99% Traders LOSE MONEY While SEBI Does Nothing to Help?!

Summary

The video discusses a new SEBI report on stock market trading losses, revealing that 93% of retail traders lose money, with the bottom 3.5% losing an average of 28 lakh rupees each. It highlights the high taxes and charges, such as ST and brokerage fees, that contribute to the losses. The speaker criticizes the lack of regulation on advisory services and questions the government's high taxes without adequate awareness programs. The conversation also touches on the geographical spread of traders, the impact of algo trading, and the need for a level playing field in the market.

Takeaways

• 📉 The SEBI report indicates that a significant majority, 93%, of retail traders incur losses in the stock market.
• 💹 Only 1% of retail traders make substantial profits, exceeding one lakh rupees, highlighting the difficulty of making significant money.
• 💸 The bottom 3.5% of traders reportedly lose an average of 28 lakh rupees each, underscoring the severity of losses for some.
• 📊 The report's findings are consistent over the last three years, suggesting a persistent trend rather than an anomaly.
• 🚫 The report focuses on individual traders, excluding large entities like ultra-high net worth individuals who trade through companies to minimize tax liabilities.
• 📈 Increasing taxes on stock trading, such as the Securities Transaction Tax (STT), have risen dramatically in the past decade, with little evidence of the revenue being used for public awareness campaigns.
• 💼 The report does not account for advisory fees, a significant cost for many retail traders who seek tips and advice, potentially exacerbating their losses.
• 🏦 SEBI's licensing of advisory services is questioned, given the low success rate of traders, with concerns about the criteria and effectiveness of such services.
• 🌐 Geographical data from the report shows a higher concentration of active traders in North Indian states, possibly indicating economic motivations for trading.
• 📊 The report emphasizes the use of algorithms by large players, which can create market volatility and may be perceived as market manipulation by retail traders.

Q & A

What is the main topic of the discussion in the transcript?

The main topic of the discussion is the new report by SEBI on the losses incurred by retail traders in the Indian stock market, specifically focusing on the financial year 2024 and the last three years.

According to the transcript, what percentage of retail traders lose money in the stock market?

The transcript states that 93% of people lose money in the stock market.

What does the report reveal about the profits of the remaining 6% of traders?

The report reveals that among the remaining 6% who make money, less than 1 lakh rupees profit is made by most, and only 1% of retail traders make more than one lakh rupees.

How much money do the bottom 3.5% of traders lose on average, as per the report?

The bottom 3.5% of traders are losing an average of 28 lakh rupees each.

Why does the transcript suggest that the report's findings are not applicable to all traders?

The report's findings are not applicable to all traders because it only considers individual traders and not those trading through companies, which often includes big clients or ultra-high net worth individuals.

What is the transcript's opinion on the government's increasing taxes on stock trading?

The transcript suggests that while taxes are increasing, there is a lack of awareness programs for retail traders, and the taxes do not seem to be used effectively to educate people about the risks of trading.

What is the role of advisory services in the losses mentioned in the transcript?

Advisory services are mentioned as a contributing factor to the losses as many inexperienced traders rely on them for tips, often leading to additional costs and losses.

What does the transcript suggest about the criteria for obtaining an advisory license from SEBI?

The transcript implies that the criteria for obtaining an advisory license from SEBI may not be stringent enough, as it does not necessarily require proof of successful trading history or profit.

How much money has been lost by retail traders in the last three years according to the SEBI report mentioned in the transcript?

According to the transcript, retail traders have lost approximately 1.8 lakh crores in the last three years.

What is the transcript's view on the geographical spread of traders in India?

The transcript suggests that there is a higher concentration of traders from North Indian states, possibly due to economic conditions, and that South Indian states are less represented.

What does the transcript suggest as a potential solution to reduce losses in the stock market?

The transcript suggests that SEBI could consider banning advisory services for cash market trading and implementing stricter regulations to level the playing field for retail traders.

