9 Out of 10 Traders Lose Money. Here Is What the Other 1 Does Differently.
SEBI’s latest data on Indian derivatives traders suggests that experience is not the edge. Process is.
Picture a game where nearly nine in ten players finish the year behind, and playing longer makes the odds worse, not better. That is not a thought experiment. It is what SEBI found in its August 2026 study of individual traders in the equity derivatives segment.
Of the roughly 78.6 lakh individual traders in the regulator’s FY26 sample, 87.7% ended the year with a net loss. The more useful question is not why so many lose. It is what a different approach looks like.
One caveat first. The study describes patterns linked to losses. It does not profile profitable traders. So the habits below are not a secret formula. They are the practical opposite of the behaviours the data ties to losing.
Experience did not fix it
Most people assume that surviving a few years in the market makes you better at it. SEBI checked that assumption against real accounts.
About 91% of first-year traders lost money. Among traders with four straight years of participation, the figure was about 96.5%. Among those who traded in every year from FY22 to FY26, 65.6% lost money in every single year, and only 0.5% were profitable in all five. Of traders who had lost in each of the previous two years and kept going, 90% lost again.
Time in the market is not the same as skill. Repetition without a method simply repeats the result.
What the losing pattern looks like
Three patterns stand out in the data.
Intensity. Traders under 30 generated derivatives turnover of about 93 times the value of their equity portfolio, against about 20 times for traders over 50. Traders active on more than 100 days a year were 42% of the sample but accounted for 87% of total losses. Trading a lot, with very little capital behind it, went with worse results.
Concentration in short-dated bets. SEBI notes that a large share of trading sits in contracts close to expiry, where there is little time for a trade plan to play out.
Lopsided outcomes. Only 15.4% of trader-quarters were profitable. The median loss in a losing quarter was ₹10,525, more than double the median gain of ₹4,366 in a winning one.
Losses came more often and ran larger than gains. That is a risk-control problem before it is a prediction problem. Three habits address it directly.
Habit 1: Fix the risk before you click buy
Most beginners decide what to buy and then guess how much. Disciplined traders reverse the order. They choose the loss they can accept, then let the chart set the size.
The formula is simple:
Quantity = (Capital × Risk %) ÷ (Entry price − Stop price)
Get Elearnmarkets’s stories in your inbox
Join Medium for free to get updates from this writer.
Say you have ₹2,00,000 and accept a 1% loss per trade, which is ₹2,000. You plan to buy at ₹500 with a stop at ₹480. Your risk per share is ₹20, so the quantity is 2,000 ÷ 20, or 100 shares. The position is worth ₹50,000, but the planned loss is capped at ₹2,000. A target at ₹540 pays ₹40 per share for ₹20 risked, a 2:1 reward-to-risk ratio. Gaps and slippage can make a real loss larger than planned, so treat the stop as a plan, not a guarantee.
Why keep the risk so small? Because losing streaks are normal, and the arithmetic of recovery is brutal. After ten consecutive losses, a trader risking 1% per trade is down about 9.6% and needs about 10.6% to get back to even. At 5% per trade, the account is down 40.1% and needs 67.0%. At 10%, it is down 65.1% and needs 186.8%.
Good risk management is mostly arithmetic done calmly before the trade, when no money is on the line.
Habit 2: Write the plan while you are calm
A trading plan is a short document that answers the questions you will not answer well under pressure. Keep it to a page:
- What you trade. A small universe of liquid stocks you understand.
- Your setup. The exact conditions that qualify a trade, such as a trend, a level and a volume condition.
- Entry, stop and target. All three written before you place the order.
- Risk limits. Maximum risk per trade and a daily loss limit that ends your session.
- Review. A log of every trade with the reason you took it.
Writing rules down also tells you what to ignore. A stock screener can apply the same price, volume and technical filters every day, so your watchlist comes from criteria rather than from tips or whatever is moving on screen.
Timeframe matters too. Many beginners drift toward very short holding periods because the action feels exciting. A slower style such as swing trading means fewer decisions each week and wider stops, which position sizing can absorb by simply buying fewer shares. Neither style guarantees profit. The point is that a plan needs room to work.
Habit 3: Treat your mind as part of the risk
The data has a revealing detail. Between 86% and 89% of the traders who stopped trading in a given quarter had booked a loss in the quarter before. Yet large losses did not push everyone out. Around 88% of traders whose cumulative gains or losses exceeded ₹10 lakh kept trading.
Persistence can be a strength. After losses, it often becomes the urge to win it back, which is how a small loss turns into a large one. This is where trading psychology stops being a soft topic and becomes a risk control. Three simple rules help:
- Set a daily loss limit in advance and stop when you reach it.
- After a losing trade, wait before the next one.
- Record your emotional state in your trade log, not only the numbers.
A simple way to start
If you want to learn trading from scratch, the order matters more than any single indicator:
- Risk first. Position sizing, stop placement and daily limits.
- Price and charts. Trends, support and resistance, candlesticks.
- One or two indicators. Enough to confirm what price is already showing.
- A written strategy. Rules you can test.
- Practice. Paper trade for a month before using real money.
You can follow that sequence on your own, or learn trading through a structured course. What matters is that you finish the risk lesson before you take the first trade.
SEBI’s data cannot tell us who the winners are. It does show how most traders lose: too much activity, too little capital behind it, and losses that run bigger than gains. Avoid those three, and you have already separated yourself from most of the field.
