AI Adoption and Trading Performance Analysis: Study on Retail Futures and Options Traders of Karnataka

A, Harshith M; P, Chandrakala D

doi:https://doi.org/10.55041/ijcope.v2i10.069

Volume 02, Issue 10

Published on: October 2026

AI ADOPTION AND TRADING PERFORMANCE ANALYSIS: STUDY ON RETAIL FUTURES AND OPTIONS TRADERS OF KARNATAKA

Harshith M A Chandrakala D P

INDEPENDENT RESEARCHER

DOI:https://doi.org/10.55041/ijcope.v2i10.069

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Abstract

Retail participation in India’s Futures and Options (F&O) market has grown rapidly, and AI-based trading tools are now widely available to individual traders, yet regulatory data indicate that most individual derivative traders incur net losses. Existing studies have largely examined why investors adopt AI tools and not whether adoption improves trading outcomes. This study examines the correlation between AI adoption and trading performance among retail F&O traders in six cities of Karnataka, with Trading Decision Quality as the mediating mechanism and Financial Literacy as the moderating condition. Data was gathered using a five-point Likert-scale questionnaire from 401 retail Foreign Exchange (F&O) traders and evaluate using Exploratory Factor Analysis (SPSS) and Partial Least Squares Structural Equation Modelling (SmartPLS, 5,000 bootstrap resamples). AI Adoption was identified as a construct consisting of three factors, namely, Perceived Usefulness and Continued Reliance, Perceived Ease of Use, and Trust in AI Reliability. It can be seen that AI Adoption has a positive impact on both Trading Decision Quality and Trading Performance. Trading Decision Quality acts as a partial mediator in the correlation between AI Adoption and Trading Performance, which means that the use of AI tools leads to favourable results by virtue of facilitating higher quality decisions while trading. Financial Literacy plays a positive moderating role in the influence of AI Adoption on Trading Performance, implying that traders with higher levels of financial literacy reap more advantages from AI tools.

Keywords: Artificial Intelligence Adoption, Trading Decision Quality, Financial Literacy, Trading Performance, Retail F&O Traders

How to Cite this Paper

A, H. M. & P, C. D. (2026). AI Adoption and Trading Performance Analysis: Study on Retail Futures and Options Traders of Karnataka. International Journal of Creative and Open Research in Engineering and Management, <i>02</i>(10), 1-9. https://doi.org/10.55041/ijcope.v2i10.069

A, Harshith, and Chandrakala P. "AI Adoption and Trading Performance Analysis: Study on Retail Futures and Options Traders of Karnataka." International Journal of Creative and Open Research in Engineering and Management, vol. 02, no. 10, 2026, pp. 1-9. doi:https://doi.org/10.55041/ijcope.v2i10.069.

A, Harshith, and Chandrakala P. "AI Adoption and Trading Performance Analysis: Study on Retail Futures and Options Traders of Karnataka." International Journal of Creative and Open Research in Engineering and Management 02, no. 10 (2026): 1-9. https://doi.org/https://doi.org/10.55041/ijcope.v2i10.069.

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