Been thinking about this after all the talk on trader losses.
Not PMS or funds. just individuals trading their own money.
Any idea how many people are actually at that scale?
what’s the point in knowing this and anyways no one has this information apart from broker
There is a sebi report on the same is published,I forget the exact data but it is very low percentage.
Not sure about the capital they actually deployed,
but around 30,000 individuals who participated in F&O in FY 2024
had an annual income of >1Crore (self disclosed).
Source: SEBI | Study - Analysis of Profits & Losses in the Equity Derivatives Segment (FY22-FY24)
@Aaron_Rego what’s on your mind to explore the scale of high-capital individual traders?
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@cvs Hey bro , this data is crazy, i mean no doubt SEBI says 9 out of 10 investors lose money in FNO. Also the less the annual income the more the losses.
I think no matter how many rules SEBI brings in, things won’t really change unless people change their mindset.
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IMHO, this will successfully happen over time (several years?), assuming the effort to increase financial-awareness / economics-education continues (in school and college curriculums, as well as in the markets).
Until the baseline awareness improves, a few seemingly unpopular measures will hopefully limit the losses. 
On a somewhat related note, my personal yardstick (of course, not a perfect measure) to estimate financial maturity / understanding of economics is, how often do i hear folks around me arguing along the lines of -
“I paid XYZ income-tax last year, still the pothole in front of my house is not filled!”
FWIW, the recent trend using the above yardstick is not a promising one. 
It points to a declining financial-maturity/understanding of economics even among otherwise well-educated and productive members of the society.
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People taking dumb risks will lose.
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But for those who are working and trying things responsibly, a big barrier is transaction costs which are extremely high, and that likely also effects slippages as a double whammy.
Make a net total of how much losers lose. A huge part of that will be transaction taxes taken by the govt.
@SpacemanSpiff Well, speaking of transaction cost, don’t you think that STT is basically TAX on tax bez when you trade, you pay tax, then again capital gain.
Maybe I am missing something , can anyone clarify is my thinking is correct
The impact of transaction costs on the losses of individual traders in F&O is also quantified in the oft-quoted SEBI report Analysis of Profits & Losses in the Equity Derivatives Segment (FY22 - FY24).
Over the years, apparently the transaction costs have accounted for approximately ~25-30% of the amount lost by traders in F&O…
…with ~71% of the transaction cost was accounted for in brokerage and exchange-fees,
and ~28% of it accounting for STT, GST, and stamp-duty.
Note: Some of the amounts specified in section 5.4 are cumulative numbers over multiple years (FY22-FY24).
Hence, such absolute numbers cannot be used in comparisions as-is with the year-wise numbers available in section 5.3.
Going by the numbers in the report, it appears that ~28% of ~30%
i.e. less than 9% of the amount lost by individual traders in F&O (in FY2024)
was due to the various taxes and duties involved.
When it comes to folks making profits in F&O,
the same report goes on to state that…
Profit-Makers incurred ~22% transaction costs as percentage of gross profits
(i.e. trading profits before accounting for transaction costs) in FY24.Loss-Makers incurred ~27% transaction costs, in addition to their gross loss
(i.e. trading loss before accounting for transaction costs) in FY24.
…the aggregate data appears to point towards ~22% of gross profits being transaction-costs.
(of which the fraction accounted for by various taxes/duties involved in unclear from a quick read.)
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Its tax before making profit. And yes income tax on top of that if you happen to make money.
They even expect you to magically know your full year income - an impossible task in trading. So there is interest and surcharge on top of everything. But atleast all of this is after profit, transaction taxes are before profit, they will hinder volume and people providing liquidity will need that much more margin increasing slippages.
Dunno how they have calculated exactly, but the ratio will probably be higher for long term losing traders taking good number of trades.
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I make decent money, and i pay 10-25% in transaction costs roughly. This figure can be much higher in difficult years, i have seen it at 50% once after which i had to improve my systems.
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So people who come and quickly go out with a bang, for them ratio will be very low as they go out quickly. For them Transaction taxes dont really matter.
But people who are doing the right thing and slowly trying to gain competence for them the ratio will be higher as things net out and whats left are expenses and actual losses. -
Slippage is also impacted by this. People who provide liquidity need to cover for transaction costs and then some profit, so that will likely lead to larger loss as you don’t get fills at prices you want. Except for the most liquid stuff, this will likely be also a factor. This can be a multiple of transaction costs. 1x is a good estimate initially, but these days i am seeing 2x-3x. A good part of this will be due to transaction costs. All of this is hidden within your net loss. In highly liquid instruments, perhaps options, this might be lower.
This is fno. Look at cash traders and STT is an obscene cost. Cash overnight and it multiplies few times again.
STT in Futures has also been increased massively recently so new data will have higher ratio esp if you can remove options.
Options has the least impact from STT, and thats one likely reason why people shifted to it ( along with leverage). And after that regulators start wondering why are people trading in options.
Lastly, this average includes both intraday and overnight fno traders ? intraday traders have a much higher impact from this. So costs are not same for all.
yeah, note above points. I remember the old joke about averages.
Many large traders therefore look to shift to Singapore/UAE etc. Same instrument if we trade on gift city will have much better treatment. So foreign capital gets treated favorably vs local capital.
Anyway, for me this is probably an edge too. Competition reduces because they cant quite cross the high barrier. So i am ok with it, but doesn’t change that govt makes money off losing traders and charges excessively on winning traders.
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Good to know that it is being reviewed.
I doubt there is any contention against the fact that it is punitive/deterrent in nature.
However with regards to double-taxation,
in absence of any express legislation, previously the Supreme Court of India has held that there is no constitutional provision that prohibits the imposition of double taxation.
Also, apparently it has been hard to prove that a case involves double-taxation, without the taxes being
- imposed on the same property and
- by the same state or government and
- during the same taxing period and
- for the same purpose.
Source: Principle of Double Taxation: A Jurisprudential Approach
Will be interesting to monitor the developments on this aspect specifically about STT.
Since, a likely interpretation of all the persistent actions of the regulator is that the regulator continues to believe that the activities they are trying to deter are leading to unsustainable losses. Losses that they believe are a detriment to a healthy market in the long run. A closely-related concern would be that even if STT were to be abolished in specific circumstances (say due to a court order), the regulator is free to levy alternate deterrents in its place. In such a scenario. Hopefully, the alternate deterrent is a more fine-grained one that doesn’t have unintentional side-effects similar to what @SpacemanSpiff highlighted in the above post.
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Every year there is some noise around STT and nothing happens. Dont expect any different. Even if by sheer luck court says something against it, our dear politicians will pas some law or something to fix it.
One point is that the deterrent aspect is only for those who reach a stage where they begin to understand the impact of different things on trading. Most dont really get there in a meaningful way. They are the ones who actually have a chance of becoming profitable or are profitable.
For the just enough profitable, changes will lead to shifting to more favorable markets like options.
And people gambling (intended or not … ) will likely dont care as they are attached to pnl changes of small number of trades and probably will never even look at the costs. This is probably the category that SEBI wants to protect. This is my view anyway.
Active traders like me are one rule away from not being able to trade, as always. So very important to have hands in multiple places and get capital to a place where there is no pressure.
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I am one of them
How’d you get your money?