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Trading Journal (06.14.20)

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@mawit07
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The futures market is currently down a little over 1% as over the weekend news of Covid-19 cases have increased in states that have opened up early is likely dragging the market down. Furthermore police and civilians tension rising as another deadly incident where a police kills a suspect in Atlanta. The police chief in Atlanta immediately resigned after the incident. There is also North Korea being a volatile area again with regards to the country bulking up on its military at the boarder between North and South Korea. The news headlines are just bad.

Then out of no where I read into a story that spread in the trading community that is very tragic. I can not confirm if it is true or false but from the way the story has presented itself and how people have reacted to it I believe it is true. The game of stock trading is a ruthless engagement no matter how experience a trader has. For those who start in environments such as what we face currently it is best to only trade what you are able to afford to lose. Never extend beyond your means when it comes to position sizing no matter how much odds favor for you in trade. Anything can happen and trade can easily go against you.

https://twitter.com/BillBrewsterSCG/status/1271802132979748866

https://www.reddit.com/r/investing/comments/h96rcf/20yr_loses_700k_on_robinhood_options_takes_life/

For those who are not aware Robinhood has been called out before on lack of protecting retail traders from excessive use of margin. Margin is when trader uses more than what they have in their account to trade. This is possible because this allows traders to profit more in trades when right but on the flip side lose more if the trade goes against them.

Bloomberg wrote a piece Robinhood's Glitch that allows trader to use 100x margin to trade. There is no excuse for Robinhood to no have fixed this, but if the trader who is down -700k in his account due to trading options it is likely possible there is still more work to be done on Robinhood's side.

Wealth creation is not created from immediate win falls. It takes many hours of sweat and tear to create. The idea that one big trade to turn massive profits will always allure traders into the game, but it rarely has a happy ending. This is because the sooner someone earns their big pay day the less they appreciate the opportunity they have in holding such success and the stock market will make anyone very humble the next day. I have experience this multiple occasions and I know many traders that have many more years under their belt than I would feel the same way.

To those who do not think finance can be harmful to one's health it is a total lie. The whole US economy and very much the rest of the globe revolves around flow of assets that includes money. Losing one's life saving is basically losing the past years time and energy in saving and earning what they have. It can be all taken away in an instant when risk management is not applied. There is no easy way out in life to make enough for retirement. I should not ever forget that. Whether tomorrow we are down 300 points on the Dow or up 300 points there will be traders that imploded their accounts. The vicious cycle never ends. Just have to avoid being that person and always remember that the market can make anyone humble and when volatility is high best to limit position sizes.

Posted Using LeoFinance