Intraday trading in the equity cash segment is gaining momentum, but the latest study by the Securities and Exchange Board of India (SEBI) paints a concerning picture for many traders. The findings, released on Wednesday, reveal that over 70% of individual intraday traders experienced losses in the financial year 2022-23 (FY23).

Unprecedented Surge in Participation

One of the key highlights of SEBI's study is the remarkable increase in intraday trading activity. The number of participants in the equity cash segment soared by more than 300% in FY23 compared to the fiscal year 2018-19 (FY19). This surge indicates a growing interest among individuals to engage in intraday trading, despite the associated risks.

Losses Outweigh Profits for Most Traders

The SEBI study, which underwent peer review by experts from academia, brokers, and market specialists, reveals that approximately one in three individuals trading in the equity cash segment engage in intraday trading. However, the statistics are alarming: 80% of traders with frequent trading activity (more than 500 trades in a year) ended up incurring losses. This trend is particularly pronounced among younger traders under the age of 30, with 76% of them experiencing losses in FY23.

The Cost of Trading

The financial burden on traders extends beyond just the losses incurred. The study highlights that loss-makers spent an additional 57% of their trading losses on trading costs in FY23. In contrast, profit-makers spent 19% of their trading profits on trading costs, emphasizing the financial strain on those who do not achieve profitability.

The Demographics of Trading

SEBI's analysis also underscores the changing demographics of intraday traders. The share of young traders (below 30 years) has significantly increased to 48% in FY23 from 18% in FY19. This shift suggests that younger individuals are increasingly venturing into the high-stakes world of intraday trading, often with unfavorable outcomes.

Comprehensive Analysis

Covering the periods of FY19, FY22, and FY23, SEBI's study provides a thorough analysis of trading trends before and after the pandemic. The study is based on a sample of individual clients from the top 10 stock brokers, representing about 86% of the individual client base in the equity cash segment during FY23.

Final Thoughts

While intraday trading offers the allure of quick profits, SEBI's study serves as a stark reminder of the inherent risks. Aspiring traders, especially the younger demographic, should approach intraday trading with caution and be aware of the high probability of losses. Consulting with a qualified financial advisor is crucial to navigating the complexities of the stock market and making informed investment decisions.

Disclaimer: This blog is for informational purposes only and should not be considered financial advice. Always consult with a qualified financial advisor before making investment decisions.