Bleeding red! 71% retail traders making losses in intraday segment, finds Sebi study

Markets regulator Sebi has validated a well-known secret on Dalal Street – most retail intraday traders don’t make money. According to a study by Sebi, 71% of individual traders in intraday equity segment incurred losses during FY23, up from 65% in FY19 and 69% in FY22.

Not just that, the more you trade intraday, the losses inch up higher. The proportion of loss-makers increased further to 80% for traders with very frequent trading activity. During FY23, 76% of individual traders with annual intraday turnover more than Rs 1 crore were loss-makers, according to the Sebi report.

Individual traders with annual turnover of more than Rs 1 crore incurred an average loss of Rs 34,977 during FY23. For such traders’ group, the average profit by profit-makers was Rs 89,172 while the average loss by loss-makers was Rs 74,575 during FY23.

The average number of trades by loss-makers was higher than the profit-makers.

The survey is based on a sample of individual clients of the top 10 stock brokers, accounting for around 86% of the individual client count in the equity cash segment during FY 2022-23.The study finds that the number of individuals trading intraday in equity cash segment has increased from around 15 lakh in FY19 to 69 lakh in FY23, a sharp jump of 4.6 times.This surge in participation has been associated with rise in traders with low turnover, traders who trade less frequently, young traders, and traders from Tier-II and Tier-III cities.It is not so easy for experienced traders to make money as 54% of those with 3 years of experience were loss-makers in FY23.

The bottom 78% traders (by intraday turnover) accounted for less than 1% of the total intraday turnover of all individual traders in FY23. On the other hand, top 6% traders accounted for more than 90% of the turnover.

Sebi said the exercise was taken with an intent to enhance awareness among individual traders about the risks involved in intraday trading in equity cash segment. Last year, Sebi had done a similar exercise in which it was found that 9 out of 10 retail traders in the F&O segment have been making losses.

The new study finds that the youth are getting increasingly attracted towards intraday trading. The share of young intraday traders (age less than 30 years) has grown to 48% in FY 2022-23 as compared to 18% in FY 2018-19.

“Over and above the trading losses incurred, loss makers expended an additional 57% of their trading losses as trading costs in FY 2022-23. Profit makers spent 19% of their trading profits as trading costs in FY 2022-23,” Sebi said.