India Warned Nine Out Of Ten Traders They Would Lose Money. 

Nobody Told Them What To Do Instead ?

Read the SEBI disclosure that pops up on your broker's app before you place an F&O order. It tells you that nine out of ten individual traders lose money. It is accurate. It is also, on its own, close to useless.

Because a warning label is not a curriculum.

Here is what the latest numbers actually show. In FY26, individual traders in India's equity derivatives segment lost 91,685 crore rupees. That is down from 1,11,788 crore in FY25, an 18 percent fall that regulators are presenting as progress. But look at why the number fell. The count of unique individual traders dropped from 98.1 lakh to 78.6 lakh, a 20 percent exit. And the average loss per person who stayed actually rose, from roughly 1,13,913 to 1,16,654 rupees.

That is not traders learning to win. That is traders leaving before they lose more, while the ones who remain keep losing at the same rate or worse. Fewer people at the table, same house edge.

An analogy makes this easier to see. Imagine a city puts up a sign at a dangerous river crossing that says nine out of ten people who try to swim across drown. Fewer people attempt the swim. Deaths per year go down. The city calls this a public safety win. But nobody built a bridge. Nobody taught anyone to swim properly. The river did not get any safer. It just got fewer visitors.

That is precisely what disclosure without education produces. Awareness of risk, with no path to competence.

And that gap is not any single party's job to fill alone. It is tempting to hand the blame to the government for stopping at a warning label, but the responsibility for education in any market is collective. It sits with the regulator and the government that sets policy, with the exchanges and intermediaries who sit closest to the retail participant every single day, and with individuals themselves, who cannot outsource the responsibility of learning their own craft to a pop up disclaimer either.

Look closely at what the intermediary layer in India is actually teaching. NSE Academy and NISM run a wide catalogue of certifications, from capital markets to derivatives to research analysis, and much of it is genuinely well built. But read the syllabus closely and most of it is oriented toward how an instrument works, how to calculate a payoff, how to pass a compliance exam to be licensed as an intermediary. That is product knowledge and certification. It is not the same thing as training a retail participant in risk sizing, in process discipline, in how to build and test a system before risking capital on it. India has invested in teaching people what a derivative is. It has invested far less in teaching people how to survive using one.

Finland is worth studying here, not because trading and school education are the same thing, but because the shift in approach is the same shift India needs. In the 1960s and 70s, Finland's education system was unremarkable. Within two to three decades it became one of the most consistently high performing systems in the world, and it did not get there by publishing dropout statistics or warning children how many of them would fail. It got there because government policy, teacher training institutions, and schools all moved together, treating teaching as a respected, rigorously trained profession, and building the entire system around developing real competence rather than around testing and sorting who was already good. Every part of that system pulled in the same direction at once.

That is the model. Not a regulator issuing a warning, an exchange running a certification catalogue, and an individual left to figure out the rest alone, three separate efforts pointed in three different directions. A joint effort, government, intermediaries, and individuals, all treating education as the actual solution rather than disclosure as a substitute for it. India has the institutions already in place, NSE, NISM, SEBI's own investor education mandate, and a large and growing base of private trading educators. What is missing is the coordination, and the shared understanding that awareness of risk was never supposed to be the finish line.

Now put India next to the rest of the world, because this is not a uniquely Indian problem, it is a universal one that different markets have handled differently.

The landmark Taiwan study by Barber, Lee, Liu and Odean, built on the full trading records of the Taiwan Stock Exchange from 1992 to 2006, found that around 15 to 20 percent of day traders were net profitable after fees, though fewer than 1 percent were predictably, repeatably profitable.

The Brazil study by Chague, De Losso and Giovannetti tracked everyone who began day trading index futures on B3 between 2013 and 2015. Of those who persisted beyond 300 trading days, 97 percent lost money, and only 1.1 percent earned more than Brazil's minimum wage.

Korea tells a slightly better story. Choe and Eom, and separately Ryu, studying the Korean index futures market through the mid 2000s, found roughly 25 percent of retail day traders profited net of fees, a meaningfully higher rate than Taiwan or Brazil.

India's own SEBI study, covering April 2021 to March 2024, found that just 7.2 percent of individual F&O traders registered a profit over three years, and only about 1 percent cleared more than one lakh rupees after costs. That places India closer to the Brazil end of the spectrum than the Korea end.

What separates Korea's 25 percent from Brazil's 3 percent is not luck or market maturity. It is that a meaningfully larger share of Korean retail participants operate through structured, rules based approaches rather than pure discretionary speculation. Process beats instinct almost everywhere researchers have looked.

Now add a second variable India carries that most of these other markets do not carry at the same intensity. Cost. And the trend line on cost only moves one way.

In under two years, the Securities Transaction Tax on options premium in India rose from 0.0625 percent to 0.1 percent in October 2024, then to 0.15 percent from April 2026, more than double in eighteen months. STT on futures rose from 0.0125 percent to 0.02 percent, then to 0.05 percent over the same window, a fourfold increase. And STT is charged whether the trade wins or loses. It comes off the top regardless.

That is one line item out of six that hit every single trade in India: brokerage, STT, exchange transaction charges, 18 percent GST on the brokerage and transaction charges combined, SEBI turnover fees, and stamp duty. A trader can move to a zero brokerage broker and still find that brokerage was never more than a tenth of the real cost. The rest is structural, and it is rising.

