Monday, January 21, 2008

The stock market ruined my life




Stock Futures Trader losses it all and flips out - Watch more NSFW

For those that didn't see the video when it originally aired January 22, 2008, I lost over 30k holding a trade over the weekend being long the stock Futures indices. I was overleveraged, but I never thought the market would go limit offer(Dow Futures down 650pts) with the US markets closed on Monday in observation of Martin Luther King day. I sold my long before the market opened due to a potential margin call that would have liquidated everything. On Tuesday, the Fed did a surprise interest rate cut, and the market popped 500pts. Here is one of the posts from January.
The Dow dropped close to 1000pts in 3 trading days.


For the record I went long 10 ER2 contracts into the close on Friday. With the intention of holding until market open on Tuesday.........Bad Choice,,,,Clearly....

37 comments:

Anonymous said...

Sorry for the pain. Just wondering if you averaged down when globex opened this evening. Keep the faith. The way it is trading, there is a high likelihood of a rate cut Tuesday morning.

Anonymous said...

That shows you and the rest of us, keeping futures on the blind for 3 freaking days is suicide. That what brings fortune fast, brings disaster even faster! No wonder, Buffett calls these investments, FWMD (Financial Weapons of Mass Destruction).

Hopefully you'll keep trading.. even if it's just paper trades. I still think loads of people are interested I what you have to say about this stuff. Keep remembering, that what doesn't kill you, makes you tougher!

ainkurn on 5:50 AM said...

sorry to see you're loosing big over the weekend. hopefully your broker won't liquidate you before the market has a chance to rebound. good luck tomorrow.

Dinosaur Trader on 6:34 AM said...

HPT,

I felt the same way when I went short FSLR into earnings and watched it gap up 55 points on me the next morning.

Awful.

These things sometimes happen. You'll move on.

-DT

FX on 7:07 AM said...

Man it's disaster and I'm sorry.

But thanks for sharing this video because it's evidence of what can happen and how risky this business is.

Skyb0x said...

Thanks for sharing the video... I could feel the angst. At the moment, I'm on the wrong side of market as well...I'm long UYG, POT, DRYS, MOS and ICE swing positions that I bought on Thurs/Fri and I'm sure they will take a hit. The only saving grace will be my FXP hedge.
Later.

Anonymous said...

Wow, I'm so sorry. But I think you can come back from this. Good luck to you.

nullpointer said...

been there brother, my chest hurts just watching you. i am sincerely sorry, its fucked up.

Anonymous said...

HPT-

The best thing you can do at this point is to mentally let it go. You will do yourself no good and much harm by beating yourself up over it. You already know what the problem is and you will eventually be able to admit it to yourself without all the emotional pain and outburst.

If your position was not liquidated then that means you still have enough to trade, just not the size you had available to you previously- which in my opinion is a good thing in the long run. If you choose to continue trading you will force yourself to learn better self control if you want to survive.

If were so confident the market was going to tank then the correct action should have been clear and you would be up 24k or more right now. You felt locked in and you were not.

You were afraid to make a different decision because you were afraid you would be wrong again.

Intraday trading is completely different than the elephant hunt you went on. Your intraday methods are dangerous and haphazard enough without compounding them with the added risk of fighting the market while hoping for some external influence to come in and prove you right.

As have others, I have lost 40k in a single trade by ignoring the obvious and hoping for a miracle. It didn't work. The reason I thought it might? The same reason you thought it might- I'd done the same thing before and got lucky.

You don't have an edge. Luck is not a system. Hope is not viable methodology.

Flush your brain of all input regarding trading, including what I have written here, and step away for a month. Decide what you really want and think hard about the best way to accomplish that.

You seem like a smart kid. Would life not be better if you had something that paid you handsomely while you were doing more enjoyable things other than staring a monitor all day waiting for the right beep and the right color to show up?

I wish you all the best and am confident that you will accomplish great things.

J Parker

Anonymous said...

You should have used a stop to protect you. Now you've learned your lesson. Good luck going forward.