Outlines

00:00

📈 Stock Market Losses and Individual Trading

The speaker begins by addressing a new report on stock market trading losses, highlighting that 93% of retail traders lose money, with only 1% making significant profits. The discussion emphasizes that the report focuses on individual traders and not corporate entities, which often trade through companies to avoid high taxes on profits. The speaker also points out that despite the high losses, the government continues to increase taxes like the Securities Transaction Tax (STT), drawing a parallel to how the government handles smoking and drinking by increasing taxes to fund awareness programs. However, the speaker questions the effectiveness of this approach in the context of stock market trading.

05:00

💼 The Role of Advisory Services in Trading

The speaker discusses the role of advisory services in stock trading, noting that many inexperienced traders rely on these services, often incurring additional losses. The conversation questions the criteria set by SEBI for issuing advisory licenses, suggesting that there should be a requirement for advisors to demonstrate their own successful trading history. The speaker also points out that the report does not account for advisory fees, which are a significant cost for traders. The discussion concludes with the speaker's opinion that SEBI should regulate or ban advisory services for cash market trading to protect retail investors.

10:02

💵 Transaction Costs and Their Impact on Traders

This section delves into the substantial transaction costs involved in stock trading, such as STT, brokerage fees, and GST, which can amount to thousands of crores. The speaker explains that these costs are not just a transfer of wealth from one person to another but represent a net loss for the system. The discussion highlights how these costs disproportionately affect retail traders, who often bear the brunt of these expenses without realizing significant gains. The speaker also touches on the irony of high taxes on property and equity investments, which are intended to discourage such transactions, while no such measures are in place for stock market profits that are often not taxed or subject to TCS.

15:03

🌍 Geographical Disparities in Trading Behavior

The speaker analyzes the geographical distribution of traders, noting that most of the active traders are from North Indian states, with South Indian states being less represented. This observation leads to a broader discussion about the economic conditions in different regions and how they might influence people's propensity to engage in stock market trading. The speaker suggests that economic prosperity in South India may reduce the appeal of stock market gambling, whereas economic struggles in North India might drive more people to seek quick solutions through trading.

20:06

🤖 The Influence of Algo Trading on Market Volatility

In this segment, the speaker discusses the impact of algorithmic trading on market volatility, suggesting that large hedge funds use algorithms to manipulate markets, causing rapid and significant price fluctuations. The speaker calls for regulatory measures to level the playing field for retail traders and prevent market distortions by big players. The conversation concludes with the speaker reflecting on their own trading performance and the varying degrees of success among different segments of traders, emphasizing the need for a balanced approach to trading that considers both individual and systemic factors.

Keywords

💡Eundo

Eundo likely refers to 'equity' in the context of the video, which pertains to shares or stocks in a company that investors can trade. The script discusses a report on equity trading losses, indicating that the term is central to the video's theme of financial trading and investment.

💡SEBI

SEBI stands for the Securities and Exchange Board of India, which is the regulator for securities markets in India. The script mentions SEBI's new report, highlighting its role in monitoring and reporting on the financial health of the trading market, which is a key theme of the video.

💡Retail Traders

Retail Traders are individual investors who trade for their personal accounts. The video discusses the losses incurred by retail traders, emphasizing the challenges faced by this group in the financial market, which is a central narrative of the video.

💡Losses

The term 'losses' is used extensively in the script to describe the financial outcomes for traders, particularly retail traders. It is a key concept as the video explores the high percentage of traders who are experiencing losses, which is a significant part of the video's message.

💡Profit

Profit is the opposite of loss and is discussed in the context of a minority of traders who are successful in making money. The video contrasts the small percentage of profitable traders with the larger group experiencing losses, illustrating the challenges of trading.

💡Tax

Tax is mentioned in the context of the government's role in regulating financial markets. The video discusses how taxes, such as Securities Transaction Tax (STT), have increased significantly over the years, affecting traders and reflecting a broader theme of government policy's impact on trading.

