How Stockwiz Is Leveraging AI To Democratise F&O Trading For Retail Investors

What do Groww, Zerodha and Dhan (part of Raise Financial Services) have in common? Well, almost anyone can answer that. All of them are leading discount broking startups which have taken stock trading to the masses and never failed to intrigue the new generation of retail investors, redefining a traditionally conservative Indian wealthtech market. But there is another link. 

Around 80-85% of their revenues come from futures and options (F&O) traders, a highly speculative and leveraged stock market segment. Even an industry-leading full-service brokerage like AngelOne reportedly gains around 84% of its earnings from the F&O segment.

The flip side of this narrative is far from lucrative. Globally, India is the largest derivatives trading market. However, a study by the capital market regulator SEBI revealed that 93% of individual traders incurred losses in equity F&O between FY22 and FY24, and their aggregate losses exceeded INR 1.8 Lakh Cr.

Despite these odds, F&O trading is India’s fastest-growing sector, with a surge in retail participation. The question is: Why do so many continue to trade where success seems statistically improbable? 

“It’s because 90% of these traders tend to pursue quick money. In the process, they trade excessive amounts of leverage and highly risky and volatile instruments without knowledge about the market,” rued Parang Mehta, who, along with wife Geetanjali Shroff, set up the digital trading, research and advisory platform Stockwiz to empower new and veteran retail traders and investors.

For context, futures and options are financial contracts (derivatives) between sellers and buyers that involve speculations on future price movements of an underlying asset (securities, commodities, market indices, currencies and more). Of course, there are ways to hedge price volatility and realise relative gains. But the stakes could be high when people try to predict the price movement without understanding intrinsic valuations. 

To ensure effective strategies, faster trading and requisite knowledge, SEBI-registered Stockwiz offers one-click automated trading powered by AI-ML (more on that later), deep market analysis backed by research and real-time data, access to an active trading community and a suite of trading courses. All its products and services are rolled into a VIP membership package. It charges INR 9,999-19,999 as subscription fees for six months to one year and claims to serve more than 20K paid users.

Stockwiz is backed by iStart Rajasthan, the state government’s initiative to foster startup innovation. The bootstrapped venture initially invested INR 1 Lakh and clocked INR 3 Cr in revenue in FY24. Now, it eyes a 10x jump in the current financial year.

The Seeds Of Stockwiz And The Eureka Moment

Not all startup ideas come from the dorms of IITs and IIMs or the Gen Z college dropouts because the entrepreneurial bug has bitten them too early. For the 27-year-old Mehta, who hails from a family of doctors, the love for the capital market is a self-acquired passion. An MBA degree holder in finance, he was through with the CFA certification Level II. But neither academic training nor his exposure to trading could prevent losses – INR 25 Lakh in four years.

The tipping point came during his training in Sydney when he dived deep into systematic trading, wherein investment decisions are based on algorithms generated through market data analysis. Whenever these pre-set parameters are met, trade is executed automatically, minimising human errors and ensuring consistent strategy executions for various market conditions. 

“Finally, I understood that 90% of success was discipline and systematic trading. I returned to India, started trading and had my first profitable week, month and year,” said Mehta.

 Soon after, he started mentoring people online and earned lakhs. The business thrived until December 2022, when he took a month off for his wedding. His wife, Geetanjali, held a master’s degree in marketing and finance and handled B2B sales for ITC Hotels, which fitted well when she decided to explore the markets. 

During that break, the couple tested several channels on Telegram and WhatsApp for trading tips, but the experience was chaotic. Tips were lost in the noise, and prices were too high when they executed trades. Exit signals got buried, and outcomes were always poor. 

When impersonal, haphazard support fell short, they understood that an end-to-end solution and a tailored approach would be needed to meet people’s requirements. In January 2023, Stockwiz emerged as a community-driven, tech-powered F&O ecosystem.       

How Stockwiz Built A One-Stop Destination For F&O Traders

In the complex world of derivatives trading, where most retail traders chase profits without the tech tools and knowledge, Stockwiz aims to integrate operations and experiences to bridge the critical gap. 

