Student with zero income loses ₹46 lakh through F&O trading: ‘addicted, can’t quit’

A chartered accountant has highlighted the risks involved in futures and options (F&O) trading by sharing the story of a third-year BTech student who has lost ₹46 lakh so far with his investment strategy.

CA Roshan Agarwal said the student loss-making endeavour came to light while he was filing his Income Tax Return. “Yesterday I filed one ITR of a 3rd year BTech student whose income is ZERO but loss from F&O is 26 lakhs,” Agarwal wrote on the social media platform X. The student had lost ₹20 lakh from F&O trading last year as well, Agarwal revealed.

As he has no income of his own, the third-year BTech student has been borrowing money from friends, taking loans from banks and personal loan apps and has even dipped into his parents’ account to fund his “addiction,” said the Assam-based CA.

“His parents don’t know the full extent of his losses,” Agarwal told Hindustan Times. “He took money from his parents, took loans from banks and microfinance apps, borrowed from friends…I don’t know how he is managing right now.”

“Last year I tried to convince him not to take shortcuts for quick income and leave F&O and he was convinced. But this year he was back with bigger loss,” Agarwal explained on X.

When asked why he continued F&O trading, the student claimed he was “addicted” and unable to quit it.

“Playing with fire”

Agarwal, Managing partner of Agarwal Roshan & Associates, ended his thread with a word of caution against get-rich-quick schemes that he says are being peddled by some influencers.

“On social media you will only see profit,” he told Hindustan Times. “You will never see a trader talking about his losses. Young people get influenced by these social media creators. People sell courses on Telegram on F&O trading,” he said, asking inexperienced investors to steer clear of it.

“Trading in F&O without the expertise & practice needed is like playing with fire. You will surely burn your hands in the end. As per data shared by Nithin Kamath, Founder Zerodha ‘99% of F&O traders get less than 7% returns’, which is even less than what FD provides,” he explained.

“Young people get lured into F&O for quick gains seeing the Influencers on X and Telegram sharing huge profit screenshots and their lavish lifestyle,” Agarwal added. “It is important to understand to learn the basics of F&O first, practice it with a small amount and develop temperament before going all out in F&Os. It is a full time job which people do casually.”

F&O trading involves speculating on future price movements or hedging against risk. It offers opportunities for profit but requires understanding and managing the associated risks. For individual investors who have no experience, it carries more risk than rewards.

In 2023, a Sebi report said that 89% individual investors lost money through F&O trading during FY22. The average loss incurred by traders during the period was ₹1.1 lakh. On the other hand, the 11% individual traders who made a profit from F&O earned on average ₹3,400 only.