The Securities and Exchange Board of India (SEBI) recently released a detailed report on the performance of individual traders in the equity Futures and Options (F&O) segment. This report provides a clear picture of the profitability and losses incurred by traders, highlighting the challenges and opportunities within the trading landscape in India. This blog post will address key questions that many traders are searching for on Google: How many traders lose money in India? What is the percentage of successful traders in India? And, what is the option trading profit percentage in India?

Key Questions Answered

1. How Many Traders Lose Money in India?

According to the SEBI report, an overwhelming 89% of traders incurred losses in the fiscal year 2022 (FY22). This is an increase from 87% in the fiscal year 2019 (FY19). This data indicates that the majority of traders in the F&O segment are not making profitable trades, with a large proportion struggling to break even.

2. Percentage of Successful Traders in India?

With such a high percentage of traders incurring losses, only a small proportion are profitable. The report reveals that only 11% of individual traders made a profit in FY22. This underscores the difficulty of achieving consistent profitability in the highly competitive and volatile F&O market.

3. Option Trading Profit Percentage in India?

For option trading specifically, the report provides the following insights:

• Among traders involved in index options, 89% incurred an average loss of Rs. 0.77 lakh in FY22.

• However, the average profit for the 11% of successful traders stood at Rs. 0.92 lakh. This demonstrates that while the majority of traders face losses, a small percentage can achieve notable profits in option trading.

Detailed Breakdown of the SEBI Report

The SEBI report offers a comprehensive analysis of trading patterns, demographics, and financial outcomes.

Here are the key highlights:

Participation Growth

• The number of unique individual traders in the equity F&O segment surged from 710,000 in FY19 to 4.52 million in FY22, marking an increase of over 500%.

• 88% of these traders were active, trading more than five times a year.

Demographics

• Age Group: The age group 30-40 years had the highest participation rate at 39% in FY22. Younger traders (20-30 years) saw their participation rise from 11% in FY19 to 36% in FY22.

• Gender: Trading remains predominantly male-dominated, with males making up more than 80% of traders in both FY19 and FY22.

• The report provides city-wise data for traders in the equity F&O segment for FY22. Here is a summary of the participation from different cities:

  
  

  1. Mumbai: 16.5%

  2. Delhi: 9.8%

  3. Ahmedabad: 8.3%

  4. Kolkata: 7.1%

  5. Hyderabad: 6.4%

  6. Pune: 5.4%

  7. Bengaluru: 5.1%

  8. Chennai: 4.7%

  9. Jaipur: 3.5%

  10. Surat: 3.3%

  11. Other Cities: 29.9%

  
  

  This data highlights the dominance of Mumbai, Delhi, and Ahmedabad in the equity F&O trading landscape in India for the fiscal year 2022.

Financial Outcomes

• Loss Makers: On average, loss makers registered a net trading loss of Rs. 1.1 lakh in FY22, with active traders losing an average of Rs. 1.25 lakh. Excluding outliers, the average loss was Rs. 50,000.

• Profit Makers: Only 11% of traders made a profit in FY22, with an average profit of Rs. 1.5 lakh. Among active traders, the average profit increased to Rs. 1.9 lakh. Excluding outliers, 6% of profit makers had an average profit of Rs. 3,400.

Product-Wise Analysis

• The number of traders in index options and stock options increased by nearly 8 and 5 times, respectively, over the last three years.

• In FY22, 98% of traders were involved in options, and 11% in futures, compared to 89% and 43%, respectively, in FY19.

• Young traders (20-30 years) saw their participation in index options and stock options rise significantly to over 30% from nearly 11% in FY19.

Losses and Profits by Product

• Index Options: 89% of traders incurred an average loss of Rs. 0.77 lakh in FY22.

• Stock Options: 82% of traders incurred an average loss of Rs. 0.66 lakh.

• Index Futures: 74% of traders incurred an average loss of Rs. 0.96 lakh.

• Stock Futures: 67% of traders incurred an average loss of Rs. 2.1 lakh.

• Profits: The highest average profit was seen in stock futures (Rs. 2.4 lakh), followed by index options (Rs. 0.92 lakh).

Transaction Costs

• Loss makers incurred an additional 28% of their net trading losses as transaction costs in FY22.

• Non-active traders' transaction costs were significantly lower at 8%.

• Profit makers incurred transaction costs ranging from 15% to 50% of their profits, with non-active traders having a significantly lower percentage of 6%.

• The transaction cost as a percentage of net trading profit declined across all product categories from FY19 to FY22.

Gender Differences

• Female traders, although comprising less than 20% of participants, incurred higher average losses and made higher average profits compared to their male counterparts across all product categories.

The SEBI report presents a sobering view of the equity F&O trading landscape in India. With a significant majority of traders incurring losses and only a small fraction making profits, the report underscores the high risks involved in this segment. For traders, especially newcomers, understanding these dynamics is crucial for setting realistic expectations and developing effective trading strategies. The detailed insights on demographics, product-wise performance, and transaction costs provide valuable information for anyone involved in or considering entering the F&O market.

Frequently Asked Questions (FAQs)

Q1: How many traders lose money in India?

• According to the SEBI report, 89% of individual traders incurred losses in FY22.

Q2: What is the percentage of successful traders in India?

• Only 11% of individual traders made a profit in FY22.

Q3: What is the option trading profit percentage in India?

• Among successful traders in index options, the average profit was Rs. 0.92