People lose money in equities primarily due to behavioural mistakes, lack of knowledge, and treating the market like a casino (especially F&O), not because the market itself is rigged.
While the Indianmarket (Nifty/Sensex) has delivered strong long-term returns of around 12-15% CAGR over decades for disciplined investors, most retail participants lose money. This is particularly true in short-term trading and derivatives. SEBI Data on Losses show a harsh reality in equity derivatives (F & O):
In FY25, 91% of individual (retail) traders lost money. Aggregate net losses reached Rs1.06 lakh crore in a single year (up 41% YoY).
In the FY22–FY24 period, 93% of individual F&O traders lost money, with total losses exceeding Rs1.8 lakh crore over three years.
Options trading is especially brutal for retail (most losses happen here). Futures are slightly better but still loss-making for most individuals. Cash market (actual buying of shares) sees fewer catastrophic wipeouts, but many still underperform or lose due to poor decisions.
Why Are These Problems Amplified?
Retail boom post-2020: Millions of new investors entered via zero-brokerage apps.
Social media influence: Telegram channels, influencers, and "guaranteed tips" create massive herd behaviour.
F&O structure: Extremely retail-friendly but tilted against them (high leverage + time decay in options).
High costs: STT makes frequent trading very expensive compared to many other countries.
Recency bias: Bull runs create overconfidence; corrections cause panic exits.
Long-Term Investing vs Trading
Active trading/F&O: 9 out of 10 lose money
Long-term investing in quality companies or index funds: Historically creates wealth, but requires patience and discipline. Most retail investors still underperform because they trade too much or pick bad stocks.
Global studies (and Indian patterns) show that the average individual investor underperforms the market significantly due to overtrading and behavioural biases.
The ones who make money consistently treat equity as long-term investing with proper risk management and knowledge, not as speculation or gambling.
