SEBI study finds that 7 out of 10 individual intraday traders in equity cash segment make losses

Date : 24 July 2024

A study conducted by SEBI has found that more than 70% (7 out of 10) of individual intraday  traders  in equity  cash  segmenthave  incurred  losses  in  FY  2022-23.    The study also noted the surge of over 300% in the number of individuals participating in intraday trading in equity cash segment in FY 2022-23 compared to FY 2018-19.

SEBI has conducted the study analysing the trends in participation and in profits and losses in intraday trading by individuals in equity cash segment. This study has been peer  reviewed  by  a  working  group  with  representation  from  academia,  brokers  and market experts.

The study covers the periods of FY 2018-19, FY 2021-22 and FY 2022-23, in order to comparatively analyse the trends before and after the pandemic.  The study 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.Some of the major findings of the study are as under:

1. Around one (1) in three (3) individuals who trade in equity cash segment, trades intraday.
2. Number of individual traders who traded intraday in equity cash segment, rose over 300% in FY 2022-23, as compared to FY 2018-19.
3. 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.
4. 7 out of 10 individual intraday traders (71%) in equity cash segment incurred net loss in FY 2022-23.
5. Proportion of loss-makers increased to 80% for traders with very frequent (more than 500 trades in ayear) trading activity.
6. The  percentage  of  loss-makers amongyounger  traders  (age  less  than  30 years) was higher (76% in FY 2022-23) as compared to other age groups.
7. Average number of trades by loss-makers was higher than the profit-makers.
8. 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.
9. The study is expected to enhance awareness among individual traders about the risks involved in intraday trading in equity cash segment. This study is different and distinct from the report dated January 25, 2023 on F&O trading conducted by SEBI earlier.