Compare that to where global capital actually competes. The United States charges no federal transaction tax on buying or selling shares at all, only a fractional SEC fee measured in cents per thousand dollars, which is why zero commission trading became the norm there. The United Kingdom charges a flat 0.5 percent stamp duty, but only on the buy side of cash equity, and UK derivatives are largely exempt from it entirely. India is one of the few major markets taxing both legs of a trade, loading the derivatives segment specifically, and raising that load twice in two budget cycles.

This is not an accident of policy. The Economic Survey 2024 described F&O trading in explicitly critical terms, and the government has stated plainly that the STT increases were designed, in its own words, to tame retail frenzy in the derivatives market. That is a legitimate policy goal if the aim is fewer retail participants. It is a different goal from making the participants who remain more competent. Raising the cost of an activity discourages people from doing it. It does not teach the people still doing it how to do it better. A rising toll on the bridge is not the same thing as teaching people to cross safely.

And it would be convenient if the alternative to trading, plain buy and hold investing, was obviously the safer, cleaner answer. The data is more complicated than the marketing suggests. Nifty 50 headline literature routinely advertises long run compounded returns in the 12 to 15 percent range. A recent independent academic study analysing 22 years of Nifty 50 SIP data found the actual 20 year pre tax compounded return for a systematic SIP investor came out closer to 6.7 percent, well below the widely repeated 12 to 15 percent narrative, once real entry timing and the full data series were used instead of cherry picked windows. Separate long horizon studies do show that a 7 year or longer holding period in the Nifty 50 has historically avoided a negative outcome, which is a genuine point in favour of staying invested. But avoiding a loss and earning the return that gets marketed to you are two different claims, and Indian retail investors are rarely shown the gap between them.

So neither side of the popular divide holds up cleanly under its own numbers. Discretionary trading loses to instinct and emotional override. Buy and hold investing quietly loses a large share of its advertised return to timing, to survivorship in the data used to sell it, and, increasingly, to the same rising cost structure.

There is also a perception problem sitting underneath all of this, and it deserves to be questioned rather than repeated. Ask most Indian households and they will tell you trading is speculation, investing is prudence. One is treated as reckless, the other as responsible.

But that distinction has almost nothing to do with the actual data on outcomes. DALBAR's long running investor behavior research in the US has repeatedly shown that the average mutual fund investor earns meaningfully less than the funds they are invested in, purely because of when they buy and sell. Undisciplined investing underperforms the market the same way undisciplined trading does. The label on the activity, trading versus investing, is not what determines the outcome. The presence or absence of a system is what determines the outcome.

Remember the river crossing from earlier. Most retail participants are offered exactly two choices. Swim across yourself, which is discretionary trading, reading charts on instinct, reacting to news, overriding your own rules the moment a position moves against you. Or stay on the bank entirely, which is pure passive investing, a fixed deposit or an index fund, safe but slow, and often not what someone chasing real wealth creation actually wants.

What almost nobody in India is told about is the bridge in between. Call it alternative investing. Not trading on gut feel. Not parking money and waiting decades. Investing capital through a tested, mechanical, rules based system, a set of entry and exit conditions that have been backtested, quantified, and automated, so the decision has already been made before the market opens, and no emotion gets a vote on any given day.

That is the actual middle route. A disciplined trader following a tested, mechanical process and a disciplined investor following a tested, mechanical allocation plan are doing the same underlying thing. An undisciplined investor chasing hot funds and an undisciplined trader chasing hot tips are also doing the same underlying thing. The moral hierarchy between trading and investing is largely a story we tell ourselves. The real hierarchy is between process and impulse, and alternative investing through mechanical systems is where process lives.

So what actually moves someone from the losing 90 percent toward the winning minority.

Not another disclosure. Not another warning. What Korea's higher profitability numbers hint at, and what three decades of my own work across being a market outsider, a market intermediary, and now a market insider have confirmed directly, is that mechanical, rules based systems are the bridge retail India has been missing, the upgrade path from gambling on the river to crossing it on solid ground.

A mechanical system removes the two things that destroy discretionary traders fastest: inconsistent decision making and emotional override. It replaces both with a tested, repeatable process that can be measured, refined, and improved, the same way any serious profession improves. It is not trading in the reckless sense the public imagines, and it is not passive investing either. It is a third category India has barely been introduced to.

It also happens to be the most direct answer to the cost problem. High frequency intraday and options activity generates the highest number of taxable events per rupee deployed, which is exactly why the STT hikes hit that segment hardest. Momentum investing and swing trading, built as tested mechanical systems rather than discretionary impulses, sit in a different cost bracket entirely. Fewer entries and exits than intraday, held over days or weeks instead of minutes, means fewer brushes with STT, exchange charges, and GST on every leg, while still capturing more of a trend than a static buy and hold position waiting years for the same move. Lower trade frequency with a tested edge is, on the cost math alone, a more efficient use of every rupee than either extreme.

This is exactly the gap I am attempting to close through MTS Institute. Not a claim to replace the regulator, the exchanges, or NISM, and not another warning about the risk of trading, but one contribution toward the joint effort this actually needs, a structured path into alternative investing through tested momentum and swing based mechanical systems, engineered from the start to work with India's rising cost structure rather than against it, and built from frameworks, automation, and a curriculum drawn from thirty years on all three sides of the market, as an outsider, an intermediary, and an insider.

Disclosure told nine out of ten Indian traders they were likely to fail. It is time government, intermediaries, and individuals stopped treating that warning as the finish line and started building, together, the education that gets more of them across. That is the need of the hour, and it is the direction I am attempting to move in.

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