SEBI report unveils shocking insights into intraday trading

Want to know the quickest way to lose your money? Try intraday trading. A recent SEBI report disclosed that seven out of 10 intraday traders incurred losses between FY19-FY23. Not just that, the report highlighted some startling figures pertaining to intraday trading. Here are the key highlights.

Highlights of SEBI's intraday trading report

• Intraday trading is on the rise: Between FY19 and FY23, the number of intraday traders skyrocketed a massive 4.6 times.
  
• Small traders are fueling this growth: Small traders, i.e., those with an annual turnover of less than Rs 50,000, accounted for 56 per cent of all intraday traders in FY23, up from 27 per cent in FY19. However, the bottom 78 per cent of traders, which includes all the small traders, contribute only one per cent to the total intraday turnover.
  
• The bull run has not helped: Despite the current rally in the market, intraday traders continue to see red. Only 29 per cent of intraday traders made profits in FY23, down from 35 per cent in FY19.

In the market, for every loss, there is a gain. So, who is gaining from this influx of traders? The government and exchanges. Trading costs accounted for 57 per cent of the losses incurred by intraday traders.

In fact, trading costs also contracted the earnings of intraday profit makers. Overall, trading costs were around 19 per cent of the total profits made by intraday traders between FY19-23. Considering that traders also had to pay a 15 per cent short-term capital gains tax (now 20 per cent), their post-tax gains do little to justify partaking in trading.

What long-term investors can learn from this

SEBI's report underscores how speculation opens the door for losses. Also, if you think experience can help you succeed in trading, think again. Around 54 per cent of consistent traders, i.e., those with a trading history of three years or more, incurred losses in FY23. Additionally, 53 per cent of traders above the age of 60 faced losses.

So, the secret mantra for finding success in the equity market remains the same: Go for the long haul. Find a fundamentally strong company and hold it through thick and thin.

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