'Trading without strict position sizing, stop-loss discipline, or a clear exit plan almost guarantees losses.'
'Chasing tips, reacting to intraday noise, or assuming frequent trading improves outcomes are equally damaging habits.'
Markets offered opportunities in 2025, but many investors struggled as decisions were driven by speed, noise and emotion rather than understanding.
From chasing hot themes and speculative trades to stopping SIPs (systematic investment plans) during volatility and following unverified advice, behaviour often proved costlier than market movements.
As investors step into 2026, the lesson is clear: Successful investing depends more on discipline than speed.
Experts point to key mistakes made in 2025 and outline how investors can avoid repeating them.
Losses in F&O segment
A recent report by the Securities and Exchange Board of India (Sebi) showed that individual traders suffered net losses of Rs 1.05 trillion in the futures & options (F&O) segment in FY25.
Sebi and market experts attribute losses to speculative trading by largely inexperienced investors.
High leverage, transaction costs, and volatility combined to magnify losses.
While steps taken by the regulator reduced retail investor participation to some extent, the problem remains.
Mistakes to avoid
Excessive leverage remains the most damaging mistake in F&O trading.
"Small margins can control large positions, but even minor price moves or time decay can wipe out capital quickly.
"Trading without strict position sizing, stop-loss discipline, or a clear exit plan almost guarantees losses.
"Chasing tips, reacting to intraday noise, or assuming frequent trading improves outcomes are equally damaging habits," says Arun Patel, founder and partner, Arunasset Investment Services.
Investors must avoid falling prey to frequent nudging.
"Much of today's F&O participation is nudged by platforms that profit from high turnover.
"Notifications, rankings and 'easy trade' narratives create overconfidence," says Patel.
Stopping SIPs during volatility
The SIP stoppage ratio was above 100 per cent from January onwards and touched 296 per cent in April, according to Association of Mutual Funds in India (Amfi) data.
Experts say halting SIPs during volatile phases was among the biggest investing mistakes.
Patel notes that around 40 per cent of SIP accounts are now in direct mode, accounting for nearly 46 to 47 per cent of industry assets under management (AUM), largely driven by digital platforms.
"Data show a disproportionate share of SIP stoppages, shorter holding periods, and portfolio churn emerging from this segment.
"While platforms excel at onboarding and information delivery, investing is not just a spreadsheet exercise.
"During volatile phases, lack of reassurance and support leads many investors to respond to short-term noise, discontinue SIPs early and hurt long-term outcomes," says Patel.
Stopping SIPs disrupts rupee-cost averaging and compounding.
"Data from Nifty 50 SIP observations shows that even when investors faced losses of more than 20 per cent in the first year, those who stayed invested went on to earn 11 to 13 per cent average returns over the next four years.
"Exiting SIPs during downturns turns temporary losses into permanent ones, while continuing SIPs allows investors to benefit from rupee-cost averaging and eventual market recovery," says Subhendu Harichandan, executive director, Anand Rathi Wealth.
Chasing past performance
Sectoral and thematic funds attracted strong inflows in 2025, driven largely by new fund offers and recent returns rather than research.
"Chasing past performance is risky because market cycles shift, valuations peak and concentrated bets can see sharp drawdowns, hurting late entrants.
"Investors should first build a diversified core portfolio aligned to their goals and risk profile, using broadbased active funds or index funds, and treat sectoral or thematic funds only as tactical allocations, supported by SIPs and periodic rebalancing," says Sachin Jain, managing partner, Scripbox.
Rising concentration risk
Many increased concentration risk by allocating large sums to themes such as defence, infrastructure and the internet economy after strong runs.
"High exposure to a single sector can amplify losses and increase volatility.
"Investors should diversify across sectors, asset classes, market caps, styles and geographies, keep position sizes sensible, and avoid overallocating to any theme without long-term conviction," says Jain.
Risk controls ignored
Basic risk controls were overlooked during the year.
Investors chased short-term returns, overallocated to mid and smallcap or thematic funds, and ignored asset allocation.
"Investors should define goals and risk profiles, diversify across assets, stay disciplined with SIPs, rebalance periodically, and seek professional guidance to protect long-term, risk-adjusted returns," says Jain.
Influencer trap
Many avoided equity-debt portfolios and became vulnerable to influencers promoting speculative products.
Behavioural biases such as fear of missing out, herd mentality, and overconfidence pushed investors towards social-media-driven ideas, undermining outcomes.
"The best defence is sticking to a disciplined, diversified portfolio aligned with long-term goals and seeking guidance from qualified advisors.
'Sebi's December 2025 PaRRVA initiative further helps by verifying investment performance claims, enabling investors to distinguish genuine track records from exaggerated or cherry-picked claims," says Harichandan.
Other mistakes
Hype-driven decisions also hurt investors this year.
"Common missteps included entering crypto assets without fully appreciating their volatility and regulatory risks, expecting insurance to create wealth rather than protect against shocks, chasing short-term trends promoted on social media or by unregistered influencers, and reacting emotionally to market swings instead of following a disciplined strategy," says Sanjiv Bajaj, joint chairman and managing director, Bajaj Capital.
FAQ
- Key investment mistakes made in 2025
- Stopping SIPs during market volatility
- Investing without clear goals or asset allocation
- Panic-driven buying and selling
- Chasing hype-driven opportunities
- Expecting insurance to generate wealth
- Following social-media tips and unregistered influencers
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Any use of the information/any investment and investment related decisions of the investors/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.
Feature Presentation: Ashish Narsale/Rediff
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