💡Advisory Services

Advisory services refer to companies or individuals providing advice on trading strategies. The script questions the effectiveness and regulation of these services, given the high percentage of traders who do not make money, indicating a skepticism towards the value of such services.

💡Algo Trading

Algo Trading involves using algorithms to execute trades automatically. The video suggests that large entities might use algos to manipulate the market, which raises concerns about fairness and transparency in trading, a key issue discussed in the script.

💡Geographical Spread

Geographical Spread refers to the distribution of traders across different regions. The video uses this term to highlight disparities in trading activity and economic prosperity between North and South India, adding a layer of regional analysis to the discussion.

💡Transaction Costs

Transaction Costs include fees and charges associated with trading activities. The video emphasizes the substantial amount of money lost to transaction costs, such as brokerage fees and taxes, which is a significant part of the overall financial loss discussed.

💡Tax Terrorism

Tax Terrorism is a term used in the video to describe the heavy taxation burden on common people in India. It is used to criticize the government's taxation policies, suggesting that they disproportionately affect retail traders and the common man.

Highlights

SEBI's new report reveals 93% of retail traders incur losses.

Only 1% of retail traders make significant profits exceeding one lakh rupees.

Bottom 3.5% of traders lose an average of 28 lakh rupees each.

The report is based on individual traders, not corporate entities.

Government's increasing taxes on stock trading despite high losses.

Question raised on the effectiveness of SEBI's advisory licenses.

50% of traders in the financial year are new, indicating a reliance on tips and advice.

Transaction costs, including brokerage and taxes, are significant and add up to thousands of crores.

1.8 lakh crore lost by retail traders over three years, with a significant portion going to taxes and brokerage.

The geographical spread of traders shows a higher concentration in North Indian states.

Use of algos by large entities to potentially manipulate the market is a concern.

The need for a level playing field and regulations to prevent market distortion.

The speaker positions himself outside the 93%, 6%, and 1% categories as he trades through his company.

The speaker will share his personal trading performance by October 2.