Anonymous said...

Dude,

This was very painful to watch and my heart goes out to you. If you still have funds left I would suggest you take some time off and regroup your thoughts. Start trading small size and gradually build up. I took a huge hit in august and made it back. I have taken a smaller hit recently and I need to control the urge to get it all back because it leads me to gambling not following sucessful methodoligies. Good luck. May great traders completely blew up and came back and made millions.You may not want to hear that right now but it van be done !

Anonymous said...

Come to the Vanguard Diehards forum. We'll show you how to invest safely so this doesn't happen again:

http://www.diehards.org

Anonymous said...

Each person who reevaluates the risk in their holdings after watching your video should send you 1% of their portfolio.

There is nothing I can really say to you except thank you for having the courage to share a powerful message.

Felipe on 8:11 PM said...

for the genius who said "shouldn't you have used a stop?" - there are no stops when it gaps open... and if he went long before the close, he took his chances with a gap, as i did... the only thing is that i wasn't leveraged... had stocks... but i thought "ah, well, us holiday, so its a pump day from our bear market pump and dump's..."

Anonymous said...

Don't despair. There isn't a great trader in history who has not made a terrible mistake at least once in his trading career. I hope this does not annihilate your account, because then you can learn and grow from this experience.

Best –

Anonymous said...

ugh, this is obscene and I don't blame you for going long.

however if you went long 10 contracts, I assume this is just a fraction of your account?

i much more than that over a year and I now use stops even though i get stopped out more often than not.

Anonymous said...

hey guy..... I sufferred disaters 3 times in 2 years.....blow up my futures account 3 times....just like you saying the word "fucking" all day long...I know it really really really hurt!! You can stand up again....just like me......I broke my trading chair......broke my door into pieces by naked fists(pain was forgot).....crazy.....angry....anything negative was running out of your mind.....but it is the business! You may not believe that I'm still in the business right now but it's true.....I'm a better day-trader now......so can You....I trust!

Ghost of McClellan said...

Stay in the trade as long you can. A short term bottom is close to hand according to my metrics, probably already today tuesday.

Then I was young and green many moons ago I'd run down my first futures account from 20 grand to almost zero by over trading, using no stoploss, no discipline, etc. But it provided valuable lessons and made me stronger.

Oskar on 11:32 PM said...

HPT - I hope you cover your position already. The futures is currently in another leg down (double from the point you record this screencast actually).

I'm pretty much in the same position as you now. But I hope we both can pull a comeback :)

Peter said...

well, this takes courage to publish this video... I can honestly say since I trade for a living now for 23 years that this has happened to me as well on 2 or 3 occasions and I have to admitt once I even slammed and broke my keyboard. The lesson I have learned and I made me look at it visually in front of me every day is that I do not take overnight positions over the weekend or holidays. The bottom line is preservation of capital and many times you will miss on a few good trades but trust me every day there will be another opportunity and I try to slapp me whenever I feel I overtrade and put me in the penalty box for 2 days to recharge and pick only the trades where there is an edge, this is hard enough as we all know

regards
Peter

Anonymous said...

Don't get too down on yourself, all the greats have made big mistakes that they bounced back from!

If nothing else it sys your blog is worth $22,581.60, maybe you could raise some cash that way?


:)

Good luck!

YourTradingStock said...

I've been there dude. An ugly part of the journey, but one that's gonna reinforce keeping your losses small.

Globetrader on 6:57 AM said...

I really hope you did not get a margin call tonight and were able to hold for 670 to exit. Still an expensive lesson, but not as expensive as it looked at first

Pissinginthetent.com on 8:28 AM said...

Welcome to the gambling business. Do what I do, bet on sports.

Anonymous said...

Anyone who lists Topgun as a favorite movie deserves to wiped out (lol).

Anonymous said...

Where was your stop? IB accepts stops that trigger in the overnight market. I checked and this didn't just gap down. It moved lower which would have triggered a protective stop.

Anonymous said...

