SEBI Highlights Intraday Trading Risk: 70% of Traders Lose Money

A recent study conducted by the Securities and Exchange Board of India (SEBI) has painted a stark picture of the challenges faced by individual investors engaging in intraday trading. The data reveals that a significant proportion of these traders, particularly younger demographics and those with higher trading frequency, are incurring substantial losses.

The study, covering nearly 7 million investors in the equity cash segment, found that over 70% of individual intraday traders suffered losses in FY23, with an average loss of ₹5,371 per trader. This underscores the inherent risks associated with this trading strategy, often driven by the allure of quick gains.

The profile of the typical intraday trader has evolved. While the number of intraday traders has surged fourfold between FY19 and FY23, the average trade size has declined, indicating increased participation from smaller investors. Notably, the share of young traders (under 30) has quadrupled, reaching 48% in FY23. This demographic, along with ‘very frequent’ traders (more than 500 trades annually), exhibited higher loss rates.

Geographical trends also emerged, with a significant increase in intraday trading activity in Tier-II and Tier-III cities. However, the study also revealed a decline in the proportion of female intraday traders from 20% in FY19 to 16% in FY23.

SEBI’s findings underscore the need for heightened investor awareness about the risks associated with intraday trading. While the allure of quick profits may be tempting, the data unequivocally demonstrates the challenges faced by most participants in this high-risk trading strategy.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.