Why most people that blew their accounts even owe money to the stockbroker?

[crgarcia]

You often read horror stories about first timers that blew their accounts.

Many of them even owe money to the stockbroker. Why?

Even when buying on margin, is highly unlikely your stock will go down by more than the 50% needed to owe money to the stockbroker. Also, the plunge had to happen real fast so the broker could not liquidate the account fast enough.

Maybe they buy penny stocks? Short sell options? Futures perhaps?

 

[HedgefundTrader2]

Quote from crgarcia:

You often read horror stories about first timers that blew their accounts.

Many of them even owe money to the stockbroker. Why?

Even when buying on margin, is highly unlikely your stock will go down by more than the 50% needed to owe money to the stockbroker. Also, the plunge had to happen real fast so the broker could not liquidate the account fast enough.

Maybe they buy penny stocks? Short sell options? Futures perhaps?

There are numerous type of gamblers and thrill seekers and they would love to blow a wad of bills for the sake of it. Most accounts at brokerage houses close in six months or less. Just look at AMTD and see how many accounts they have opened and closed. They are always hard pressed like used car salesmen to open new accounts, get fresh meat, let it bleed, close the account and liquidate whatever is left and be done with that. Its a cycle they go through it.