Transcripts

hello everyone uh today the Talk of the

Town is uh se's new report on eundo

trades and uh it is going all over the

places so I thought let's get it

clarified uh with Mr PR Sund sir sebi

has come out with a new report on the

eundo losses so how are you seeing this

can you please elaborate it see the C

has come out with this kind of report

earlier also uh there are some changes

last time they came out with the last

one year report uh where they said about

89% of the people lose money about 6% of

the people you know make money enough to

cover their charges so which means that

totally on a net basis 95% people lose

money only 5% make money out of that 5%

also only the top 1 person make good

amount of money the remaining people you

know just make some small

money now this report you know they've

given two separate report one for the

financial year 24 and the other one is

for the last 3 years the last three

years also it is more or less matching

this time they said 93% people lose

money and uh you know uh remaining 6%

you know they make money less than 1

lakh rupees profit so only 1% of the

retail Trad us make more than one person

one lakh rupes per but what is more

disturbing they say that about the

bottom 3.5% of the people on an average

they are losing 28 lakh rupees perom so

that's something very very

dising second thing

though uh this report you know uh

looking very shocking but we must also

understand that retail people

most of the retail people trade in their

individual name so this report is based

on the individual Traders usually the

big people Ultra clients they don't

trade in the individual name because you

know if they make a good profit they

will be required to pay very high tax so

they will be trading uh through a

company okay so this report is only

based on the individual Traders not the

companies okay right so therefore this

uh report is definitely uh looking

shocking but at the same time uh

naturally the question come to the mind

you know if so many people are losing

then why the government keeps on

increasing the taxes the St has been

increased I think 500

600% uh during the last 10 years St has

been increased four to five times in the

last four five six years so government

can give caution rights so for example

if people smoking or people drinking so

people government can't stop drinking or

smoking so they can increase the taxes

so I think that is the way that they're

increasing the sdt can we look at that

way see if you're talking about smoking

right uh the government want to how a

normal government should behave right uh

people are smoking that is very bad so

we need to create awareness among the

people we need to teach the people about

bad things about the smoking so to

create that awareness not to conduct

program awareness program we need money

so we don't have the money so therefore

we charge more tax on the cigarettes

that whatever the more tax is coming so

that money is being used to create

awareness but what happens in India you

know they just keep on increasing the

tax I don't think that they spend that

money for creating awareness so if this

is the case you know what is the

awareness that has been created among uh

retail people I'll give you one

example this report is only taking into

account the statutory charges the people

are paying people are paying brokerage s

St Duty those things only but however

this report does not take into account

one very important charge that people

spend advisory fee every time Dick and

Harry is running an advisory every day I

receive five to 10 calls sir we are

providing tips I used to ask what tips

you will provide sir we will tell you

which call option to buy which put

option to buy right so the question

is when the sebi knows that almost 99%

people don't make money why the sebbi is

giving so many licenses to people to run

this

advisory now next question okay now if

somebody is doing very well somebody's

has the capacity he want to help other

people nothing wrong in giving them

license know so that the people can be

benefited but what is the criteria for

that so does SE has any criteria like

you know tomorrow you want to go and get

the advisory license do they ask you

okay what is a guarantee that your

advice will work have you traded in your

own account at least for last 3 years

can you show me your trading profit

they're just putting some parameters

like educational qualification or

previous experience all the research and

certification has prescribed that but it

is not uh effective or it is not very

elaborate uh in the sense see you know

Indian education system you know a

person can you know mug up everything

can go to exam can pass the exam right a

person has passed the exam it doesn't

mean that he knows everything about the

stock market right and I I know one

trainer who who teach the people okay

and he has made about 80 CR rupes last

year but he himself doesn't

trade okay and but here the report says

that nobody's making profit so then what

is the criteria say for example if you

if let us say you want to teach okay I

plus two I remember how to set up a

nuclear reactor there is a lesson in

physics so people teach but they can't

go and set up a nuclear reactor that is

a different story but the thing is you

know uh the teacher teach number one the

teacher has a prescribed

qualification right that is a theory

part he gives as a student I'm also

receiving only a theory

part okay but if tomorrow the same

teacher come and tell me okay you do

this you take this you put it here you

you take atemp you do this then your

nuclear reactor will come definitely I

will ask the teacher what is your

experience have you set up a nuclear

