A recent SEBI study shows that Indian retail investors are bleeding about $12 billion every year in futures and options (F&O) trading.
How big is the loss?
SEBI data says around 90% of people who trade F&O end the year with a loss. The average loss for a typical 30‑40‑year‑old male from a small town is about ₹1 lakh (≈ $1,200) each year.
Why do most retail traders lose?
The market is split into two very different sides:
- Retail traders: First‑time investors using mobile apps, often from small towns.
- Institutional desks: Companies with high‑speed computers, massive data sets and PhD‑level algorithms.
The institutions have a clear edge. When a retail trader does not have a measurable advantage, they are not really competing – they are simply providing the other side with business.
Who feels the pain?
The hardest hit are middle‑class earners aged 30‑40 who are already juggling loans, family expenses and limited savings. Money that could have been spent on daily needs or saved for the future is instead flowing to large financial firms, both in India and abroad.
What can be done?
Experts are urging regulators to put limits on F&O trading for retail investors, similar to gambling restrictions. They argue that even modest curbs could return $8‑12 billion to the economy, boosting consumption and helping the middle class.
- Reduce easy leverage on trading apps.
- Increase education about the risks of derivatives.
- Introduce caps on position sizes for non‑professional traders.
Potential economic impact
If SEBI implements some restrictions, the stimulus could add about 1.8% to India's GDP, roughly ₹6.3 trillion, according to the analysis. Even without curbs, the benefit would still be around 1.6% of GDP, but stronger measures would help recover losses that the middle class suffered from 2019 to 2025.
Bottom line
F&O trading is currently a money‑draining activity for most Indian retail investors. Without better safeguards and clearer education, the trend is likely to continue, enriching large institutions at the expense of everyday households.
Remember, this is perspective, not prediction. Do your own research and consider speaking with a certified financial adviser before making any investment decisions.