Only 1 out of 10 F&O traders made profit in FY22; average loss stood at ₹1.25 lakh (2024)

FAQs

What is the average loss in F&O trading? ›

Recently, the Securities and Exchange Board of India (SEBI) issued a report, stating that 9 out of 10 individual traders in the equity F&O segment incurred an average loss of Rs 1.1 lakh during FY22, with most of them operating in the options segment.

The study also found that 90% of the active traders in the equity F&O segment lost money. In plain terms, it's vital to grasp that a staggering 9 out of every 10 traders who venture into Futures and Options (F&Os) end up losing money.

The emotional aspect of trading often leads to irrational decisions like panic selling. When the market moves unfavourably, many traders, especially those who are inexperienced, tend to panic and exit their positions hastily. This panic selling often occurs at the worst possible time, leading to significant losses.

With a $10,000 account, a good day might bring in a five percent gain, which is $500. However, day traders also need to consider fixed costs such as commissions charged by brokers. These commissions can eat into profits, and day traders need to earn enough to overcome these fees [2].

As much as 95 per cent of day traders lose money in the market, it demands an investigation. Intraday trading is the most popular, yet data suggests that most intraday traders lose money.

Futures and Options (F&O) trading offers significant opportunities for profits but also carries substantial risks. So, traders must have strong risk management in F&O trading to manage their capital.

Loss Makers and Profit Makers:

1.25 lakh. - The percentage of loss makers decreased when looking at the "active trimmed" group (excluding outliers), where around 83% of active traders experienced losses. - 11% of individual traders made profits during FY22, with an average profit of Rs. 1.5 lakhs.

What is the success rate of options traders? The success rate of option traders is estimated at 75%.

It is a high-stakes game where many are lured by the promise of quick riches but ultimately face harsh realities. One of the harsh realities of trading is the “Rule of 90,” which suggests that 90% of new traders lose 90% of their starting capital within 90 days of their first trade.

What percent of traders give up? ›

According to research, the consensus in the forex market is that around 70% to 80% of all beginner forex traders lose money, get disappointed, and quit. Generally, 80% of all-day traders tend to quit within the first two years.

It might sound as simple as “buy low” and “sell high,” but the reality is that the vast majority of traders end up losing money over time. Here's why day trading is an extremely difficult pursuit, and what's likely to happen when inexperienced traders get in over their heads.

A common approach for new day traders is to start with a goal of $200 per day and work up to $800-$1000 over time. Small winners are better than home runs because it forces you to stay on your plan and use discipline. Sure, you'll hit a big winner every now and then, but consistency is the real key to day trading.

George Soros

This feat cemented his reputation as the "man who broke the Bank of England" and solidified his status as a forex trading legend. Soros' net worth is estimated to be around $8 billion, making him one of the wealthiest individuals in the world.

The maximum amount options buyers can lose is the premium that they originally paid, plus brokerage commissions. But before initiating an options position, the trader should first calculate the breakeven point. To calculate an options breakeven point the trader uses the strike price and the premium.

For a put option buyer, the maximum loss on the option position is limited to the premium paid for the put. The maximum gain on the option position would occur if the underlying stock price fell to zero.

We multiply the purchase value by the lot size and then multiply the sales value by the lot size. The difference between this gives us the profit or loss, which is the turnover.

The potential for loss is theoretically unlimited for the seller of a futures contract and is substantial for the buyer. Options, on the other hand, have limited risk for the buyer (the most you can lose is the premium you paid), but unlimited potential profit.