SEBI’s Latest P/L Analysis of Equity and FnO Traders

A recent analysis of the profit and loss (P/L) statements of individual traders dealing in equity and future & option (FnO) segments revealed some surprising insights.  

The study found that most profit-making traders were under the age of 20, while the highest number of trade losers were in the 40+ age group. 

This goes against the conventional wisdom that experience and maturity are key factors in successful trading.

Female traders and traders in Tier 1 cities were the highest gainers and losers.

In 2019 and 2022, female traders were found to be both gainers and losers in greater numbers than their male counterparts. This indicates that women are increasingly participating in the stock market and impacting the industry. 

The study also found that traders in Tier 1 cities (eight metropolitans cities) were the highest gainers and losers. This suggests that the more developed and sophisticated financial markets in these cities attract both experienced and novice traders, leading to a mix of successful and unsuccessful outcomes.

Some things to be noted:

  • Average Losses Suffered by Traders in 2022

The study found that in 2022, out of every ten traders, nine were in losses, with an average loss of 1.1 lakhs. This highlights that 89% of the individual traders (i.e. 9 out of 10) in the equity F&O segment incurred losses with an average loss of Rs. 1.1 lakh during FY22, whereas 90% of the active traders incurred average losses of Rs. 1.25 lakh during the same period.

  • Relevance of Young Traders Making More Profits

The high number of young traders making a profit in the equity and FnO segments is encouraging for the stock market’s future. These young investors bring fresh perspectives and innovative ideas to the table, which can lead to more diversity and growth in the industry. 

However, it’s also important to note that trading is highly risky and requires discipline, patience, and a solid market understanding.

  • Increasing Women’s Participation in the Stock Market

The increasing participation of women in the stock market is also a positive trend. Women have historically been underrepresented in finance and investing, but this study shows that they are making gains in the industry. This is a testament to the growing recognition of the importance of diversity in the financial world and the increasing opportunities for women to succeed in this field.

  • Implications for Investors and Traders in Tier 1 Cities.

The results of this analysis also have implications for investors and traders in Tier 1 cities. These markets are well-established and sophisticated, but they can also be volatile and competitive. 

It’s crucial for traders to have a deep understanding of the market dynamics and to be able to make informed decisions to minimise their risk and maximise their profits.