Stock Market Basics · Lesson 13 of 14 · Updated October 2026 · 7 min read
Investing means buying a share of a business and holding it while the business grows. Trading means trying to profit from price moves, often within days or hours. Both happen on the same app, but they are very different activities with very different odds.
In short: Investing can work for most people over years. Short-term trading, especially futures and options (F&O), loses money for the large majority. SEBI’s study found over 91% of individual F&O traders made losses in FY25.
Investing vs trading
| Investing | Trading | |
|---|---|---|
| Time frame | Years | Minutes to weeks |
| What drives returns | Business growth and dividends | Short-term price moves |
| Work needed | Research before buying, review a few times a year | Constant watching and quick decisions |
| Costs | Low | High, from frequent charges |
| Tax | Capital gains rates | Business income at slab rates (intraday, F&O) |
What F&O are, in one paragraph
Futures and options are contracts whose value depends on a share or index. You put down a small amount (margin or premium) to control a much larger position. That’s leverage: a small move in the share becomes a big percentage gain or loss on your money, and options can lose all their value by expiry.
Leverage, with numbers
Say you buy ₹1 lakh of call options on a share before its results. If the share jumps, the options can multiply in value. If it falls 10%, the options can lose most of their value in a day. Kosh learnt both lessons in 2017 and 2018: one ₹6 lakh weekend, then a much bigger loss that he borrowed to hide.
What SEBI found
SEBI studied individual traders in equity derivatives. In FY25, over 91% of them lost money, and their combined net losses, after costs, were ₹1,05,603 crore, up 41% from ₹74,812 crore in FY24. The odds are not in a beginner’s favour.
Signs trading has become a problem
- You trade to win back losses.
- You borrow, or use credit cards or loans, to trade.
- You hide losses from family.
- You feel restless on days you don’t trade.
If these sound familiar, stop, tell someone you trust, and consider talking to a counsellor or psychologist. It’s not a weakness; it’s how many people get out.
Common questions
Is trading illegal or always bad?
It’s legal and regulated. But it’s a skilled, high-risk activity, and most people who try it lose money.
Should beginners try F&O with a small amount?
Learn investing first. If you ever trade F&O, use only money you can afford to lose completely, never borrowed money.
Next lesson: 10 Stock Market Mistakes Beginners Make (and How to Avoid Them) → · See all 14 stock market lessons
Education, not investment advice. Figures and rules as of October 2026; check the latest before you act.