Took out a loan to transition to full-time trading. 24 years old.
- Thread starter wabu27
- Start date
Ok. You said he made most of his money from his tv show. That wasn't true.
He was already in a world of trouble when he first took those high interest rate loans. Yet, I'm unsure about why he was not able to secure a much lower interest rate with lendingclub that advertises their rates are lower than the typical bank unless its those existing student loans (50k) he has that caused the higher interest rate but then again you would think they would not have qualified him to get a loan from lendingclub.
The other reason that put him in a world of trouble prior to his first trade as a day trader was that he has "no patience" via the fact he already had saved 9k and with a 60k yearly job he could not wait a few years to save enough money to get pass the 25k PDT rule so that he could day trade. Heck, getting a 2nd job (night) would have allowed him to saved even faster.
Psychologically, traders will trade differently when trading with money they can afford to lose versus trading with money they can not afford to lose. That's why its best to just save the money...it will remove a great deal of pressure from the trading.
What makes someone take on that much risk prior to trading so that they ensure they have so much financial pressure to succeed that it then encourages bad decision making when trading is mind boggling...its self-sabotaging.
In addition, some of this day trading is occurring from work...that's another self-sabotaging. There are many ways someone can actively trade while not doing such at work. Those that refuse to make adjustments in their personal life so that they aren't trading at work...these are people that should not be day trading.
The only thing on his side is that he's young and has a decent paying job with benefits. Simply, even if he fails miserably...he'll be able to pay off the loan and file for some consolidation to lower his monthly payments assuming he stays away from trading. I believe the latter is why he has taken on such a high risk because he knows he can bounce back but he also will know he's not suitable for day trading.
Thus, the real risk is if he loses his job and its still not too late for him to just pay back the loans now, start over and do this right without the loans via just doing it the old fashion way...save money. Also, get a 2nd job so that when he starts day trading again, he doesn't have that financial pressure that will encourage him to make poor day trading decisions via such type of pressure.
Hopefully next time he will not use a "virtual account" as his proof that he can succeed as a day trader. Hopefully he will be more patient with his finances because the U.S. is already in a financial crisis over those student load debts...people don't need to make it worst via adding personal load debts on top of that.
The other reason that put him in a world of trouble prior to his first trade as a day trader was that he has "no patience" via the fact he already had saved 9k and with a 60k yearly job he could not wait a few years to save enough money to get pass the 25k PDT rule so that he could day trade. Heck, getting a 2nd job (night) would have allowed him to saved even faster.
Psychologically, traders will trade differently when trading with money they can afford to lose versus trading with money they can not afford to lose. That's why its best to just save the money...it will remove a great deal of pressure from the trading.
What makes someone take on that much risk prior to trading so that they ensure they have so much financial pressure to succeed that it then encourages bad decision making when trading is mind boggling...its self-sabotaging.
In addition, some of this day trading is occurring from work...that's another self-sabotaging. There are many ways someone can actively trade while not doing such at work. Those that refuse to make adjustments in their personal life so that they aren't trading at work...these are people that should not be day trading.
The only thing on his side is that he's young and has a decent paying job with benefits. Simply, even if he fails miserably...he'll be able to pay off the loan and file for some consolidation to lower his monthly payments assuming he stays away from trading. I believe the latter is why he has taken on such a high risk because he knows he can bounce back but he also will know he's not suitable for day trading.
Thus, the real risk is if he loses his job and its still not too late for him to just pay back the loans now, start over and do this right without the loans via just doing it the old fashion way...save money. Also, get a 2nd job so that when he starts day trading again, he doesn't have that financial pressure that will encourage him to make poor day trading decisions via such type of pressure.
Hopefully next time he will not use a "virtual account" as his proof that he can succeed as a day trader. Hopefully he will be more patient with his finances because the U.S. is already in a financial crisis over those student load debts...people don't need to make it worst via adding personal load debts on top of that.
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I think he is under pressure of the loan and wanted to make some big bucks quick to pay off the loan ASAP; once done that, he would be more patient, not so eager to place trades everyday. In addition, trading while working added to the pressure and anxiety, he would be disappointed from time to time that he missed some real good play and then tempted to trade less favorable opportunity.
After watching the market many years (5 plus?) he got some trading experience for sure, as he made some decent gains many days, but it looks like he still needs to rely on other external info like stocktwits to confirm his trading decision and also trade on his gut feeling that would contribute to both big gain and big loss.
