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Out of the 45.24 lakh individual traders in futures and options (F&O) in the financial year 2021-22, only 11% made profit, shows a report by Securities and Exchange Board of India (Sebi). Out of the total participants, the number of individual active traders stood at 39.76 lakh (88%). Sebi has classified active traders as those who traded in the equity F&O segment more than five times during the year.

The sample size of 45.24 lakh traders is taken from the top 10 brokers that account for around 67% of the overall individual client turnover in the equity F&O segment during FY22.

The total number of unique individual traders has increased by over 500% in FY22 from 7.1 lakh in FY19 as individual investors flocked to the F&O segment during Covid-19. Even as the interest in derivatives market has zoomed in the past three years, the percentage of profit making traders has gone down from 13% in FY19 to 10% in FY22.

The report analysed P&L of individual investors in the equity F&O segment for the period of FY19 and FY22. “The periods of study have been suitably selected keeping in view the influx of individual investors in the last three years, so as to comparatively analyse the trends before and after Covid-19 outbreak," the Sebi report said.

The average loss made by the 89% loss makers stood at Rs. 1.1 lakh during FY22, whereas the average profit for traders with their P&L in green was at 1.5 lakh. The report shows that the top 1% and top 5% active profit makers accounted for nearly 51% and 75% of the total net profit earned by all active profit makers, respectively.

Over and above the net trading losses, loss makers spent an additional 28% of net trading losses as transaction costs. Aggregate transaction costs include brokerage, clearing fees, exchange fees, SEBI turnover fees, STT, GST etc. and higher transaction costs are indicative of frequent trading. For this reason, the percentage of transaction costs for non-active traders was much lower at 8%.

The striking growth in the total number of participants in the F&O segment since 2019 was largely fuelled by young traders aged 20-30 years. This segment constituted 36% of the total traders in FY22, up from 11% in FY19. Individual traders in the age group of 30-40 years had the highest share in participation (39%) in FY2022, but saw a decline from 43% in FY19.

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