Why Most Indians Are Losing Money in Short-Term Trading (Shocking SEBI Data Explained)

In recent years, short-term trading—especially intraday and F&O (futures and options)—has exploded in popularity across India. Social media, YouTube influencers, and easy-to-use trading apps have made it look like a fast way to make money.

But the reality is very different.

Data released by India’s market regulator, the Securities and Exchange Board of India (SEBI), paints a clear and concerning picture: most retail traders in India are losing money—consistently and at scale.

Let’s break down the numbers and understand why this is happening.

One of the most shocking statistics comes from a SEBI study released in 2024. It found that 93% of individual traders in equity derivatives (F&O) incurred losses between FY22 and FY24.

That means only about 7 out of 100 traders were able to make money.

Another report showed that 91% of retail traders lost money in the derivatives segment in FY25, with total losses crossing ₹1 lakh crore in just one year.

Over a three-year period, retail traders collectively lost more than ₹1.8 lakh crore in derivatives trading.

These are not small numbers. This is a massive transfer of wealth from retail investors to more sophisticated market participants.

Even in intraday trading, the story is similar. SEBI found that 7 out of 10 intraday traders in the equity cash segment incur losses.

So why is this happening?

The first major reason is that short-term trading is not investing—it is speculation. When you trade in the short term, especially in derivatives, you are betting on price movements rather than business fundamentals. This makes outcomes highly unpredictable.

The second reason is that retail traders are competing against professionals. In the derivatives market, you are not trading against beginners—you are competing with institutions, hedge funds, and algorithmic traders. These players use advanced models, high-speed systems, and large capital.

SEBI data shows that while retail traders lost heavily, institutional players and proprietary traders made significant profits in the same period.

This creates an uneven playing field.

Another key factor is overtrading. Many retail traders make frequent trades in the hope of quick profits. However, data shows that traders who trade more frequently are actually more likely to lose money.

Frequent trading increases:

Transaction costs
Brokerage fees
Emotional stress

All of these eat into profits.

Leverage is another major risk. In F&O trading, you can take positions much larger than your capital. While this can amplify gains, it also magnifies losses. Many beginners underestimate this risk and end up losing a significant portion of their capital quickly.

Lack of knowledge is also a critical issue. Many new traders enter the market without understanding how derivatives work. Influenced by social media and “get rich quick” narratives, they jump into trading without proper education or strategy.

SEBI has also highlighted the growing participation of young investors, many of whom lack experience. In fact, a large proportion of traders are under the age of 30, and a significant number of them incur losses.

Emotions play a huge role as well. Fear and greed drive most trading decisions. Traders often:

Buy when prices are rising (FOMO)
Sell when prices fall (panic)

This leads to poor timing and losses.

Another overlooked factor is costs and taxes. Short-term trading involves higher transaction costs and is taxed more heavily than long-term investing. Even if you make small profits, these costs can significantly reduce your net returns.

Despite these losses, many traders continue to participate. Reports show that over 75% of traders keep trading even after losing money.

This creates a cycle where losses lead to more trading in an attempt to recover money, which often leads to even bigger losses.

So what can investors learn from this?

First, understand that short-term trading is extremely risky. The data clearly shows that the odds are stacked against retail investors.

Second, focus on long-term investing. Unlike trading, investing is based on business growth and fundamentals. Historically, long-term investors have had much higher success rates.

Third, avoid leverage unless you fully understand the risks. Leverage can wipe out your capital faster than you expect.

Fourth, invest in learning before investing money. Understanding markets, risk management, and basic analysis can significantly improve your outcomes.

Finally, be realistic. The idea of making quick money in the stock market is appealing, but it rarely works in practice.

In conclusion, the rise of short-term trading in India has brought millions of new participants into the market. But the data is clear—most of them are losing money.

This is not because the market is unfair, but because short-term trading is inherently difficult, competitive, and risky.

For most people, the smarter path is not chasing quick profits, but building wealth slowly through disciplined, long-term investing.