“7 Out Of 10 Individual Intraday Traders…”: SEBI Study Reveals Explosive Information

A recent study conducted by the Securities and Exchange Board of India (SEBI) has uncovered startling information about individual intraday traders in the equity cash segment. The study found that more than 70% (7 out of 10) of these traders incurred losses in the fiscal year 2022-23. Additionally, there was a dramatic surge of over 300% in the number of individuals participating in intraday trading during the same period compared to FY 2018-19.

The study, according to a statement by SEBI, peer-reviewed by a working group comprising academics, brokers, and market experts, analysed trends in participation, profits, and losses among individual intraday traders. It covered the fiscal years 2018-19, 2021-22, and 2022-23 to compare trends before and after the pandemic. The sample included individual clients of the top-10 stock brokers, representing about 86% of the individual client base in the equity cash segment in FY 2022-23.

Key findings of the study include the fact that approximately one in three individuals trading in the equity cash segment engages in intraday trading. The number of intraday traders soared by over 300% in FY 2022-23 compared to FY 2018-19. Notably, the share of young intraday traders (under 30 years old) rose to 48% in FY 2022-23 from 18% in FY 2018-19. However, 71% of these traders incurred net losses in FY 2022-23, with the proportion of loss-makers increasing to 80% among those with very frequent trading activity (over 500 trades a year).

The study also revealed that younger traders had a higher rate of losses, with 76% of traders under 30 incurring losses in FY 2022-23. Loss-makers averaged a higher number of trades compared to profit-makers. Beyond trading losses, these loss-makers also spent an additional 57% of their trading losses on trading costs, whereas profit-makers spent 19% of their trading profits on such costs.

SEBI expects this study to raise awareness among individual traders about the risks involved in intraday trading in the equity cash segment. This research is distinct from SEBI’s earlier report on F&O trading released in January 2023.