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Trader loses 130k+ on short, owes eTrade 100k
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Trader loses 130k+ on short, owes eTrade 100k

  #11 (permalink)
Elite Member
Memphis TN
 
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Big Mike View Post
I do admire the guy for saying he will pay his broker back. Legally, he's on the hook. I don't know what his financial situation is, or how old he is, but 100k is not chump change. People have filed bankruptcy for much less.

Mike

The article I read said he's 32. One of the comments noted that after he liquidated, the stock dropped by 50%. So if he'd waited the three-day period he'd owe only 50k. But who would be able to do that? Who has the nerves? That's just an extra twist of the knife right there.

I remember the Swiss Franc move in January. I trade a foreign currency overnight and of course I do keep a stop in place, but it makes me wonder if it's just a matter of time...

Someday, and that day may never come, I'll call upon you to do a service for me.
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  #12 (permalink)
Market Wizard
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I just donated to this guy, I feel for this guy and I donated because it's a very valuable lesson to every trader...Thanks Mike for sharing...I know ETRADE suck but this is huge

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  #13 (permalink)
Elite Member
Austin, TX
 
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Pariah Carey View Post
The article I read said he's 32. One of the comments noted that after he liquidated, the stock dropped by 50%. So if he'd waited the three-day period he'd owe only 50k. But who would be able to do that? Who has the nerves? That's just an extra twist of the knife right there.

I remember the Swiss Franc move in January. I trade a foreign currency overnight and of course I do keep a stop in place, but it makes me wonder if it's just a matter of time...

Your broker might not wait 3 days. Being big in the red they can close your position at anytime.

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  #14 (permalink)
Site Administrator
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TheShrike View Post
I feel absolutely nothing for this guy. In fact, I think he's got a lot of nerve begging others for money to help him out of this. Of course he'll spin this as it wasn't his fault, market manipulation, insiders screwed me over, e-trade didn't liquidate me, wah wah wah. Anything to deflect the blame. This is what happens when you don't treat the markets with respect. I think he should sit in the corner by himself and eat his humble pie but that's just my opinion.

I think he said he was a new trader, only trading for 6 months. Did you know everything there is to know when you only had 6 months experience?

I think the kid deserves a little sympathy, if nothing else. I'm not sure how much 130k is in relation to his total net worth, but for most 32 year old's it would be quite a bit. The fact he is liquidating retirement accounts and still needs a payment plan gives some insight.

Mike

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  #15 (permalink)
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i feel for him. shit happens. it can happen to anyone...any given day with even stops being there.

@bmtrading9 you did a good thing. Nice....will do the same

got to hand it to him...he is diligent to pay up. we all borrow in some fashion or the other. when you short you borrow. i think he has courage.

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  #16 (permalink)
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That's a tough market lesson indeed. I've made some pretty big mistakes when first trading but nothing on that level.

As you say, leverage (too much) and diversification (too little) are the key lessons there. Also, these types of stocks can be extremely volatile. If only he had decided to buy puts instead or covered his position with some likely cheap call protection...

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  #17 (permalink)
Hi Mom!
Bridgeport, Ct
 
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Big Mike View Post
I think he said he was a new trader, only trading for 6 months. Did you know everything there is to know when you only had 6 months experience?

I think the kid deserves a little sympathy, if nothing else. I'm not sure how much 130k is in relation to his total net worth, but for most 32 year old's it would be quite a bit. The fact he is liquidating retirement accounts and still needs a payment plan gives some insight.

Mike

No, I didn't then and I don't now. My knowledge is rudimentary at best, but I know at least not to get my head blown off by a trade and to treat the market with a modicum of respect. This guy did neither and now wants a parachute. I hope he can bounce back from this, but he must have known this was a possibility.

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  #18 (permalink)
Energy futures Superfreak
charlotte nc
 
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I've never been in a situation like this, but it certainly seems like the panic after hours sell cost him almost 5$*8400 (42k). Unfortunate that the broker wasn't more supportive and instructive. Spooky man. Sosnoff tells a story of a guy who had several hundred google calls that expired 1 penny in the money, got assigned, and then gapped down on monday to the tune of a 3 million dollar loss/margin call. TDA siezed the account after the guy said he couldnt cover it, and spent 3 hours trading out of the position on the open.

I feel for this guy, who didnt know its possible to get hit for a 15$ move on a 2$ stock. As one of my favorite mentors once told me "don't carry gold or crude short over a weekend, bud"

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  #19 (permalink)
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Some of the comments remind me of how much people can be assholes

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Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
to support our community, become an Elite Member.

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The following 6 users say Thank You to Big Mike for this post:
 
  #20 (permalink)
Hi Mom!
Bridgeport, Ct
 
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Big Mike View Post
Some of the comments remind me of how much people can be assholes

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Mike

I agree, that is way over the line. He made a bad mistake but that's uncalled for.

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