You have probably seen the number already, in a forwarded screenshot or a YouTube thumbnail with a red arrow through a piggy bank. 93%. It gets repeated so often that it has become a kind of background noise, the financial equivalent of a smoking warning on a cigarette pack. Everyone has read it. Almost nobody has read what it actually says.

That is the problem worth fixing. Not the headline, the mechanism underneath it. A statistic tells you what happened. It does not tell you why, and it definitely does not tell you what to do differently on Monday morning. So this piece is not another retelling of the SEBI study. It is an attempt to open the number up, look at the machinery inside it, and hand you something you can actually use the next time you place an order.

One more thing before we start. NiveshX publishes equity research, entry, target, stop-loss, and market commentary. It does not touch your money, does not place trades on your behalf, and this article is not a pitch for F&O strategies. If anything, it is the opposite. Read it as background you need before you touch a derivatives contract at all.

The finding, stated precisely

In September 2024, SEBI released a study examining individual traders in the equity futures and options segment across three financial years, FY22 through FY24. The result: 93% of individual F&O traders lost money over that period, with aggregate losses exceeding ₹1.8 lakh crore. The study also noted that the average loss for a loss-making trader was roughly ₹2 lakh over the period.

This was not SEBI's first look at the question. An earlier study, published in January 2023, had already found that 89% of individual F&O traders lost money in FY22 alone. The 2024 number is higher and covers a longer window. Read together, the two studies do not show a one-off bad year. They show a persistent, worsening pattern across a bull market, not a crash.

That last part deserves a pause. FY22 to FY24 was not a period of falling markets. Nifty made new highs repeatedly across that stretch. Retail traders were losing money on derivatives in large numbers while the broader index was going up. That single fact should tell you this is not primarily a story about market direction.

What the number does not mean

This is the part almost every article skips, and it is the most abused statistic in Indian financial media. The 93% figure is about equity futures and options — leveraged, expiring, derivative contracts. It is not about equity delivery investing. It is not about a person who buys shares of a company and holds them.

Those are structurally different activities dressed up in the same word, "trading." A delivery investor buying and holding shares carries market risk, plainly, and can lose money if the business or the market falls. But that investor is not fighting a clock. A share does not expire on the last Thursday of the month. It does not decay in value purely from time passing, the way an option premium does. It does not force a decision by 3:30 pm on a specific date regardless of what you think is about to happen.

F&O trading bolts a second layer of risk onto market risk: leverage and time. You can be right about the direction of a stock and still lose the entire premium, because you were early, or because the move happened one day after your contract expired. None of that applies to a person holding shares in a demat account with no expiry date attached.

So when someone uses the 93% number to argue that "the stock market is rigged" or that "trading of any kind loses money," they are stretching a specific, narrow, well-defined finding about leveraged derivatives into a blanket claim about investing. SEBI's own release does not make that claim. It is worth being precise about this, because the confusion is not accidental. It benefits people who want to scare you away from markets entirely, or, on the other end, people who want to sell you a course claiming they have cracked the code the other 93% missed.

Why derivatives are structurally hostile to the retail trader

Set aside behaviour for a moment. Even a perfectly disciplined trader is up against a set of structural forces in F&O that simply do not exist, or exist in much smaller form, in plain equity investing.

Leverage cuts both ways, but losses come faster

A futures contract lets you control a position many times larger than the cash you put down. That magnifies gains, yes, but it magnifies losses on the same multiple, and losses arrive on a smaller price move than most beginners expect. A 2% adverse move against a 5x leveraged position is not a 2% loss on your capital. It is closer to 10%. Do that a few times in a volatile week and the account does not just shrink, it can be wiped out, faster than the trader's mental model of "a small move" accounted for.

Time decay works against the option buyer, every single day

Most retail F&O activity in India is concentrated in buying options, particularly weekly index options around Nifty and Bank Nifty expiry. An option has a fixed lifespan. Every day that passes without the underlying making the move you predicted, a portion of the premium you paid erodes, whether or not the stock or index has moved against you. You can be directionally right and still watch the position lose value, simply because you were right too slowly. The seller of that option, very often an institution or a well-capitalised proprietary desk, is structurally positioned to collect that decay. You are not trading against the market in the abstract. You are trading against a specific counterparty whose business model is built around exactly that decay.

Costs compound across high turnover

Every F&O trade carries transaction costs: brokerage, exchange charges, Securities Transaction Tax, GST, stamp duty. Individually small. But retail F&O activity tends to involve very high turnover, in and out multiple times a day around a single expiry, because the instruments are cheap to enter and the temptation to keep trying is constant. Costs that look trivial on one trade stop looking trivial once you multiply them by dozens of trades a week. A trader can be roughly breakeven on raw market calls and still lose steadily once costs are layered on top, trade after trade.

You are usually the least informed person in the trade

On the other side of most retail F&O trades sits an algorithmic desk, a proprietary trading firm, or an institutional participant with faster data, cheaper execution, and no emotional stake in being right about a single position. This is not a conspiracy. It is simply who has the capital and the infrastructure to run derivatives strategies at scale. A retail trader placing a few lots on a hunch is participating in the same order book as firms running statistical models across thousands of contracts a second. The playing field was never level, and derivatives, more than plain equity, is where that gap matters most.