reactor

yourself so teaching learning is

different but when I to do practically

you know the the question comes so here

you know first thing is that no I'm not

against teaching because I'm also

teaching I'm also trainer right in

training what we do okay you can do this

you can do this you can do that is a

teaching but we don't tell okay you buy

this call option you buy this put option

and every day I receive five to 10 calls

so okay fine let us say that you know

somebody has a skill he doesn't want to

trade he want to help okay fine but are

they asked to keep a record of the calls

that they provided and how much is the

profit made or how much is the loss made

right is there anything so you know uh

in the same C report it says 50% of the

Traders are new traders in this

financial year so they have never been

in a market so how come you know like

out of a total of approximately 1 CR

Traders 50 lakh Traders are new traders

who have no experience until last year

how can can they be professionals here

so definitely you know these people are

paying money to somebody getting the

tips right and in addition to the loss

in the market they are also losing money

to these advisory companies so in my

opinion the first thing what if the SE

is very much interested in ciling in

reducing the volume in fendo the first

thing the sebi should do they should

stop they should ban The Advisory on F

if any anybody want to do advisory let

don't do it for cash market right that's

a investment right for trading there

should not be any advis advisory

companies so coming back uh to the

earlier discussion what are the

transaction costs involved in this whole

scenario the number seems to be thousand

10,000s of crores and it is very

mindboggling numbers can you elaborate

on that see many people say you know

somebody's loss is somebody's gain that

is not true true if somebody is losing

100 rupees that 100 rupees is not the

gain of somebody else because this guy

who is losing 100 rupees also he has to

pay St stem Duty brokerage GST

everything the guy who is getting the

profit on the other side also he has to

pay s St D everything so therefore

whatever the money is lost okay then you

have to minus that

charges whatever the remaining comes

only that becomes is not a zero some

game is not a zero Su it's a negative Su

right so the SE report says during the

last 3 years about 1.8 lakh CR has been

lost by the retail people but it does

not mean that you know non- retail

people are the little bit of retail

people that 1% people it's not that they

made 1.8 lakh CR okay there St stamp

Duty GST exchange charges you know

brokerage so The Brokerage you know so

all this add up to about 50 to 60,000

crores The Brokerage alone in last 3

years is 25,000 crores right and just

imagine there are only five six top uh

broking companies in India and at the

end of the day they are the only people

who are making money exchange charges

exchange charges for 10,800 crores so no

matter now now we can understand why the

shares of BC and NC are hitting hitting

new highs all the time because one side

people are happy if their Shares are

going up on the other side people are

crying that they are losing a lot of

money into on the fundo

trades see share prices are going up

it's a cash market so cash Market has

nothing to do with no I was just

referring to the share prices of BC NSE

brokerage like Angel one etc etc so they

uh if you haveed if you have invested

money in those shares also then trading

also at least you know when you're

losing money in trading you gain

something there but the problem is that

most of the people who come to the

trading they are not invested they only

trade TR yes so that is a issue so the

thing is you know so much of money is

getting out of the system I'll just give

one example 1.8 lakh CR is been lost out

of that 1.8 lakh CR about 60,000 CR

would have gone for St st2 brokerage

this and that that remaining is 1.2 lak

CR and out of the 25 30,000 CR would

have gone to government k Inc tax right

okay now when we are talking about the

income

tax we have to talk one thing very very

specifically here very

interesting tomorrow suppose you want to

buy one property

abroad and or you want to go for some

medical or you want to education now the

government says you know uh we will

deduct tax uh tax collected at source

it's called TCS right recently broughten

yeah and for property and Equity

investment the TCS is so high it's 20%

if I want to send one CR 20 lakh you

know government will take away and I

will get it after one year two year when

I file the return right there is so much

tax terrorism in India but look what is

happening on the other side and uh more

than one lakh CR okay is

being made profit made by F and neither

they pay any tax to

India and nor they have any

TCS and most of the biggest problem is

that if you ask the government why did

you bring 20% TCS they will say no no uh

you may go and buy property abroad

you'll be sending lot of money right but

you are giving only Indian rup we have

to supply the dollar and we are a third

world country we don't have so much

dollar how can we supply all the dollars

to the people so that's why we want to

discourage that's why we put 20% EES but

if that is the logic one lakh CR is

given to

F this one lakh CR f are making the

profit they'll be taking it out when

they take it out the RBI will have to

supply the dollar so RBA happily

supplying the dollar right and the

government does not insist ECS the

government does not insist income tax so

do you say that like f should be brought

into the tax net in fundo trading that

is for government to decide but what I'm

saying that you know you are torturing

