Why 89% of day traders lose money

25 May 2026 · 10 min read · Behaviour / Data

Not investment advice. Analysis based on SEBI's publicly released study.

TL;DR. SEBI tracked 9.5 lakh F&O traders. 89% lost money. Average loss ₹1.1 lakh. Structural, not random.

The study

SEBI's January 2023 study covered 9,46,427 unique traders across FY 2021-22 and FY 2022-23.

Metric	Value
Total studied	9,46,427
Loss-makers	89%
Avg loss / loss-maker	₹1,10,000
Profit-makers	11%
Avg profit / profit-maker	₹1,50,000
Net retail outflow	~₹41,000 cr
Median age	30
% continued despite losses	~75%

The money went to brokers, government (STT + GST), exchanges, market makers, and professional desks.

Why it happens

1. Transaction costs eat edge

ATM NIFTY option trader: brokerage ₹20-100/order, STT 0.0625%, 18% GST, exchange + stamp. 20 trades/day on small account ≈ 0.5-1% equity/day in costs → 100%+ annual hurdle.

2. Win-rate trap

OTM sellers: 70-85% win, rare massive losses. Buyers: 25-30% win, occasional big wins. Both ≈ break-even gross. After costs, both lose.

3. Behavioural biases

Cut winners early, let losers run.
Overconfidence.
Recency bias from 2020-21 bull market.
Loss chasing — 75% kept trading despite losses.

4. Information asymmetry

Retail vs co-located prop desks with microsecond feeds. Phone app + YouTube tips is outmatched.

The 11% who profit

40-60 age, not 20-30.
Trade less, not more.
Larger accounts.
Top 1% earns the bulk.

If you still want to trade

Paper-trade 6 months.
Risk <1% equity / trade.
Trade less.
Define edge in numbers. If you can't, you don't have edge.
Track post-tax post-cost CAGR.

Bottom line. Starting out? Low-cost index funds + long horizon. If you really want to trade: treat it like a startup. Expect to lose seed. 5-year runway. Real job funding it.

Source

SEBI, "Analysis of Profit and Loss of Individual Traders Dealing in Equity F&O Segment", FY 2021-22 to FY 2022-23.