India’s retail F&O market has spent the last few years testing this proposition. The fool rushes in, loses money, returns and tries again. The State sees the pattern and faces a difficult question: should it warn him or make the mistake more expensive?
India diagnosed retail derivatives trading as a ‘behavioural health’ problem. Then it also started billing the patient.
The State and behavioural economists agree on this disease. In FY26, 87.7 per cent of India’s individual equity derivatives traders lost money, ₹91,685 crore between them, 92 per cent of it in options; a third held no shares at all. SEBI’s studies describe traders who return after consecutive years of losses. The Economic Survey of 2024 called it gambling.
Behavioural economics has a name for the problem: an internality, present bias, loss-chasing and overconfidence causing harm to the trader himself, driven by biases that a price signal barely reaches.
SEBI put the loss statistic in front of the trader at the point of decision, enlarged contract sizes, cut weekly expiries, and tightened collateral and position limits—friction exactly where the bias operates. The exchequer raised the securities transaction tax (STT) on derivatives three times in three years, the latest this year, with the Budget speech describing the increase as a “reasonable course correction” that would also “generate additional revenues”, behavioural intent and fiscal appetite in a single sentence.