taking activity.

The odds of winning

In FY24 alone, proprietary traders and Foreign Portfolio Investors made gross profits of ₹33,000 crore and ₹28,000 crore, respectively, while individuals and others faced losses exceeding ₹61,000 crore.

You see, it’s a zero-sum game—for every winner, there’s a loser bearing the cost.

Firms and institutions have a clear edge here, having resources and a large capital that would put them on the winning side most of the time.

Long story short, the odds are not at all in the favour of individual traders.

To conclude:

Maybe the likes of Radhakishan Damani, Rakesh Jhunjhunwala, and Vijay Kedia, who started their careers as traders, had realized early on that they would not be making money all the time doing trading and shifted their focus on building long-term wealth.

So for individuals, the takeaway is clear: instead of getting caught in the adrenaline-fueled cycle of F&O trading, it’s wiser to focus on long-term, sustainable investments that steadily compound over time.