Why 93% of F&O traders lose money
Futures and options are derivative contracts whose value is derived from an underlying (stock, index, commodity). Used by institutions to hedge, used by retail mostly to speculate with leverage. SEBI's January 2024 study covered 1.1 crore individual traders in equity F&O over FY22 and FY23. Headline finding: 93% of individuals lost money. Average net loss for a loser: ₹1.8 lakh. The top 1% of profitable traders earned the bulk of the gains; the rest mostly funded them.
A typical retail F&O loop: ₹50,000 capital, weekly Bank Nifty options, 3 to 5 trades a week. Brokerage, STT, exchange fees, and slippage typically eat 0.5% to 1% per round trip. Even a 50% win rate at 1:1 risk:reward bleeds the account in months once costs are subtracted. Add overconfidence after a winning week and leverage; the math accelerates against you.
Believing 'I will be in the 7% who win'. The same 7% line up at every casino. The honest move is to either trade with rigorous risk rules and a tested edge, or to not trade derivatives at all.
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