In a recent study by the Securities and Exchange Board of India, it was found that almost 70% of individual traders who engaged in intraday trading in the equity cash segment incurred losses during fiscal 2023.
Intraday Traders suffering Loss
Reportedly, over 70 percent of individual investors who engage in intraday trading incurred an average loss of Rs 5,371 during 2022-23 (FY23).
The finding comes at an interesting time as intraday trading among individual investors has surged.
It has reported a notable increase of over 300% compared to FY19.
This study further highlights that young traders under 30 years of age made up 48% of intraday traders, up from 18% previously.
A total of 71% individual intraday traders experienced loss, and this figure rose to 80% among those who traded very frequently (more than 500 times a year).
Affecting Younger Traders
This has mainly affected Younger traders who were particularly affected, with 76% facing loss.
It appears that the traders who lost money tended to make more trades on average.
Further, they incurred additional costs equivalent to 57% of their loss.
For the profitable traders, it is different as they spent 19% of their profits on trading costs during the year.
In this study, they have compared trading patterns before and after the Covid-19 pandemic, hence providing insights into how market dynamic and trader behaviors have evolved during this period.
As we all know that Intraday trades involve buying and selling securities within the same trading day.
This study covered nearly 7 million investors trading in the equity cash segment.
Prior to this, another Sebi study in January 2023 revealed that 90 percent of active futures and options investors (those trading more than five times a year) have made an average loss of Rs 60,000 crore in 2021-22.
In both of these studies, the market regulator highlighted how the odds are stacked against small investors, who are often lured into equities trading by the prospect of quick gains.
Sebi said, “The study is expected to enhance awareness among individual traders about the risks involved in intraday trading in the equity cash segment,” in a press release.
So far this month, the average daily trading turnover for the cash segment has reached Rs 1.5 trillion with about a third of these trades being intraday.
Besides this, the latest study also points to a surge in investors engaging in high-risk intraday trading.
