7 Out of 10 Individual Intra-day Traders in Equity Cash Segment Make Losses: SEBI Study

Moneylife Digital Team 26 July 2024

More than 70% or 7 out of 10 individual intra-day traders in the equity cash segment have incurred losses in FY22-23, shows a study conducted by market regulator Securities and Exchange Board of India (SEBI). The study also noted a surge of over 300% in the number of individuals participating in intra-day trading in the equity cash segment in FY22-23 compared to FY18-19.

SEBI conducted the study analysing the participation trends and profits and losses in intra-day trading by individuals in the equity cash segment. This study has been peer-reviewed by a working group with representation from academia, brokers and market experts.

The study covers the periods of FY18-19, FY21-22 and FY22-23, to comparatively analyse the trends before and after the pandemic. The study is based on a sample of individual clients of the top-10 stock brokers, accounting for around 86% of the individual client count in the equity cash segment during FY22-23.

Some of the major findings of the study are as follows:

Around one (1) in three (3) individuals who trade in the equity cash segment trade intraday.
The number of individual traders who traded intraday in the equity cash segment rose over 300% in FY22-23, compared to FY18-19.
The share of young intra-day traders (age less than 30 years) has grown to 48% in FY22-23 compared to 18% in FY18-19.
7 out of 10 individual intra-day traders (71%) in the equity cash segment incurred a net loss in FY22-23.
The proportion of loss-makers increased to 80% for traders with very frequent (more than 500 trades in a year) trading activity.
The percentage of loss-makers among younger traders (age less than 30 years) was higher (76% in FY22-23) than other age groups.
The average number of trades by loss-makers was higher than the profit-makers.
Over and above the trading losses incurred, loss makers expended an additional 57% of their trading losses as trading costs in FY22-23; Profit-makers spent 19% of their trading profits as trading costs in FY22-23.

SEBI says its study is expected to enhance awareness among individual traders about the risks involved in intra-day trading in the equity cash segment. This study is different and distinct from SEBI's 25 January 2023 report on futures & options (F&O) trading.

Comments

User

Smasher

3 months ago

That means 30% are profitable. That's a big number. In any business there are failures. I read somewhere that 90% of startups fail within 5 years. There is nothing to panic about it. It is just the nature of speculation and risk-taking.

Jitendra B Parmar

3 months ago

It is very logical that 100 % can not win in the gambling. Why SEBI or Government are not imposing heavy tax on it to curtail it instead of punishing Long Term Investors who are creating wealth for their old age? It is very clear that all influential people are making big money through inside information at the cost of retail players so the regulators and Government are just watching the show.