A study by Sebi, the markets regulator, has confirmed that most retail intraday traders lose money. In the fiscal year 2023 (FY23), 71% of individual traders in the intraday equity segment experienced losses. This is an increase from 65% in FY19 and 69% in FY22.
The study also found that the more frequently a person trades intraday, the higher their losses. About 80% of traders with very frequent trading activity lost money. In FY23, 76% of individual traders with an annual intraday turnover of more than ₹1 crore faced losses.
For these high-turnover traders, the average loss was ₹34,977 in FY23. Among this group, the average profit for those who made money was ₹89,172, while the average loss for those who didn’t was ₹74,575. Loss-making traders also made more trades than those who were profitable.
The study, which included clients of the top 10 stock brokers (covering 86% of individual clients in the equity cash segment), showed that the number of people trading intraday in the equity cash segment rose from 15 lakh in FY19 to 69 lakh in FY23, a 4.6-fold increase. This rise was mostly due to more low-turnover traders, infrequent traders, young traders, and traders from smaller cities (Tier-II and Tier-III).
Even experienced traders struggled, with 54% of those with three years of experience making losses in FY23. The bottom 78% of traders (by intraday turnover) contributed less than 1% of the total intraday turnover, while the top 6% of traders accounted for over 90% of the turnover.
Sebi conducted this study to raise awareness about the risks of intraday trading. Last year, a similar study found that 9 out of 10 retail traders in the futures and options (F&O) segment were losing money.
The new study also highlights that young people are increasingly drawn to intraday trading. In FY23, 48% of intraday traders were under 30 years old, up from 18% in FY19.
Additionally, loss-making traders spent an extra 57% of their trading losses on trading costs in FY23, while profit-making traders spent 19% of their profits on trading costs.
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