Trading Trap

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The SEBI has produced a consultation document titled "Measures to strengthen index derivatives framework for increased Investor protection and Market stability".

Around 89% of derivative traders lose money, as we discovered at the time. While there were additional revealing details concerning F&O gaming, that was the main story. Now, we have this new document with a newly analysed data and proposed reforms that try to address some of the issues that have been brought to light. 76% of traders under 30 years old lost money on their intraday cash segment trades in FY23, according to data from Sebi.

In the index derivatives category of the NSE for FY 2023–24, 92.50 lakh unique people and proprietorship entities traded, resulting in a cumulative trading loss of ₹51,689 cr. Transaction charges are not included in this amount. According to the aforementioned SEBI study, traders who lost money on their trades also incurred transaction costs equal to 23% of their trading losses, whereas traders who made money on their trades incurred transaction costs equal to 15% of their winnings.

The results for FY24 will probably be fairly similar to our FY 22 survey, which showed that 9 out of 10 people lost money, after taking transaction expenses into account.

The majority of individual investors lose money, while high-frequency algo traders, FPIs, and other similar entities made money.

Thus, it concludes the matter. The large, clever operators are simply taking money away from retail investors, who keep losing money because they believe they will eventually become wealthy. The loss mentioned above, including expenditures, came to Rs 63,600 crore in 2023–2024. Small investors gifted away Rs 51,689 crore to large operators and paid an additional Rs 11,888 crore to the brokers. Do retail investors realise how completely foolish it would be to give away their money like that?

Will SEBI's suggested actions actually have an impact? A lot of individuals have doubts. In our opinion, there is never a 100% success rate or 100% failure rate when it comes to these kinds of problems. These steps, if taken, will undoubtedly lessen the tendency to make risky trades. To put it frankly, the increase in ticket size will also mean that derivative trading will only be available to a somewhat rich people, so hopefully they won't be as negatively impacted. It's also possible that nothing much will change and that players and the business will figure out how to get over the new regulations.

In conclusion, gambling as a whole is an addiction regardless of initial financial gain or loss. There is no such thing as easy money. Market Return is a function of quality, Patience and Discipline. Over time, investing has a high possibility of beating trading return and generate wealth. India's economy has enormous development potential. To achieve your goals, all you need is the appropriate Investing procedure and financial planning.

Disclaimer:
The above charts and returns are only for representation purposes. There is no assurance of any returns whatsoever. Stocks/ Mutual Fund investments are subject to market risks, read all scheme-related documents carefully. The NAVs & Stock prices may fluctuate depending on the factors and forces affecting the securities market. The past performance of the stocks/mutual funds is not necessarily indicative of future performance. I/We are not guaranteeing or assuring any return or dividend under any of the stocks/schemes and the same is subject to the availability and adequacy of distributable surplus.

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