---
title: "F&O loss chasing and SEBI's behaviour study, explained"
description: "What SEBI's Aug 2026 behaviour study found about F&O traders who keep trading after losses, and why raising the stake after a loss raises the chance of ruin."
source_url: "https://www.rupeecase.com/learn/path-12/module-12-9-fo-trading-behaviour"
---

[Path 12 9 of 9](/learn/path-12/)Behaviour in F&O: loss chasing and what SEBI's behaviour study found[Path 12](/learn/path-12/)

SEBI's August 2026 behaviour study followed individual F&O traders quarter by quarter. In the last quarter of FY26 about twelve lakh of them stopped trading, and more than eight in ten of those had lost money in the quarter before. Look at the same study from the other side and a second group appears: traders whose losses had passed ten lakh rupees in total, nearly nine in ten of whom kept trading. Losses push some people out and keep others in. This lesson reads what the study measured, what it did not, and where chasing a loss fits. It describes groups and says nothing about any one trader. Every study figure carries its table, and every modelled figure is labelled as a model.

3By the end you can

1. Say what SEBI's behaviour study measured after a loss, and what it did not.
2. Work out the gain needed to recover a loss, and why it exceeds the loss.
3. Explain why a high win rate and a bigger stake after a loss do not make a plan.

## The idea, plainly

### Why do 9 out of 10 F&O traders lose money?

Nine in ten is the share of individual traders with a net loss in a year: 87.7% in FY26, in SEBI's profitability study. The behaviour study explains the pattern behind the count. Almost all individual traders mainly buy options. They trade often compared with their capital. Their losing quarters are more frequent and larger than their winning ones, and traders who lose tend to lose again. Costs come out of every trade, win or lose. None of this is a verdict on one trader. It describes how a group behaves. The [question page](/learn/questions/why-fo-traders-lose) has the short answer, and [module F03](/learn/path-12/module-12-3-sebi-fo-loss-studies) reads the companion study of losses.

### What chasing a loss means

Chasing a loss is raising the stake, or the pace of trading, to win back what was lost. A trader on a bad run puts on a bigger position, trades on more days or moves to cheaper options with bigger swings, because only a big swing gets the account back to where it began. My own check is simple: if the size of a stake depends on the last result, that is chasing, whatever it is called.

Read one more paragraph, 56 words
The study does not see stake sizes after a loss. Its data is quarterly and yearly totals. What it can see is who kept trading after losing, and who lost again. That is persistence. Chasing can sit behind it, along with hope, habit, and an account that cannot step back. The study does not say which.

### What SEBI found

Six findings are worth carrying, each from a named table of the study.

1. **Losses repeat.** Of continuing traders who lost in each of the two years before, about nine in ten lost again, in FY24, FY25 and FY26 alike.

2. **A big loss did not mean leaving.** Close to nine in ten traders with losses above ten lakh rupees in FY22 to FY24 were still trading in FY25 and FY26, and more than nineteen in twenty of them lost again.

3. **Leaving follows losing.** More than eight in ten of the traders who stopped in a quarter had lost in the quarter before.

4. **Losses outweigh gains.** More than eight in ten trader quarters lost money, and the median loss in a losing quarter was more than twice the median gain in a winning one.

5. **Intensity.** Traders active on more than a hundred days in a year were fewer than half of all, and took almost all of the turnover and nearly nine tenths of the losses.

6. **Capital cuts two ways.** Small accounts lost more often. Larger accounts lost less often, and much more per loser.

The most active traders were fewer than half of all and took almost all of the losses

SEBI's random sample of individual traders, which SEBI calls indicative. The group is traders active on more than a hundred days in the year. A link between activity and loss, not proof that activity causes it. Source: SEBI, Trading Behaviour of Individual Traders in the Equity Derivatives Segment (FY25 to FY26), Aug 2026, Table 18 (random sample, indicative). As of 20 Aug 2026.
After a big loss most traders kept trading, and most lost again

Population data of individual traders. First bar: lost in each of the two years before, lost again in FY26. Second and third: cumulative loss above ten lakh rupees in FY22 to FY24, then kept trading and stayed loss making in FY25 to FY26. Fourth: of those who stopped trading in FY26 Q4, the share who lost the quarter before. Source: SEBI, Trading Behaviour of Individual Traders in the Equity Derivatives Segment (FY25 to FY26), Aug 2026, Tables 14 and 24, sections 5.23 and 5.24. As of 20 Aug 2026.
Read 2 more paragraphs, 119 words
One more finding shows the cost. Of the traders who lost in FY22 to FY24, more than three quarters held an equity portfolio worth less than a quarter of what they had lost in derivatives, and fewer than one in five held more than they had lost. The study links the two and does not claim cause, since it cannot see other savings or debts. Still, the money that went into losses was not there to compound in shares.

