Market Risk Alert: A recent study by the Securities and Exchange Board of India (SEBI) has uncovered a stark reality—seven out of every ten intraday traders experience losses in the equity cash market. Here are the key insights from this eye-opening report.
Shocking SEBI Report 7 Out of 10 Day Traders
In the financial year 2022-23, 71% of individual intraday traders incurred losses, equating to seven out of every ten traders. Intraday trading, which involves buying and selling stocks within the same trading day to capitalize on short-term price movements, saw a significant rise in participants—more than quadrupling over four years until March 2023.
Key Takeaways from the Study: Shocking SEBI Report 7 Out of 10 Day Traders
- Intraday Trading Prevalence: One in every three individuals trading in the equity cash segment engages in intraday trading.
- Dramatic Increase in Traders: The number of individual intraday traders in the equity cash segment rose by over 300% in FY 2022-23 compared to FY 2018-19.
- Youth Participation: The share of intraday traders under 30 years old grew from 18% in FY19 to 48% in FY23.
- High Loss Rate for Frequent Traders: 80% of traders with more than 500 trades a year incurred losses.
- Losses Among Young Traders: 76% of traders under 30 years old experienced losses, higher than other age groups.
- Trading Volume vs. Profit: On average, those who lost money conducted more trades than those who made a profit.
The study analyzed data on profits and losses from intraday trades by individuals. It emphasizes the importance of adequate knowledge, guidance, and professional assistance to avoid significant losses in day trading.
The SEBI study, aimed at raising awareness about the risks of intraday trading in the equity cash segment, was peer-reviewed by a working group comprising academia, brokers, and market experts. The sample included individual clients from the top 10 stock brokers, representing around 86% of the individual client base in FY23.
Conclusion
This comprehensive study serves as a cautionary tale for aspiring day traders, highlighting the high-risk nature of intraday trading and the importance of informed trading strategies.
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