Uneven field

Why retail traders keep losing big in derivatives market

- NACHIKET KELKAR

India's derivatives market has exploded in recent years, drawing in millions of eager retail traders chasing quick profits through futures and options trading.

These contracts, where two parties agree to trade a stock at a set price on a future date, have fuelled a frenzy of speculation. In April 2025, India accounted for nearly 60 per cent of the 7.3 billion equity derivatives traded globally. But a recent study by the Securities and Exchange Board of India (SEBI) reveals a grim truth—91 per cent of individual traders lost money in the equity derivatives segment in the financial year ending March 2025.

The derivatives market has grown at a breakneck pace, with the average daily turnover soaring from ₹92,724 crore in 2019-20 to ₹2.64 lakh crore in 2024-25—a 23 per cent compounded annual growth rate. Many factors contributed to this surge. The Covid-19 lockdown left many with extra time and savings, prompting them to try their hand at trading. User-friendly apps, low-cost trading plans from discount brokers, and mobile trading tools made it easier than ever to jump in. Social media and financial influencers further hyped the market, turning trading into a cultural phenomenon.

But the excitement masks a harsh reality. SEBI's data, which tracks trading from 2021-22, shows that nine out of 10 individual traders lose money. Total losses have climbed from ₹40,824 crore in 2022 to ₹1.06 lakh crore in 2025.