Money Wise: Now You Know Why You Lost Money On Index Trading

Market regulator Securities and Exchange Board of India this week announced the result of an investigation into stock market manipulation by a U.S.-based hedge fund. Jane Street Group entities were barred from accessing the Indian securities market and have been directed to impound Rs 4,843.57 crore in alleged unlawful gains.

According to the order, the SEBI found that Jane Street earned a whopping Rs 43,289.33 crore through trading in index options on Indian exchanges between Jan 1, 2023 and March 31, 2025. It has been alleged that a large amount of money was earned as profit by Jane Street by manipulating the Indian stock market.

You can read about how this was done here.

What does this mean for you as an individual trader? The regulator has stepped in over the last few months to protect the trader by mandating that exchanges can have only one index derivative contract with a weekly expiry. This resulted in the Bank Nifty contract shifting from a weekly expiry to a monthly expiry. Another major change was the increase in the lot sizes for these derivative contracts, which increased the premium needed to purchase these options. This has worked as something of a barrier.

The reason the regulator stepped in was because studies it conducted showed that 90% of retail traders were losing money. And no wonder, when the deck was stacked against the small trader.

Now, I'm not going to preach against trading. In fact, a lot of veterans have told me that it's a great way to understand how equity markets work. But in my opinion, it shouldn't be your primary activity. The way to make money as a trader is to limit the losses you make and that is increasingly harder to do when you're competing against institutions that are using algorithm-based strategies. The secret to long-term wealth creation is to build a stock or mutual fund portfolio and to benefit from the eighth wonder of the world – compounding.

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The 15:15:15 Rule

There are a number of thumb rules that can help you make sense of your finances. They aren't gospel truth. Rather, they're meant to help you conceptualise concepts that would otherwise be hard to contemplate. One of them is the 15:15:15 rule. It means that if you invest Rs 15,000 every month and get a return of 15%, you'll get to Rs 1 crore in 15 years.

I know what a lot of you are thinking. This sounds ridiculous. First of all, 15 years is so hard to contemplate. This is especially true if you're in your 20s. And if you're just starting out, it's normal to feel that saving Rs 15,000 is like a pipe dream. And finally, 15% is something many advisors will say is an ideal return for long-term equity investments.

The thing is – while all of these are aspirational values – attempting it is not going to lead you astray. Saving every month will seem difficult at first but will become a habit over time. And even if you get 13% instead of 15% - it'll just mean that it will take a few more years. And that's if you continue to save Rs 15,000 every month. But your income will rise and you'll certainly be able to save more. Your first crore is the hardest to achieve when you're starting from scratch. The wealth creation you can achieve after is truly magical.

Until next week, happy reading!

Alex