Realising that cutting-edge technologies like AI-ML and automation could transform end-to-end F&O trading, the founders built a seamless, technology-driven platform that provides real-time insights into market trends, automated trade executions and robust risk management – all under one roof. 

Here is a deep dive into four differentiated features that make Stockwiz stand out.        

• Stockwiz’s Stryke app uses AI-ML to scan high-performing stocks, track high-impact news items, and offer one-click trade executions. The fintech firm uses GPT-4 and Gemini for automatic stock scanning, and in-house analysts review the output before any research is shared with clients. Stockwiz uses 100+ data sources and more than 1 Mn data points to refine its trading models. 
• Team trades live every day alongside its members, providing them with real-time market exposure to hone their skills. These live interactions create a dynamic learning environment and foster a deeper understanding of trading strategies.   
• Unlike brokerages focussing on retail trading, Stockwiz focusses on capital preservation and steady returns, drawing inspiration from institutional strategies. It also trains people through courses, seminars and workshops.
• With more than 20K active members, the platform enables traders and investors to connect and collaborate with like-minded people. “This community-driven model is central to Stockwiz’s growth. Many of our competitors have followed suit after seeing how powerful communities are for retention and value addition,” the founders said. 

When iStart Played A Key Role In Optimising Product Design & Team Building 

Asked about the driving forces behind Stockwiz’s impressive growth, the founders mentioned the pivotal role of iStart Rajasthan. “It has been incredibly supportive,” said Mehta. “We were introduced to Raunak Singhvi, a mentor and advisor, through the initiative. His guidance was invaluable during early growth as we found the product-market fit and fine-tuned our tech offerings.”

Backed by the Rajasthan government, the programme has been designed to promote local startups, attract investment and generate jobs across the state. But for Stockwiz, it was more than a support system. The catalyst shaped Mehta’s vision and expertise into a thriving business. The founders also lauded iStart for helping the startup scale quickly.

“We were mentored in crucial areas like operations, product design and team-building,” said Mehta. “Although we chose not to seek financial backing, preferring to remain bootstrapped at this point, a lot of insights, feedback and advice came our way. It gave our business the proper direction and helped refine our business strategy.”

Can Stockwiz Drive F&O Growth?

A quick look at the Indian capital markets reveals both challenges and opportunities. Consider this. Per an ICICIDirect report, the country’s monthly F&O turnover reached a record INR 8,740 Lakh Cr ($1.1 Tn) in March 2024, a phenomenal surge from INR 217 Lakh Cr (about $27 Bn) in March 2019.

Again, the country’s stock market wrapped up in 2024 with an impressive 10% gain despite heavy selling by FIIs. Overall, they sold INR 2.96 Lakh Cr, again a record selling in a year. That the market thrived despite this capital drain was solely due to the rise of a new hero – the retail investors. As Stockwiz is going all out to target them for the futures and options space, it shows the startup’s readiness to embrace upcoming opportunities.

But here is the flip side. The Indian stock market is strictly regulated, and innovating in this sector comes with challenges. Stockwiz needs to focus on its growth, but being a SEBI-registered entity, it has to comply with all applicable norms for a smooth run ahead.

According to Mehta, the startup has compliance and grievance officers in place, internal systems and controls for the segregation of other business activities and strict firewalls to protect traders and investors. Additionally, it has an external auditor and an in-house compliance team managing the entire compliance scenario.  

Nevertheless, Stockwiz is not putting all its eggs in one basket, given the fast-evolving regulatory scenario and how fintechs must scramble to cope. Instead, it aims to venture into wealth management this year and eyes INR 100 Cr in assets under management (AUM). More products and services, especially in areas like portfolio management, smallcase, algo/speed trading, mutual fund distribution and global investing options for Indians, are in the pipeline. 

The fintech will charge variable fees for these services, which may help it surpass the INR 60 Cr revenue mark in FY26. “Our product timeline until 2027 is already planned, and we will move accordingly,” said Mehta.

“In the long run, we will launch products and services designed for non-traders or investors who can trade like professionals and participate in the India Story 2050, where we may see this century’s greatest wealth creation opportunity.”

As of now, the vision is clear: To make professional-grade trading and investing tools accessible to all at an affordable price and prepare to emerge as a driving force in the financial revolution the country is set to experience in the coming decades.