After watching the market many years (5 plus?) he got some trading experience for sure, as he made some decent gains many days, but it looks like he still needs to rely on other external info like stocktwits to confirm his trading decision and also trade on his gut feeling that would contribute to both big gain and big loss.
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Also, usually inexperience traders will have occasional big gains trading days but they also have big losing trading days. If he's lucky (yeah...luck is involved), he'll last long enough to gain more real trading experience so that he can minimize those big losing trading days but with all that financial pressure to succeed...odds are that this will be a pattern for him.
Big winning days and then big losing days.
Only way to remove that financial pressure is to pay off the loan, save money and start over without that type of pressure.
In addition, those prior years of learning experience was "losing" in the long run (his words) due to living expenses and the markets was different along with the fact he didn't have the financial pressure like he has today. Further, I'm sure he traded around his school schedule or had better control of his trading schedule and school schedule in comparison to today's real job schedule.
I day traded while in college myself...very little pressure. In contrast, day trading while at work is a completely different ball game and should never be recommended because there are only two outcomes...poor trading or poor job performance. Trading from work really does impact a person decision making process...resulting in that something will suffer.
The general rule is don't bet more than 2% on any single day trade, not in a day. That rule is hard to follow unless you have a large account. Most day traders could easily lose 20% of their account in a day following this rule with ten consecutive losses (a high probability event). A daily loss limit is the only way to prevent this, the PA-marketing gurus never mention these sobering facts in their greedy push to make sales.
I think most traders have some kind'uv "loss limit" and such is regularly mention to them by everyone including gurus. Even if someone in specific doesn't mention it...others are talking about.
Simply...they know. The real issue is that we don't listen and/or we do not have something in place to enforce whatever "loss limit" rule they're using. Thus, we are completely dependent on our own that we will follow our risk management rules. Some of us even think we'll follow the rules if we put "sticky notes" on our monitors.
Seriously, this guy took out a high interest loan when people were telling him not to do it. What are the odds he's going to listen to one guru telling him also not to do it and what are the odds he's going to listen to another guru telling him to use a "loss limit" to close shop for the day so that he can fight the battle another day ?
He's not going to listen no matter what a guru tells him, no matter what you say to him, no matter what I say to him and no matter what others at this forum will say to him. I know this for fact considering he was told such prior to the loans and prior to the first trade after the loans. Yet, he's still trading.
The only thing he will listen to is a margin call, loss of job, mental breakdown or loss of something he dearly cares about. Regardless, the next several paragraphs are for you (Q3D) because you should pay more close attention to your broker disclaimer statement and warnings and your data vendor (CQG) disclaimer statements and warnings just in case you're one of those people that doesn't listen to gurus or have the habit of blaming gurus.
If you say they give no warnings about risk management...you surely did hear about such from forum members at any forum you're a member like here at Elitetrader.com
This is why I think brokers and data vendors should do some sort'uv credit check and psychological evaluation prior to allowing retail traders to open an account with a broker and prior to being allowed to subscribe to a data service. This is what has been suggested by congressional meetings back in early 2000 and suggested by banking institutions that do business with brokers and suggested by well known trader psychologists...
Yet, here we are today and nothing really has changed. Anyone with money and a license ID can open a trading account along with trading on margin.
Seriously, you knew the warning (risks) yourself and yet you decided for whatever reasons to day trade with your psychological profile and I'm assuming you're still trading. The question is this...did you reveal your psychological profile to your guru when you decided to listen to some guru...did the guru know that critical info about you ?
If not, blame yourself and not some guru, not your broker, not your data vendor because it really is a two way communication street and when someone does not disclose something that will impact their trading...things go wrong.
Trading is high risk and you can lose all your money...you've now heard it again and if you take another trade...do not complain and say you didn't know.
P.S. Next time you open a trading account...read the paperwork fine print more closely...it really does inform you about the high risks involved in trading. Also, talk to your broker to see if they have something in place to setup a "daily loss limit". That is your responsibility to find out and not your broker responsibility to contact you about such if you don't ask.
P.S.S. High interest on the loans, trading from work and lack of discipline...that's the bulk of his problems...not some forum guru or someone he's following on stocktwits.
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Guy has a down day and out come the "told ya so" comments.
I kind of think it might be a big sim troll thread anyway, who knows. If it's the real deal cash trading...dude I've been there, you can't take 25% daily losses in this game and survive. And your comment to that massive, future account blowing loss is "lol". You better get mad at yourself and feel that pain and be a motivator to never let it happen again.
