Extended trading hours: 9 out of 10 traders already lose money, will it be all 10 now?

The experts said that brokers are also looking to reduce losses for investors as it will help them retain those clients

As NSE is proposing to extend trading hours, will the number of derivatives traders who lose money increase? A Sebi study said that 9 out of 10 F&O traders lose money. At Moneycontrol’s X (formally twitter) spaces session on September 26, experts said that lack of knowledge and lack of trading system results in retail traders losing money.

Chandan Taparia, Head of Technical & Derivatives Research at Motilal Oswal said that money is being lost by people, who don’t know how to trade in derivatives and those who don’t have risk management.

Kirubakaran Rajendran, founder of SquareOff.in, an algo trading firm said it's not lack of knowledge that is causing losses as there are plenty of resources on the internet that teach about derivatives and markets. “Now, there is a level playing field for all investors”. Rajendran attributed the losses to a lack of discipline. “There is no big entry barrier with respect to anybody who has any capital. But it is the discipline in how they react to the losses. This determines the overall success of a trader in the markets,” he added.

Rajendran said that brokers are also looking to reduce losses for investors as it will help them retain those clients. “I came across an article that said 90 percent of people, who opened a trading account blew it away in the first 90 days. So the broker is now more focused on retention than acquisition. So if they have to retain the clients only thing they have to focus on is that they shouldn't lose more money."

Rajendran reasoned that people can’t sit for 6 hours in front of a screen all the time and they will strategise their own trading system that works for them. If they can stick with the process, they could make profits in the long run, he said. “There will be a day after 10 years, where SEBI will do a report saying maybe 6 out of 10 people are making profits in derivatives. Definitely, some people will make money and some will lose money. But the number of profitable traders definitely will increase down the line,” he added.