Pretty cool to have posted the webcam footage. Back in November I got the chills when I was down over 170Keur (obviously on margin) on only pure equity (mostly emerging market ETF and Mining), sent one of my cellphones crashing against the fucking wall and was really thinking I would be royally fucked if the market went down any harder, luckly I stuck to my guns, and got out on the rebound and sold 60% of my portfolio on the day gayish Bernanke only gave us 0.25pt cut; which means I got it all back in the December rally.

Couple of pointers that I've tattooed on my forehead:

One way bets will make or break you, and remember : you can't win them all, so always hedge!

Never turn a short term bet into a long position.

Don't bet! Invest.

Beanieville on 10:36 AM said...

That's horrific. I want you here: http://beanieville.blogspot.com

El on 7:45 AM said...

So sorry man...
I know that sorry does not even come close to doing it justice. Don't forget one thing...you are more important than money my man. You are MUCH more important than money.

Anonymous said...

Thanks for the video. Hope you make it back next week

www.ShareTipsInfo.com Team on 12:13 AM said...

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Airelon on 9:05 AM said...

Dude,

I mean this to help. Let me ask you a question.

Why did I experience the same move? But year to date, I'm only down 8% in my worst performing account?

It's all about money management principles and strategies. It's not that you were in Futures (I've traded futures for 12 years). It's not that you were in Options, or recession, or subprime is unfolding, or anything else.

It's all about money management. You were gambling. Not investing. Not trading. Gambling. There's a difference. And the five aspects of money management are what make up the difference. I'm really sorry you had to learn this expensive lesson . . . but you know you did it to yourself. Only 3 - 5% of your account should have been risked total on that trade. Unless you are very, very savy with money management principles, and understand the ratio's, you should NEVER risk beyond 5% of your capital. Ever. This is what leaves you alive through movements like this - to trade another day.

the finance ninja on 6:24 PM said...

airelon is right, but it also sounds like he/she has a lots of capital to work with because only 5% is not enough to pay for commissions on such a small account. Sure its easy to say if you have an account of $500k another thing if you have $5k.

i've been there done that and i know the pain of bad trading decisions. just stop gambling and focus on becoming more disciplined.
thats my goal this year. i plan to trade call/put options with only $1000 per trade for a good while until I can handle that amount. I'm also taking steps to not make the same mistakes i have before and to keep it strictly disciplined how i get in and out of trade using a personal checkoff sheet i'm creating. if all the checks aren't there i won't trade the option.

so the stock market didn't ruin your life, you made your ownself miserable, so own your own misery and be reborn again! =D

finance ninja
http://financeninja.wordpress.com

Mike on 9:37 AM said...

Dude, I feel your pain right across the Pacific. Finance Ninja is right, a large part of money management depends on the scale of money involved. Nevertheless, you still should have some sort of stop loss.

Betting futures either way at the moment, IMHO, is financial suicide. But hey, we all come back to trade another day, right?

Anonymous said...

jesus.. this was hilarious.. :)
very sorry for you man. hope I never put my self in this serious position.. help me god! Hope you make it back so you can laugh of this video yourself.

M on 10:53 AM said...

I also just lost $30k in the last couple of days. I lost that much because I went against my own trading principles.

In my experience the biggest profits are made from leveraged counter-trending, that's also where the biggest fortures are lost.

I'm not pissed at the Markets but at myself. I knew the shape the market was taking and instead of doing what I had planned I completely lost self control and the market swiftly punished me for that (in less than 24hours).

I'm still thankful that I got stopped out with money in my trading account because if it hadn't stopped me out intra-day, I would have left it going and who knows... I could have ended up owing the bank more money than I have!

Anyway, I hope you feel better and I can say I know how you feel. I don't think I'll be going back in the markets any time soon, I need a period of reflection and maybe a sharpening of my trading skills in a simulator.

Thanks

Bureau on 3:38 AM said...

Well that was very sad, but we should remember that nothing is permanent, you will earn again what you have lost, Trading Market is full of consequences and chances so Good Luck.

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