I kind of think it might be a big sim troll thread anyway, who knows. If it's the real deal cash trading...dude I've been there, you can't take 25% daily losses in this game and survive. And your comment to that massive, future account blowing loss is "lol". You better get mad at yourself and feel that pain and be a motivator to never let it happen again.
Actually, the I told you so comments started when he got the loans and prior to him trading. He even open this thread asking for opinions about such. The comments just has not stopped even when he had profitable days.
Yeah, its possible this could be a troll thread (fake situation) but still a useful thread just in case someone else thinks about really doing such and they don't know the warnings about such and the impact on a trader's quality of life.
Heck, it could be Baron himself for the purpose to bring in view counts because I've seen a forum owner elsewhere admit to doing such in the past.
I think most traders have some kind'uv "loss limit" and such is regularly mention to them by everyone including gurus. Even if one doesn't mention it...others are talking about.
Simply...they know. The real issue is that we don't listen and/or they do not have something in place to enforce whatever "loss limit" rule they're using. Thus, they are completely dependent on their own that they will follow their rules. Some even think they'll follow the rules if they put "sticky notes" on their monitors.
Seriously, this guy took out a high interest loan when people were telling him not to do it. What are the odds he's going to listen to one guru telling him also not to do it and what are the odds he's going to listen to another guru telling him to use a "loss limit" to close shop for the day so that he can fight the battle another day ?
He's not going to listen no matter what a guru tells him, no matter what you say to him, no matter what I say to him and no matter what others at this forum will say to him. I know this for fact considering he was told such prior to the loans and prior to the first trade after the loans. Yet, he's still trading.
The only thing he will listen to is a margin call, loss of job, mental breakdown or loss of something he dearly cares about. Regardless, the next several paragraphs are for you (Q3D) because you should pay more close attention to your broker disclaimer statement and warnings and your data vendor (CQG) disclaimer statements and warnings just in case you're one of those people that doesn't listen to gurus or have the habit of blaming gurus.
If you say they give no warnings about risk management...you surely did hear about such from forum members at any forum you're a member like here at Elitetrader.com
This is why I think brokers and data vendors should do some sort'uv credit check and psychological evaluation prior to allowing retail traders to open an account with a broker and prior to being allowed to subscribe to a data service. This is what has been suggested by congressional meetings back in early 2000 and suggested by banking institutions that do business with brokers and suggested by well known trader psychologists...
Yet, here we are today and nothing really has changed. Anyone with money and a license ID can open a trading account along with trading on margin.
Seriously, you knew the warning (risks) yourself and yet you decided for whatever reasons to day trade with your psychological profile and I'm assuming you're still trading. The question is this...did you reveal your psychological profile to your guru when you decided to listen to some guru...did the guru know that critical info about you ?
If not, blame yourself and not some guru, not your broker, not your data vendor because it really is a two way communication street and when someone does not disclose something that will impact their trading...things go wrong.
Trading is high risk and you can lose all your money...you've now heard it again and if you take another trade...do not complain and say you didn't know.
P.S. Next time you open a trading account...read the paperwork fine print more closely...it really does inform you about the high risks involved in trading. Also, talk to your broker to see if they have something in place to setup a "daily loss limit". That is your responsibility to find out and not your broker responsibility to contact you about such if you don't ask.
P.S.S. High interest on the loans, trading from work and lack of discipline...that's the bulk of his problems...not some forum guru or someone he's following on stocktwits.
#1 I had great credit, good work history, a somewhat stabilized mental state and over $50,000 in capital when I started 5 years ago, so when I see people talk about saving $25,000 to day trade and then be set I think that is terrible advice. In the aftermath of these 5 years of masochism I have nothing positive left, aside from a possible rationalization of "trader's tuition" which can rationalize further masochism ad infinitum.
#2 the way the human mind works, even if a guru mentions a daily loss limit or a risk of ruin in 100 out of 200,000 words in their books, the readers will not focus on that because they gurus write much more about positive and glowing rewards in their books, which is what manipulates and stays in the human mind, a brief talk of a daily loss limit does not.
These gurus should have been required by their corrupt publishing houses/government regulators to offer a free risk-management book with their other books so readers are not manipulated into focusing on the rewards instead of the risk of trading.
My advice to OP is to take all profits out of account to pay off debt after each profitable trading day, once debt is paid off your trading should be less volatile.