Trading Horror stories

[gambler2075]

Since it takes alot for someone to post negative experiences they had trading (even if your SA username is anonymous), I figured I'd post a few from elitetrader.com, among other places. Most people have no idea how hard trading is, or what psychological foibles they have that will make them lose, time after time... but just take it from one who has been there, trading can be the worst thing that can ever happen to someone's psychological and financial well-being. I guess the long and short of it is that, unless you have some sort of informational edge, which the vast majority of traders do not, then you shouldn't be trading at all.

Forums - My DAYTRADER story

NY_HOOD

Registered: Jun 2007
Posts: 1297

05-16-11 08:56 PM
i am posting a new thread so my story does'nt get lost in the shuffle.

here's the deal. i was a very good trader, believe it or not. however, i would have a 6 great months and one bad one would destroy me. i lost about 600k ;i am not exaggerating one bit. i kept replenishing my account and telling myself this was the last time until i was broke. i remember sitting in a parking lot of a jewelery store almost in tears because i was selling my last piece of jewelery to pay my phone bill so my wife would'nt be humiliated when friends called the house and then my car was re possessed and i hit rock bottom. you think i am trying to make the story more interesting? wrong ! i was fu##in devistated .thats when i got into the construction industry and am now doing very well despite the bad economy. i am a TOTALLY different person. i am serious,i just want to help people avoid going through what i went through.
by the way, my car was repossessed twice; the first time i said it was a wake up call and i was now going to be a MORE DISCIPLINED trader..well, you know the rest. one last thing. you will lose your money quicker in the market than any casino,thats a fact. casino's don't offer margin.

Forums - Day Trading Is A Dead End Job
Forums - I finally Quit Daytrading after 5 years
Anyone in here a Day Trader? - AnandTech Forums

g

[Snodog]

Seems like in order to be profitable you have to be both a good trader and good at money management. Sounds like this guy wasn't a good money manager.

[buildmybudget]

That's really interesting... Gambler, how do you mitigate this? You can't be on top all the time, or are you?

[Mr Nice Guy]

The first three months of having my IRA was a horror story......

[Scanner]

Yeah, I just tried my hand at some trading with this silver market. . .oh vey. . .not for me.

Remember that scene from Wrath of Khan and Khan whips Captain Kirk's butt and Kirk gets out of the situation barely by the skin of his teeth and he's sitting in his Captain's chair wiping his brow with a hankerchief?

Well, that was me the last few days with silver and ZSL. Yup. . .approached the market with my shields down I guess, despite Star Fleet protocol being I approach with my shields up.

I got out making $200 and wiping my brow.

Charles Schwab is $17.00 richer.

I think I'll stick to investing.

[Scanner]

PS: A non-discerning reader may ask, "Well, what's the big deal? You made $200 in 5 days or so. . ."

Well, I had $10,000 of my Roth on the table at one point.

The reward is NOT, NOT commensurate with the principal risk is what I can tell from day trading. (or in my case, I guess I was "week" trading)

[Slug]

Here's my recent $1400 poof trading a short term option on Google. With illustration.

Google Option FAIL | Sunk Costs Are Irrelevant

[Scanner]

Slug,

Another movie analogy with me may as well been the Monty Python Killer Rabbit scene.

"Aw c'mon. . .it's just a wee little rabbit (the market)"

"Nooooo. . .that's a killer rabbit."

So, I am now back from the killer rabbit figuring out if I can use the Holy Hand Grenade or something.

[feh]

The trader mentioned in the OP seems to have addiction issues.

[kv968]

Well, that was me the last few days with silver and ZSL. Yup. . .approached the market with my shields down I guess, despite Star Fleet protocol being I approach with my shields up.

I got out making $200 and wiping my brow.

You ain't seen nothin' Scanner. Try doing some options with SLV lately

[Scanner]

KTP,

I don't know. .. I would love to trade with let's say 5-10% of my portfolio and actively manage/invest the rest but after this week. . .I am not sure it's for me. Let Gambler have at it.