the common man and you are helping the

billionaires right so is it right or not

you

know I would say no if you're not

interested in taxing the F at least I

will say you reduce the tax for Indian

common people why so much of sat why so

much of stem Duty why so much of tax why

so much of GST right so but this is how

the things work right most of the people

a command man suffers one or two rich

people take away everything no TCS no

corporate tax no income tax know dollar

is being supplied so that's how

capitalism works right so yeah that that

that that's a thing right so is it right

or not okay so in this report uh like SE

has given some more details there is a

geographical spread among the Traders so

can you please elaborate on that or what

is your inference from this geographical

spread

uh see uh being a South Indian uh I feel

little bit Happy by looking at this

report because the report says you know

uh if you look at the top 10 states and

out of the top 10 states nine states are

North Indian states only one state

Karnataka but again Karnataka there will

be mostly nor Indian settled in in

Karnataka so it's a Cosmopolitan Society

so you know this shows that you know

somehow I feel feel you know uh see if

you talking about the gambling right

there are two aspects in gambling I know

two people do the gambling as far as I

know one somebody is working making very

good money uh feeling lot of stress just

to release the stress you go to gambling

and spend some money okay that's okay

other side somebody's having a lot of

problem in life to solve that so he got

so much depth so what he thinks you know

he go to gambling he can make more money

he can solve his problem but that is not

the truth he can never solve the problem

but that's how the people think right so

uh you see generally it's what I feel

South Indian states are economically

prospering right that is why here the

people don't go for gambling but North

Indian States especially utar Pradesh

you know they are not economically doing

well so they are seeing you know coming

to stock market you know making good M

but most of the people are from Gujarat

and Maharashtra is what the number

States yeah Gujarat Maharashtra you know

uh like utar Pradesh you know the these

are madya Pradesh Rajasthan so there are

so many states in the top 10 right so

somehow I feel that you know the people

are you know I always say you know most

people think you know uh stock market is

the solution to their financial problems

but the fact is that the stock market

will add to your financial problems so

that's what the people should understand

okay so this report also gives more

emphasis on alos so people like SE has

stated that whoever has used alos had an

edge would you like to add more about

this yeah yeah there were some reports

you know this people like Jan Street and

million Hedman they bring a huge amount

of capital they use the algo to distort

the market

so this video is being shot on Tuesday

now even today also uh Bank Nifty shot

up 250 Point and then fell 350 Point all

in 3

minutes right all this is being done by

algo right if somebody want to place a

big order I know or sliced order you

know okay manually that is not possible

if they taking the help of the computer

that is okay right see what is at the

end of the Al go instead of you are

doing manually you are asking the

computer to do the job right so that is

okay but the thing is the fact is that

you know most of the retail people feel

that so these big people using the algo

to manipulate the market why the hell

Bank Nifty has to shoot up 250 Point and

fall in 250 Point in just one minute so

are the market inefficiencies are being

exploited by an higher hands or bigger

hands yes yes definitely that that's

that that is what most of the people

feel that's what I also feel but I heard

that you know countries like America if

somebody want to dist the market you

know there will be a system you know if

somebody go and put a sell order for 500

CR the order will not go to the exchange

it will be sliced stopped it will be

sliced you know so there must be some

system to make sure that you know uh

this kind of huge hedge funds they

cannot disturb the market so can we

expect uh sebi to come up with some

rules or regulations that will allow

everybody to to play in a very Level

Playing kind of AE first let the sebi

have time to do all these things okay

because the sebi chairman itself is

having some problem so if they do it we

will be very happy because at the end of

the day we are talking in the interest

of retail people right okay so in this

report uh we saw three uh segments uh

93% of or in loss and 6%

less

than small profit profit and 1

percentage are really making profit so I

want to know where do we exactly stand

are you in the 93% or the 6 percentage

or in the 1 percentage block okay uh to

be honest with you I'm neither in 93%

nor in 6% nor in 1% okay uh basically

this report is for individual Traders

I'm not an individual Trader I'm not a

retail Trader I'm not an individual

Trader I trade through my company right

so therefore I will be coming under the

other side of the spectrum but however

since you ask me you know uh where do I

stand okay uh maybe this is we are

coming closer to the end of September

right so September 30 the half the

financial year will be over so as on

September 30 so what is my profit or

loss okay by 1st October the data will

be ready uh maybe I'll make a video I

will release that video on uh October 2

uh G gandi jti thank you sir thank you

for your views I hope uh we will

continue this discussion next week with

some more interesting questions thank

you sir yeah sure thank you