70-of-intraday-traders-suffered-losses-in-fy23-sebi

A study by market regulator SEBI has shown that 7 out of 10 individual intraday traders in the equity cash segment made losses in the financial year 2022-23.

This comes as a reminder of the risks associated with the exciting yet perilous world of intraday trading.

The study also highlights a jaw-dropping 300 percent surge in the number of individuals participating in intraday trading in the equity cash segment in 2022-23 compared to 2018-19.

The promise of quick profits has attracted many new traders. However, they might want to reconsider their strategies, as the data reveals that the average number of trades by loss-makers was higher than that of profit-makers.

Digging deeper, the study found that the share of young intraday traders, those under 30 years of age has risen significantly over the period. 

However, the harsh reality is that 76 percent of these young traders ended up on the losing side in 2022-23, a higher percentage than their older counterparts.

SEBI's comprehensive study, which analysed trends from FY2018-19 to FY2022-23, reveals a stark picture.

The regulator examined individual clients of the top-10 stock brokers, covering around 86 percent of the individual client count in the equity cash segment during 2022-23. The findings were peer-reviewed by a working group comprising academics, brokers, and market experts.

SEBI's study also shows that for those engaging in very frequent trading (more than 500 trades in a year), the proportion of loss-makers jumped to 80 percent. 

Not only are these traders losing money, but they are also incurring significant trading costs.

Loss-makers expended an additional 57 percent of their trading losses as trading costs, while profit-makers spent a more modest 19 percent of their trading profits on costs.

The Securities and Exchange Board of India (SEBI) hopes that this study will serve as a wake-up call, enhancing awareness among individual traders about the inherent risks of intraday trading in the equity cash segment.

This is not the first time SEBI has sounded the alarm. An earlier study found that 89 percent of individual traders in the equity F&O segment suffered losses, with average losses amounting to Rs 1.1 lakh in FY22.