NSE Chief warned retail investors, said - F&O trading will ruin you

NSE Chief Ashishkumar Chauhan says that trading in Futures and Options (FO) derivatives is only possible for experienced and knowledgeable investors. They understand the ups and downs of the market and they also know how to reduce the risk. On the other hand, retail investors are unable to trade properly due to a lack of information and lose their savings.

Jun 14, 2024 - 17:29
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NSE Chief warned retail investors, said - F&O trading will ruin you
NSE Chief warned retail investors, said - F&O trading will ruin you

National Stock Exchange (NSE) Chief Ashishkumar Chauhan has warned retail investors trading in derivatives segments like Futures & Options (F&O). He said that there is a high possibility of losing money in this segment. Chauhan suggested to retail investors that they should invest in equities through mutual funds.

The NSE Chief emphasized that trading in Futures and Options (F&O) derivatives is only available to experienced and knowledgeable clients. They comprehend the market's ups and downs, as well as how to manage risk. At the same time, retail investors are unable to trade effectively due to a lack of knowledge, and they lose their deposits.

Finance Minister Nirmala Sitharaman and Chief Economic Advisor V Anant Nageshwar recently raised worry about the rising risk to ordinary investors in F&O. Earlier in November 2023, SEBI Chief Madhabi Puri Buch warned investors against placing large wagers on F&O.

Despite all the concerns, the popularity of the F&O segment is increasing day by day, as it has a high probability of profit along with a high risk of loss. Monthly turnover in the F&O segment reached Rs 8,740 lakh crore in March 2024, while it was Rs 217 lakh crore in March 2019.

A study by the Securities and Exchange Board of India (SEBI) shows that 89 percent of retail traders in the equity F&O segment have suffered losses. Their average loss was Rs 1.1 lakh in FY 2022. There was a huge jump in the number of F&O traders during the Corona pandemic. There were 7.1 lakh retail F&O traders in FY19, which increased to over 45 lakh in the next year.

Muskan Kumawat Journalist & Writer