None of these says what a trader should do. They say what groups of traders did. A study of outcomes can show that most who lose keep going. It cannot show whether stopping would have helped any one of them.

### The seller's shape: win often, lose big

The study splits traders by how they trade. Those who mainly sold options had the lowest share of loss makers, fewer than half of them, against nine in ten for options buyers. But when a seller lost, the average loss was more than eleven times that of a mainly buying trader. This part comes from SEBI's random sample, which it calls indicative. A model on a dated Nifty chain shows why the two facts sit together. Take one lot of a weekly Nifty 23,500 put, sold for Rs 29.25 a unit at a fair price. In the model the seller wins about 88 weeks in a hundred. The 3 or so worst weeks make up 57% of the losses. [Module F13](/learn/path-14/module-14-3-option-buyer-vs-seller) walks the same shape on a dated week. This is not a case for or against selling. It is the reason a win rate says little by itself, and the reason a loss can be many times the premium taken in.

Model, not market data

A seller wins most weeks, and a few large losses give it all back

Each bar is the total in rupees per hundred weeks for one lot. Prices are fair, so nobody starts with an edge. SEBI finds the same shape in the data: fewer loss makers among sellers, far larger losses when they lose. Inputs: one lot of 65 units of the Nifty 23,500 put sold at its settlement premium of Rs 29.25 a unit on 16 Jun 2026, expiry 23 Jun 2026; the forward 23,983.33 and the option's own implied volatility 13.24% over 7 calendar days; the index at expiry follows a lognormal curve around the forward; 100 weeks; before costs and interest. Source: RupeeCase model, inputs from NSE end of day data. As of 16 Jun 2026.

## Worked example: what chasing does to one account

Start with the arithmetic of getting back. A loss is a percentage of the old balance, and the gain to recover it is a percentage of the new, smaller one. Take an account of Rs 5,00,000. After a loss of one fifth it holds Rs 4,00,000, and recovering the Rs 1,00,000 needs a gain of 25% on what is left.

| Loss | Gain |
| --- | --- |
| One tenth | 11.1% |
| One fifth | 25% |
| Three tenths | 43% |
| One half | 100% |
| Three quarters | 300% |

Model, not market data

Same odds, bigger stake: the chance of losing half the account climbs from nothing to near certainty

A trader with a win rate and payoff that nearly break even before costs. Each bar is a separate run with the same seed, at the risk per trade on its label. Raising the stake after a loss moves a trader to the right on this chart. The inputs line gives the five percent run. Inputs: win rate 45%, average win 1.20 times the average loss, 5% of the account risked on each trade, ruin at a 50% loss of the starting account, 250 trades, 2,000 simulated paths, seed 1. Source: RupeeCase model, seeded simulation. As of 17 Oct 2026.
Model, not market data

At a bigger stake the middle path halves, and only a lucky tail comes back

The 5th, median and 95th percentile paths of the same trader at five percent risk per trade. The upper band is why chasing feels possible: some paths do recover. Most do not. Inputs: win rate 45%, average win 1.20 times the average loss, 5% of the account risked on each trade, ruin at a 50% loss of the starting account, 250 trades, 2,000 simulated paths, seed 1. Source: RupeeCase model, seeded simulation. As of 17 Oct 2026.
Read 3 more paragraphs, 216 words
The deeper the hole, the more than proportionally harder the climb. A trader who answers a loss of one fifth by raising the stake from Rs 10,000 a trade to Rs 50,000 is betting that the next few trades will be good ones. Now run the same trader through a model. Win rate and payoff are set so that the edge before costs is almost zero. Only the stake changes. [Module F29](/learn/path-12/module-12-7-position-sizing-and-risk-of-ruin) covers sizing in full.

Risking one percent of the account a trade, the chance of losing half the account in 250 trades is 0%. At two percent it is 7.6%. At five percent it is 61%, at ten percent 90%, and at twenty percent 99%. Nothing about the trader's skill changed. The line chart shows why it still feels possible: at five percent of the account a trade, the 95th percentile path ends at 2.39 times the start, while the median path ends at 0.50.

The model is a tidy picture. Real losses come with costs and gaps, and the study's traders are in the data, not in a simulation. The point is the direction. Raising the stake after a loss does not change the odds of the next trade. It changes how much the odds can take.

