Why 9 in 10 F&O Traders Lose Money: Lessons from SEBI’s Latest Study
Futures and options trading looks exciting on social media. Small capital, fast moves and screenshots of huge profits make it seem like the quickest route to wealth. SEBI’s own data tells a very different story.
In FY25, over 91% of individual traders in India’s equity derivatives segment lost money. This guide explains what SEBI found, why F&O traders lose money so consistently, and what you can do differently.
What SEBI’s study found
SEBI has now studied retail F&O results across several years, and the pattern is remarkably stable.
| Period | Share of individual traders who lost money | Net losses |
| FY22 – FY24 (three years) | 93% | Over ₹1.8 lakh crore in aggregate |
| FY24 | About 91% | About ₹74,812 crore |
| FY25 | Over 91% | ₹1,05,603 crore |
The FY25 study covered the top 13 stock brokers, with a combined base of around 96 lakh unique F&O traders. Net losses widened 41% year on year, even after SEBI introduced new rules to cool speculation.
Participation did fall. The number of unique individual traders declined from 61.4 lakh in the first quarter of FY25 to 42.7 lakh in the fourth quarter. Reports on the FY26 data suggest nearly nine in ten traders still ended the year in losses, with option trading driving the bulk of them.
SEBI now requires brokers to show a risk disclosure at login, reminding users that nine out of ten individual F&O traders make losses.
Why do most F&O traders lose money?
The losses are not bad luck. They come from a small set of repeated behaviours.
1. Buying cheap, far out-of-the-money options
Many beginners buy low-priced options hoping for a big jump. Most of these options expire worthless. The low price reflects a low probability of profit. Learn the difference in option buying vs option selling.
2. Trading close to expiry
Options lose time value fastest in the final days before expiry. Traders who hold options into expiry often watch their premium melt even when the market barely moves. This is theta decay, explained in our guide to option Greeks.
3. Excessive leverage
F&O lets you control a large position with a small amount of money. That magnifies gains, but it magnifies losses too. A normal market move can wipe out a large part of a small account.
4. Ignoring transaction costs
Brokerage, exchange charges, STT, GST and stamp duty add up quickly for active traders. SEBI’s figures on net losses include these costs. Frequent trading can turn a break-even strategy into a losing one.
5. No position sizing or stop loss
Many traders risk too much on a single trade and refuse to exit a losing position. One bad trade can erase weeks of gains. The fix is covered in our risk management and 1% rule guide.
6. Emotional trading
Fear of missing out, revenge trading after a loss and overconfidence after a win all lead to poor decisions. See 9 common trading mistakes beginners make for practical fixes.
What SEBI changed to protect traders
From October 1, 2024, SEBI introduced a set of measures to strengthen the equity index derivatives framework. These included larger contract sizes, fewer weekly expiries, upfront collection of option premium and higher margins near expiry.
The goal was to reduce excessive speculation by small traders. The data shows participation fell, but the percentage of loss-making traders remained close to 91%. Rules alone cannot fix trader behaviour. Education and discipline have to do the rest.
How to be among the few who survive
There is no guaranteed way to profit in F&O. But you can stack the odds in your favour.
- Learn before you trade. Understand futures, options, pricing and Greeks before risking money.
- Start with the cash market. Build chart-reading and risk skills in equity first, where leverage is lower.
- Risk a small, fixed amount per trade. Many disciplined traders cap risk at 1–2% of capital per trade.
- Avoid lottery-style option buying. Focus on setups with a clear logic, entry, target and stop loss.
- Track every trade. Record entry, exit, reason and outcome. Review weekly.
- Account for all costs. Include every charge when judging whether a strategy works.
Is F&O trading bad for everyone?
Not necessarily. Futures and options are useful tools for hedging a portfolio and for experienced traders with a tested process. The problem is not the product. The problem is untrained traders using leveraged products without a plan.
If you want to trade derivatives, invest in proper training first. A structured course should teach you strategy, but spend even more time on risk. Upside’s Option and Future certification course covers options, futures and risk management through classroom training in Dadar and Thane. Explore our courses.
Frequently asked questions
What percentage of F&O traders lose money in India?
According to SEBI’s FY25 study, over 91% of individual traders in the equity derivatives segment made a net loss.
How much did retail traders lose in F&O in FY25?
Individual traders’ net losses were ₹1,05,603 crore in FY25, up 41% from about ₹74,812 crore in FY24.
Why do option buyers lose money?
Most option buyers lose because of time decay, buying far out-of-the-money options, trading near expiry and lacking a stop loss or position sizing plan.
Should beginners trade F&O?
Beginners are usually better off learning the cash market and risk management first. F&O should come only after proper education and practice.
Is option selling safer than option buying?
Option selling has a higher win rate but carries large, sometimes unlimited, risk. Neither is automatically safe without risk management.
Learn the rules before you play the game
SEBI’s data is a warning, not a verdict on you. The traders who survive in F&O are the ones who treat it as a skill, manage risk and avoid emotional decisions. Want to learn F&O the right way? Visit Upside at our Dadar branch or check the admission process.