Why 93% of F&O Traders Lose Money: The SEBI Study Explained
SEBI’s study is a warning label for leveraged trading: the game is not only prediction, it is costs, leverage, behaviour and risk control.
For broader context, see the Investing, Loans and Personal Finance Hub.
This guide is designed to help readers avoid avoidable losses, understand risk and use official grievance routes when something goes wrong.
SEBI’s study is a warning label for leveraged trading: the game is not only prediction, it is costs, leverage, behaviour and risk control.
Use filings, product documents, statements and official complaint IDs.
Never treat social-media claims as source documents.
No article can guarantee returns or complaint outcome.
1. What the SEBI study actually measured
SEBI’s September 2024 study tracked individual equity F&O traders across FY22-FY24 and found 93% incurred a net loss, with aggregate losses exceeding ₹1.8 lakh crore over the three years - and this was BEFORE accounting for transaction costs, which the study found made the picture worse still. The mechanism is not "wrong predictions": F&O is a leveraged, short-dated, zero-sum-before-costs game, so even a trader who calls market direction correctly on paper can still lose money once brokerage, STT, exchange charges, GST and slippage are deducted from every single trade, not just the losing ones.
For the connected rule, example or next step, see Index Fund vs Active Fund: SEBI-Style Investor Decision File.
This article is not a recommendation. It is a practical safety playbook: verify registration, read documents, understand risk, preserve evidence and escalate through official routes where needed.
2. Verified-source-backed approach
- SEBI’s study is a warning label for leveraged trading: the game is not only prediction, it is costs, leverage, behaviour and risk control.
- Use official SEBI/exchange/AMC/platform/product sources before acting.
- Keep statements, contract notes, screenshots, ticket IDs and product documents.
- Avoid guaranteed-return claims, anonymous tips and unregistered advice.
For the connected rule, example or next step, see Debt Mutual Funds: Credit Risk vs Duration Risk Explained | Finin2min Investor Protection.
3. Practical action checklist
- Calculate full-year net P&L after all charges.
- Never trade with borrowed or emergency money.
- Understand margin, expiry and loss limits.
- Avoid tips and revenge trading.
- Stop if you cannot explain payoff and downside.
4. Evidence file checklist
| Evidence | Why it matters |
|---|---|
| Contract notes, CAS, ledger, statement or folio records | Proves what was actually bought, sold or held. |
| Product document, DRHP, factsheet, IM, agreement or risk disclosure | Shows the terms and risks disclosed before investing. |
| Screenshots, chats, emails, calls summary and ticket IDs | Helps establish mis-selling, fraud, advice or service failure. |
| Complaint acknowledgements and timeline | Supports escalation through SCORES, ODR, cybercrime or other official routes. |
5. Common mistakes
- Investing because a screenshot or influencer shows profit.
- Treating GMP, tips or target prices as verified source material.
- Ignoring costs, taxes, slippage and liquidity.
- Using emergency money for leveraged or illiquid products.
- Not checking whether the adviser/intermediary is registered.
- Complaining without evidence or without first approaching the entity where required.
6. Red flags
- Guaranteed return or no-loss promise.
- Pressure to transfer money quickly.
- Personal bank account instead of regulated entity account.
- Withdrawal blocked unless more fees are paid.
- Product document not shared.
- High yield without credit, liquidity or collateral explanation.
- Anonymous Telegram/WhatsApp admin giving buy/sell calls.
Worked example
Example: A trader buys a weekly Nifty option correctly predicting a 1% index move in their favour. The option’s gross payoff looks like a clean win - but brokerage, STT (levied on options at exercise on the intrinsic value, not just the premium), exchange transaction charges, SEBI turnover fees, stamp duty and GST apply on EVERY leg of the trade, and bid-ask slippage on a fast-moving weekly contract can silently eat a further chunk. Run across dozens of trades a month, these costs compound into a net loss even for a trader whose market calls are right more often than not - which is exactly the mechanism SEBI’s study is describing, not a one-off bad trade.
7. Finin2min takeaway
Good investing starts with not getting trapped.
Before chasing return, check risk, cost, liquidity, registration, evidence and exit. Track your own full-year NET P&L after every cost line, not just the gross calls that felt right. Investor protection is a habit, not a helpline used after damage.
Frequently Asked Questions
Source and review trail
Use the current official instrument, portal or regulator publication before acting. This panel separates the category authority from page-specific references.
- Primary category
- SEBI & Securities Law
- Official starting point
- www.sebi.gov.in