The research also revealed that the percentage of traders operating at a loss rose to 80% among those who engage in extremely frequent trading (more than 500 trades per year). Equity Trading SEBI report
A study carried out by the capital markets regulator Sebi revealed that over seventy percent of retail investors in the equity cash segment experienced losses during FY23.
The research conducted by the Securities and Exchange Board of India (Sebi) delved deep into the world of intraday trading within the equity cash segment, shedding light on significant trends and insights. This study, which underwent rigorous peer review by academics, brokers, and market experts, analyzed data spanning from FY19 to FY23, capturing the impact of the pandemic on trading behaviors.
The press release dated July 24 unveiled a remarkable 300 percent surge in the number of individuals engaging in intraday trading in the equity cash segment during FY23 compared to FY19. The study focused on a sample of individual clients of the top 10 stockbrokers, representing a substantial 86 percent of individual clients in the equity cash segment during FY 2022-23.
Key findings from the study painted a detailed picture of the landscape:
1. It was revealed that approximately one in three individuals trading in the equity cash segment partakes in intraday trading, showcasing the popularity of this trading.
2. A notable shift was observed in the demographics of intraday traders, with the percentage of young traders (under 30 years old) soaring to 48 percent in FY 2022-23 from a mere 18 percent in FY 2018-19.
3. The study highlighted a concerning trend where the proportion of traders incurring losses spiked to 80 percent among those with very frequent trading activity, specifically those conducting more than 500 trades per year.
4. Losses were particularly prevalent among younger traders, with 76 percent of traders under 30 years old experiencing losses in FY 2022-23 compared to other age groups.
5. An intriguing correlation emerged between the number of trades and profitability, as loss-making traders tended to conduct a higher average number of trades compared to profitable traders.
6. Beyond trading losses, the study uncovered that loss-making traders allocated a significant portion of their losses to trading costs, with a staggering 57 percent of trading losses being spent on trading costs in FY 2022-23. In contrast, profit-making traders only dedicated 19 percent of their trading profits to trading costs during the same period.
These findings provide valuable insights into the dynamics of intraday trading, shedding light on the challenges and opportunities faced by individual traders in the equity cash segment.
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