The behavioural mechanisms that turn a bad structure into a wipeout

Structure explains why the odds are poor. Behaviour explains why so many people still lose more than the structure alone would predict. These patterns show up again and again, and you have probably done at least one of them.

  • Revenge trading. A loss stings, and the instinct is to take it back immediately, often with a bigger position than the one that just failed, on a setup that was not actually planned, just reactive.
  • Position sizing driven by conviction instead of risk. "I was very sure about this one" is not a risk management method. It is how a single trade takes down a month of gains.
  • No pre-defined exit. Entering a trade without deciding, in advance, the exact price at which you are wrong. Without that line, every losing trade becomes a debate instead of a decision.
  • Averaging down into a loser. Buying more of a falling position to lower the average cost, without any new information, purely to make the account feel better. This turns a contained loss into an uncapped one.
  • Mistaking a bull market for personal skill. A rising Nifty lifts most positions for a while. Profits during a broad uptrend get attributed to a trading system that was never actually tested against a falling or sideways market.
  • Survivorship bias from social media. The trader who is loud online is, almost by definition, the one currently winning. The other 93% are not posting screenshots. What you see is a curated, unrepresentative sample, and it quietly resets your sense of what is normal.

Notice that none of these are about market prediction. They are about process, or the absence of one. That is the part within a trader's control, and it is also the part almost nobody works on, because reading charts feels like progress and writing down a risk rule feels like paperwork.

Why more screen time does not fix it

A common instinct after a loss is to watch the market more closely. Add another monitor. Follow more channels. Take more trades to "get the feel back." This rarely works, and there is a simple reason: screen time increases exposure to the structural disadvantages above without changing any of them. More trades means more transaction costs, more decay if you are buying options, more opportunities for a revenge trade, more chances to abandon a plan mid-session because the price is moving in front of you in real time.

Screen time is not the same as skill. Skill, in this context, is a small number of specific habits, applied consistently, mostly away from the live screen. What follows is what those habits actually look like.

What actually changes the distribution

None of this is exotic. It is unglamorous, and that is exactly why most traders skip it.

  • A written thesis before entry. One or two sentences, before you place the order, stating why you are in the trade and what would prove that thesis wrong. If you cannot write it down, you do not have a plan, you have an impulse.
  • A pre-defined stop-loss, set before entry, not decided emotionally after the price starts moving against you.
  • Position sizing calculated from the stop-loss distance, not from how confident you feel about the idea.
  • A fixed maximum risk per trade, as a percentage of total capital, applied the same way whether the last trade was a win or a loss.
  • A review process. A trade log, reviewed weekly, that separates trades that lost because the market did something unexpected from trades that lost because the plan was not followed.

The common thread is that every one of these happens before or after the trade, never during it. That is deliberate. Decisions made while a position is open, with money visibly moving, are the least reliable decisions a trader makes. Good process moves as much of the decision-making as possible to a calmer moment.

Position sizing off the stop, worked through with numbers

This is the one habit from that list that is genuinely mechanical, so it is worth doing the arithmetic once, slowly, so you can repeat it yourself.

Read that last line again. The stop distance and the quantity move together, in opposite directions, so that the rupee amount at risk stays constant. That is the entire discipline. Most traders do it backwards: they decide how many shares or lots they want to hold based on excitement about the idea, and only then discover, almost as an afterthought, how much they stand to lose if it goes wrong. Flip the order of operations and the position size becomes a consequence of your risk tolerance instead of a guess.

The bull market disguise

It is worth returning to the fact that FY22 to FY24 included a strong overall market. A trader who bought calls, sold puts, or ran long futures positions through much of that stretch would have had periods of green screens purely from broad market direction, independent of any actual edge in reading price action. That is the most dangerous kind of profit, because it teaches the wrong lesson. It feels like validation of a system. It is often just a rising tide.

The honest test of a trading approach is not how it performs when everything is going up. It is what happens in the sideways, grinding months, or the sharp corrections, when leverage and time decay stop being background noise and start being the entire story. Most traders never run that test on themselves until the market runs it for them, without asking permission.

An honest close

Nothing in this article, and no research service, registered or otherwise, can remove market risk. SEBI registration means a research analyst has met certain standards of disclosure, qualification, and conduct. It does not mean a recommendation cannot go wrong, and it does not mean the person or platform issuing it is exempt from the same market forces described above. Every trade you take, on the back of anyone's research, carries the possibility of loss. Anyone telling you otherwise, registered or not, is the one to be suspicious of.

What you can control is smaller than what you cannot, and that is uncomfortable to sit with. But it is also enough. A written thesis, a stop-loss decided in advance, a position size that answers to the stop rather than to how you feel about the idea, a cap on what a single trade can cost you, and a habit of reviewing what actually happened against what you planned. None of that guarantees a profit. It is simply the difference between gambling and running a process, and over enough trades, that difference is the whole game.