SEBI Study Reveals 70% of Individual Intraday Traders in Equity Cash Segment Report Losses

A recent study conducted by the Securities and Exchange Board of India (SEBI) has highlighted significant losses among individual intraday traders in the equity cash segment for the fiscal year 2022-23. The study found that over 70% (7 out of 10) of individual intraday traders experienced financial losses during this period. It also reported a dramatic increase of over 300% in the number of individual participants in intraday trading compared to FY 2018-19.

The study, which analyzed trading trends and financial outcomes for individuals engaged in intraday trading, was peer-reviewed by a working group consisting of experts from academia, brokerage firms, and market analysts. Covering the fiscal years 2018-19, 2021-22, and 2022-23, the research aimed to compare trends before and after the pandemic. It is based on a sample from the top 10 stock brokers, representing approximately 86% of individual clients in the equity cash segment for FY 2022-23.

Key findings from the study include:

Approximately one-third of individuals trading in the equity cash segment engage in intraday trading.

The number of individual intraday traders in the equity cash segment surged by over 300% in FY 2022-23 compared to FY 2018-19.

The proportion of young intraday traders (under 30 years old) increased to 48% in FY 2022-23, up from 18% in FY 2018-19.

71% of individual intraday traders in the equity cash segment incurred net losses in FY 2022-23.

The percentage of loss-makers rose to 80% among traders with very high trading frequency (more than 500 trades per year).

Younger traders (under 30 years) had a higher loss-making rate at 76% in FY 2022-23 compared to other age groups.

Loss-makers executed more trades on average than profit-makers.

In addition to trading losses, loss-makers spent 57% of their trading losses on trading costs, while profit-makers spent 19% of their trading profits on costs in FY 2022-23.

This study aims to increase awareness among individual traders about the inherent risks of intraday trading in the equity cash segment. It is distinct from SEBI’s earlier report dated January 25, 2023, which focused on futures and options (F&O) trading.