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

  #1 (permalink)
Site Administrator
Manta, Ecuador
 
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Platform: My own custom solution
Favorite Futures: E-mini ES S&P 500
 
Big Mike's Avatar
 
Posts: 46,240 since Jun 2009
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Trader loses 130k+ on short, owes eTrade 100k

A trader started a GoFundMe page to pay back $100,000 to E-Trade after a disastrous short - Business Insider

Read the article above, but here is an excerpt


Quoting 
Hello to all you traders out there. I’m starting this page out of the recommendation of other traders in the community.

I hesitated on doing this but I literally owe Etrade $106,445.56 as of this moment what would you do if you were in my situation? I’ll do whats needed and sell what I have to get them paid but if someone feels my pain and is willing to help out—who am I to say no?

If you don’t want to donate I understand, at least read my story of what happened today and protect yourself from the same happening to you! This is a terrible lesson for me but if this helps just one person than I’m happy I wrote this.

I’m a fairly new trader, been trading since about March of this year. I have learned alot about the community and trading…well not enough about trading as you will soon hear.

I have a fairly small account, but its over PDT. As of this morning it was $37,000. I keep it small because I wanted to manage risk, the most I can afford to lose is what I have in the account….$37,000. When I get some profits I take them out of the account because I wouldn’t want to lose more than $37k.

I was holding KBIO short overnight for what I thought was a nice $2.00 fade coming. At the close of the bell I saw the quote montage clear out and figured today there was no action after hours in the stock. So I went to my office for a long meeting. I got out of the meeting and saw a message from one of my buddys, he asked if I was ok since I was short KBIO….my heart dropped. “Shoot did I blow up my account, everything I worked for? I don’t want to lose all $37,000 that would be terrible.” —It was much worse.

The stock was at $16 and my account was negative over 100k. I figured it was a mistake, Etrade would never let that happen, they must have cut the position when my account got to $0….nope. I immediately called them and they confirmed I still owned all the shares. He says that it got out of hand too fast for them to cover me, he says that all he can do right now is cover. I was devistated. I asked him to cover at $16 and he waited trying to find me a good exit. I told him to do it asap and the fill was around $18.50 avg.

At the moment not only is my $37k gone, but I now owe ETrade the negative balance of over $106k. I always knew I could blow up an account and I was financially able to “afford” to lose the $37k. Never in my wildest dreams did I imagine that Etrade would NOT have some sort of stop or circuit breaker in place that would automatically cut a position if the account went to $0…..how could they ever let it get to -$144k loss on a account that small! Also, why did I have to call them to find out what was going on, why did they not alert me or call me when it went neg???

I’m never one to ask for a handout and honestly I’m kinda not sure if I should post this but here we go. I’m sure it will cause lots of controversy on whether or not I deserve even a $1 donation but it doesn’t hurt to ask. Anything you traders can do to help me get a little out of this hole would be a blessing for me. Anything donated will go 100% to simply paying Etrade some of this $106,445.56.

My plan moving forward is to liquidate mine and wife’s 401k’s and try work out a payment plan with Etrade. I’m also going to ask them to help out in some way…thats a longshot. I will pay them and be back trading….only with set stops this time. What an expensive lesson that was.

I hope my story helps someone else from the same.

Mike

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  #2 (permalink)
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  #3 (permalink)
Patience my young padawan
Houston, TX/USA
 
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ElChacal's Avatar
 
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I saw it today on marketwatch. That is sad and bad and I knock on wood.

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  #4 (permalink)
Site Administrator
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Big Mike's Avatar
 
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A long time ago a friend and I were both long the same tech for a few days. I didn't like it so much, and exited at the close. A few minutes after the after hours close, news broke of major fraud and cooking the books. Friend ended up losing nearly his entire account on it, and he was long.

Lots of lessons to be learned here, but diversification is an important one when it comes to stocks.

Mike

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  #5 (permalink)
Elite Member
Memphis TN
 
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Pariah Carey's Avatar
 
Posts: 592 since Jan 2014
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We all pay our tuition to the markets one way or another. But to receive a bill that large, in one day, is terrible. I may pitch in a few bucks just as a gesture and show of support. Though I'm sure some people will revel in his misfortune and say he brought in on himself. Which he did, but I'm not going to kick a man while he's down.

If this is the worst thing that happens to him this year, he's still had a pretty good year.

Someday, and that day may never come, I'll call upon you to do a service for me.
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  #6 (permalink)
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Imagine losing every dollar in your current account right now, in 2 hours, while you were away at a meeting. Then imagine tripling that loss and having to liquidate your retirement accounts for you and your wife.

I feel for him, I really do.

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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  #7 (permalink)
Site Administrator
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Posts: 46,240 since Jun 2009
Thanks: 29,353 given, 83,234 received

https://www.gofundme.com/jwctrek

On his GoFundMe page, it seems the comments are pretty harsh.

I think everyone needs to learn countless lessons in trading, but losing triple your account in a couple of hours is a bit extreme for anyone to cope with.

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.

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  #8 (permalink)
Site Administrator
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Posts: 46,240 since Jun 2009
Thanks: 29,353 given, 83,234 received

I noticed he said he would be back trading, but with stops.

I am not sure he realizes (though, surely...) that let's say he was short $2.00 and had a stop at $3.00, if the stock is halted or the deal is done after hours, it can reopen at anywhere it wants, for example re-opening at $12.00 and then his stop gets filled at $12.

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 4 users say Thank You to Big Mike for this post:
 
  #9 (permalink)
Site Administrator
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Big Mike's Avatar
 
Posts: 46,240 since Jun 2009
Thanks: 29,353 given, 83,234 received

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

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.

Reply With Quote
The following user says Thank You to Big Mike for this post:
 
  #10 (permalink)
Hi Mom!
Bridgeport, Ct
 
Futures Experience: Intermediate
Platform: Sierra
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Posts: 365 since Jun 2012
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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.

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