## The common mistake

The belief: I will trade bigger until I am back to even, and then I will stop. Three things say otherwise. The arithmetic of recovery asks for a bigger gain than the loss. The model shows the chance of ruin climbing with the stake while the edge stays the same. And SEBI's data shows that big losses were followed mostly by more trading and more loss, not by a clean stop at even. A plan made after a loss is a plan made by the part of the mind that wants the loss undone. A fair test of any plan is whether the stake rule was written before the first trade, in terms of the account, and not after the last result.

## Key takeaways

* SEBI's study shows persistence in groups. It does not see stake sizes after a loss.
* Most traders with big losses kept trading, and most of them lost again.
* Winning back a loss needs a bigger percentage gain than the loss itself.
* A seller can win most weeks and still lose over time.
* A bigger stake after a loss raises the chance of ruin, not the trade's odds.
* Write the stake rule before trading, in terms of the account.

The term this section turns on: Persistence

From the module glossary; every term is in the Learn glossary too. Source: Module 12.9, Behaviour in F&O: loss chasing and what SEBI's behaviour study found.
**Before you trade.** Derivatives trading carries a high risk of loss. SEBI's study "Profitability of Individual Traders in the Equity Derivatives Segment (FY25 to FY26)" (August 2026) found that 87.7% of individual traders in equity F&O made net losses in FY26, with aggregate net losses of Rs 91,685 crore. [Read the SEBI study](https://www.sebi.gov.in/reports-and-statistics/research/aug-2026/study-profitability-of-individual-traders-in-the-equity-derivatives-segment-fy25-fy26-_103835.html)

What does Behaviour in F&O: loss chasing and what SEBI's behaviour study found cover?Who kept trading after a loss, who lost again, and what a bigger stake does to the odds of ruin. It works through The idea, plainly, Worked example: what chasing does to one account, The common mistake, Key takeaways. It is module 12.9 of Path 12, Derivatives Basics and Rules, about 9 minutes of reading, free.

TTry it

## Risk of ruin, on the same example.
Win rate, payoff and size, simulated to the chance of losing the account. Dated NSE end of day data, nothing live, no orders.

**Risk of ruin**.

[Open the risk of ruin](/learn/tools/risk-of-ruin?preset=negative)

  AF&O on RupeeCase

## Hedging only, in development
F&O at RupeeCase will do one job: protect a portfolio you already own, by a rule published before it runs. No speculation, no naked option selling, no leveraged bets. It is not available yet.

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  [No hedgeFalls with the marketWith a putA floor, for a premiumIllustration with made up numbers, not a product and not a recommendation.](/hedging)

QQuick check

## 10 questions, 7 to pass.
Each attempt draws 10 of the 15 questions in this module's bank, and a retake draws a fresh set. A pass gives this module's Certificate of Completion. Your result stays on this device and counts towards the Path 12 certificate.

7 of 10 correct passes module 12.9

Every answer is explained when you check; a retake is always free. Source: RupeeCase Learn quiz rules (70% to pass).

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Self paced and unproctored. A record of completing free education by RupeeCase; not a NISM certificate and not endorsed by NISM, NSE, BSE or SEBI. It qualifies no one to deal, advise or publish research.

12Path test

## 30 questions. 21 correct earns the certificate.

30 questions drawn from the 135 in the banks of the 9 live modules of Path 12, 12.1 to 12.9, a fresh set each attempt, with no timer. Your score stays on this device.

* **30**questions
* **21**to pass (70%)
* **9**modules covered

Start the testOnly the path test decides the path certificate. The module quizzes are optional: pass them too for each module's own certificate and a tick on every stop.

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CCheck yourself

## Path 12 so far.
Your quick check results on this device, stop by stop.

Stop 9 of 9 on Path 12

Derivatives Basics and Rules: every live stop, this module ringed. Source: RupeeCase Learn, Path 12.

1. [12.1Why derivatives exist: forwards, futures and options in one storyNot yet](/learn/path-12/module-12-1-why-derivatives-exist)
2. [12.2India's F&O market map: exchanges, clearing, SEBI and who tradesNot yet](/learn/path-12/module-12-2-india-fo-market-map)
3. [12.3Read SEBI's loss studies before your first tradeNot yet](/learn/path-12/module-12-3-sebi-fo-loss-studies)
4. [12.4Contract specs that matter now: lots, expiry days, strikes and settlementNot yet](/learn/path-12/module-12-4-contract-specs-lots-and-expiries)
5. [12.5Margins without jargon: SPAN, exposure, expiry day margin and upfront premiumNot yet](/learn/path-12/module-12-5-fo-margins-explained)
6. [12.6The real cost of a trade: STT, exchange fees, SEBI fee, GST and stamp dutyNot yet](/learn/path-12/module-12-6-cost-of-an-fo-trade)
7. [12.7Position sizing and risk of ruin for F&O beginnersNot yet](/learn/path-12/module-12-7-position-sizing-and-risk-of-ruin)
8. [12.8Red flags in F&O: tip groups, too good claims and registration checksNot yet](/learn/path-12/module-12-8-fo-red-flags)
9. [12.9Behaviour in F&O: loss chasing and what SEBI's behaviour study foundNot yet](/learn/path-12/module-12-9-fo-trading-behaviour#quiz)
10. [TPath test, 30 questionsNot yet](/learn/path-12/module-12-9-fo-trading-behaviour#pathTestSection)

