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That’s exactly what I’m looking for –real “in the trenches” experiences from traders about what’s gone wrong. I go by the old axiom that while it’s good to learn from your mistakes/experience, it’s better to learn from others mistakes/experience.
It is critical to know you can be your own worst enemy, and yes, in the heat of the moment you believe you are doing the right thing… but really digging your own grave. Under pressure, mistakes are easy to make… just watch the tv show Air Disasters. That show also taught me, sometimes it’s not just any one thing that causes a tragedy. Sometimes a random confluence of events, even statistically remote events, coalesce and lead to tragedy.
Either way, anyone who has been in and around tech long enough, knows it can and will fail. A wrong record here; a failed refresh there. It really seems one should have multiple points of verifying reality/positions… and not just react by clicking. What a terrible, terrible gotcha. I’m so glad I started this thread.
This video also had me thinking about emotions and risk. I think it was “That Man From Texas” or another one of the old timers on here who had that saying where the day he became a winning trader, losses no longer bothered him and winners no long excited him, or something along those lines. I suppose he had risk management down pat, because things became routine/boring.
In this video, when he talks about prop traders smashing screens, and all the pressure of mounting loses, it really means they were risking too much. So, the litmus test is: if you find yourself anxious or nervous about getting into any particular position, it means you’re risking too much, regardless if it’s mathematically sound. For the most part, it wouldn’t damage your emotional stability to lose say 10 bucks. It’s a nothing-burger. But losing a 1000 is huge deal. The day you feel the same way about losing 10 bucks as you do 1000, well that’s where the emotions need to be for what you’re doing. The idea is that despite being “mathematically sound” your psyche is out of whack, and thus compromising decision making in that moment of time. So, it’s important to be cognizant of your own emotions and how they are affecting you.
The video also emphasizes to me, trading is a marathon, not a sprint. Those traders looking to get rich, probably don’t have risk bottled up, and those traders looking to last, probably do. That’s not to say tragedy cannot still strike, it can, but that also parlays into the other point you made about diversification.
Folks who had all their money in PFG Best or MFGlobal or their retirement in Enron learned that the hard way. Living to fight another day definitely means don’t put all your eggs in one basket. So, that means yeah, have more than one trading account or at least enough money somewhere on the side lines to get back in the game, versus being fifty and be forced into a ‘will you take fries’ with that situation.
But now this leads back to one of my questions in a previous post about busted accounts. Say you tuck away 10 or 20 grand away as rainy-day tragedy-struck money so you don’t have to apply to McDonalds. Do these brokers/firms liquidate you before they let you go negative? Again, it goes back to busting an account being bad; busting an account and getting another bill being worse; and busting an account and then finding oneself on the receiving end of a lawsuit, god-awful.
Thanks everyone for contributing to the thread, I’m learning a great deal. 😊
I think you're asking whether you're allowed to send in money to avoid a margin call, or whether you will simply be liquidated before you go negative. The answer is almost always: you will be liquidated before you go negative. And in truth, you'd want to be, wouldn't you? If I'm at the point where my account has flipped negative, something's horribly wrong and the risk of going negative is worse than the potential for a turnaround, IMO.
Some brokers will work with you and actually let you wire funds in before liquidation. But they are few and far between. Most brokers are set up to automatically liquidate you if you get below margin requirements, let alone go negative.
Yes, I agree I would definitely want to be liquidated. I was more thinking along the lines that I can do everything in my power to manage risk within my control, however anything outside my control, can bite ya. Knowing that this is America, the land of litigation, I always have an eye on exposure. I also know a number of lawyers and the stories they tell... teaches you to be careful. So, knowing for a fact any Terms of Service agreement is going to be extremely one sided (for even say some technical error on their end), I was trying to see if the community had any experiences along these lines. I would expect an event along these lines would be a six sigma event, however, these people don't put those disclaimers (lose more than your investment) in the not-so-fine print for no good reason, which is why I posited the question. I do agree though, that it seems logical that once you hit margin ---their safe guards shut you down ---which is what you'd want.
