Why 90% of Investors Make Losses in Derivatives

Over 90% of retail investors incur losses in derivatives due to a combination of high leverage, lack of knowledge, and emotional decision-making. Derivatives are complex financial instruments that amplify both gains and losses, and many investors underestimate the risks involved. Poor risk management—such as failing to set stop-loss orders or overexposing capital—often leads to rapid capital erosion. Additionally, market movements are influenced by a variety of unpredictable factors, making short-term speculation especially dangerous. Many traders also fall prey to psychological biases like fear, greed, and overconfidence, leading to impulsive trades and repeated mistakes. Moreover, a lack of understanding about how derivative instruments like options and futures are priced or behave under different market conditions results in misguided strategies. Ultimately, without a disciplined approach, deep market knowledge, and proper capital management, most investors struggle to consistently profit in the fast-paced and unforgiving world of derivatives trading.