Path 12 in reading time: 72 minutes over 9 modules

Minutes of reading per module, this one in amber. Source: RupeeCase Learn, Path 12.

    Explore next

## Put the module to work.

* [Free module 15.5Liquidity in the chain: spreads, volume and tradable strikes9 min read](/learn/path-15/module-15-5-option-chain-liquidity)
* [ToolOption payoff builderLegs on a dated Nifty chain, breakevens and charges](/learn/tools/payoff-builder)
* [Free module 12.3Read SEBI's loss studies before your first trade8 min read](/learn/path-12/module-12-3-sebi-fo-loss-studies)
* [Free module 14.3Buyer or seller: payoffs, margin, win rate and expectancy9 min read](/learn/path-14/module-14-3-option-buyer-vs-seller)
* [Free module 12.7Position sizing and risk of ruin for F&O beginners8 min read](/learn/path-12/module-12-7-position-sizing-and-risk-of-ruin)
* [Free module 12.8Red flags in F&O: tip groups, too good claims and registration checks7 min read](/learn/path-12/module-12-8-fo-red-flags)

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SSources

## Go to the source.
5 sources, SEBI the most cited

The publisher of each source listed below. Source: Module 12.9 source list.
1. [SEBI, Trading Behaviour of Individual Traders in the Equity Derivatives Segment (FY25 to FY26), Aug 2026](https://www.sebi.gov.in/reports-and-statistics/research/aug-2026/study-trading-behaviour-of-individual-traders-in-the-equity-derivatives-segment-fy25-fy26-_103836.html) SEBI
2. [SEBI, Profitability of Individual Traders in the Equity Derivatives Segment (FY25 to FY26), Aug 2026](https://www.sebi.gov.in/reports-and-statistics/research/aug-2026/study-profitability-of-individual-traders-in-the-equity-derivatives-segment-fy25-fy26-_103835.html) SEBI
3. [SEBI Investor, Understanding derivatives](https://investor.sebi.gov.in/understanding_derivatives.html) SEBI
4. [NSE, option chain (Nifty 50 index options)](https://www.nseindia.com/option-chain) NSE
5. Barber, B. and Odean, T., Trading Is Hazardous to Your Wealth, Journal of Finance, 55(2), 2000 Paper

GTerms

## 5 terms from this module.
Loss chasingRaising the stake, or the pace of trading, to win back a loss. The size of the next stake then depends on the last result.
PersistenceThe share of a group that keeps trading, or keeps losing, from one period to the next. SEBI measures it in groups.
Gain needed to recoverThe percentage gain on a smaller balance that restores the old one. It is the loss divided by what remains, so it is always larger than the loss.
Risk of ruinThe chance that a run of losses takes an account down to a set fraction of its start. It rises with the stake, not only with the odds.
Indicative sampleSEBI's word for the random sample of about five thousand traders behind parts of the behaviour study. The results are patterns, not exact counts.
[All 230 terms in the glossary](/learn/glossary)

[Question people askWhy do 9 out of 10 F&O traders lose money?A short answer with a dated chart](/learn/questions/why-fo-traders-lose)[Related module12.3 Read SEBI's loss studies before your first trade8 min, Beginner](/learn/path-12/module-12-3-sebi-fo-loss-studies)[Related module14.3 Buyer or seller: payoffs, margin, win rate and expectancy9 min, Beginner](/learn/path-14/module-14-3-option-buyer-vs-seller)[Pillar guideDerivatives and Quant115 modules across paths 12 to 19](/learn/derivatives)

Education only, not investment advice, a research report or a recommendation to buy, sell or hold any security. RupeeCase (QC Alpha Technologies Pvt Ltd) is not registered with SEBI as an investment adviser or research analyst. Contracts and prices shown are for illustration only, come from NSE end of day files at least 30 days old, and are not recommendatory. Derivatives trading carries a high risk of loss.