But I don't want to "day trade" either. . .maybe quarterly trade or weekly trade or monthly trade, whatever. . .but just sit there at a computer all day and not go nuts? I am not sure how people do it.

But as far as I can tell, the reward doesn't outweight the risk. Now. . .I know there are ways of quantifying risk (beta's or something) but I am not sure if anyone ever did a study on that or not.

[disneysteve]

But I don't want to "day trade" either. . .maybe quarterly trade or weekly trade or monthly trade, whatever. . .but just sit there at a computer all day and not go nuts? I am not sure how people do it.

I think that would drive me crazy, too.

Also, I find that when I do trade, I get too aggravated if the price continues to climb after I sell or continues to drop after I buy. It isn't worth the aggravation to me.

I'll stick to blackjack. I made $250 doing that this weekend and the most I ever had at risk was about $75, not $10,000. Much better risk/reward ratio.

[KTP]

I think that would drive me crazy, too.

Also, I find that when I do trade, I get too aggravated if the price continues to climb after I sell or continues to drop after I buy. It isn't worth the aggravation to me.

I'll stick to blackjack. I made $250 doing that this weekend and the most I ever had at risk was about $75, not $10,000. Much better risk/reward ratio.

I think you have to define the risk a bit better than that. Is the $10,000 *really* at risk of going to zero in your investment? If so, then like the blackjack game, the reward should be $20,000 as likely as $0. If you are risking a total loss on $10,000 just to make $250, then I agree with you that the blackjack is much better risk/reward.

An example. Today I purchased 1000 shares of Microsoft at $24.30 and sold it later in the day for $24.70. I had $24,300 in the trade and made a profit of $400 (used 2 of my free trades at wells fargo, so no commision). Now, was there a chance I could have lost the entire $24,300? No way. A one day move down of more than 5% in microsoft is extremely rare, especially at the current PE of 9 and change.

After saying all of this, I do have to admit that I have almost completely stopped trading and have 98% of our portfolio in index funds. Trading is too risky.

Edit: Also, to make my microsoft trade more like your blackjack trade, I could have put in a stop limit order at $23.90 along with my sell order at $24.70 when I bought the shares at $24.30. Microsoft has so many shares out that it is unlikely to gap down past the limit without triggering it, especially intra-day. Then I would have a 50/50 chance of doubling my money at risk, and no advantage to the house since I get free trades.

[gambler2075]

That's really interesting... Gambler, how do you mitigate this? You can't be on top all the time, or are you?

If you mean to ask if I win all the time? well, I certainly do not. But hopefully the winning more than makes up for any losing, so on aggregate I win. I did alot of looking at my trades and I realized that my daytrades are treading water, but my longer term trades are the ones that make me money. Specifically, the biotechs that I think are underpriced and I wait until the sentiment changes.

For example, with SLV, there were a couple of times I was trading it and I lost 20,000$ within 2 hours. Well, actually, trading 2000 share positions of AGQ (double silver long). Reminds me that I shouldn't be trading it, but sticking to my biotech swing trades. Of course, there were also times where I made 10,000$ or 15,000$ in a few hour swing trade, but the point of trading for me is to make money, not to be excited by it. Trading should be the most boring thing, just to grind out profits.

When it comes to the advantages of swing trading vs daytrading, I think the thing that most traders do not factor in is the cost of trading, in terms of TIME. Some of the horror stories I posted emphasize financial losses, but they also should mention loss of time as even more important. I have spent at least 10K hours learning to trade, and it has been a fascinating trip, but now I am at the point where I want to make the most amount of money in the least amount of time and mental energy, and for me, that consists of swingtrading over daytrading.

g

[My English Castle]

I worked in brokerage for a decade, and except for people trading the house accounts, I've never seen such a collection of junkies. It's a mug's game. Even the analysts who wrote our investor newsletters were way too often caught up in the fever.