Short Term Trading Weekend Lounge 29-31st Jan

Originally posted by Freehold ↑

Experiencing a MAjor Down Swing ...

A true Story....

I had a friend who lived in Singapore who was a trader primarily (Ex accountant) in the hot sector of Tech around the year 1997-2000... He started small with 20-30k and was enamoured with Tech stocks...anything Tech. He traded extremely successfully... and was full of Bravado ...the phrase Bullet Proof comes to mind. He made money on good tech decision he made money and on bad decisions ... 30k turned into $3.8 million. He drove a fancy car lived in a fancy apartment had a high maintenance /cost Lifestyle and girlfriend... He went over and above and started leverage but only small to med amounts given the portfolio size. ... He bragged about how great a trader he was and how he had given up full time work forever... I was jealous ... seeking tips /advice... which he gave freely and enthusiastically.

Problem was he (and the rest of the world) was riding the crest of a giant wave but did not realise at the time. That Tsunami was the wordwide Tech boom ...The wave hit land and crashed in a matter of days / weeks...

End result was all tech stock he owned collapsed and in 3 months he was left with nothing but debt and had to sell all his assets to pay for it... could not even afford to pay rent at one point and had to return to Aust. given he had left his job for more than 18mth had difficulty finding a job, had to borrow more money from relatives to survive ...his health suffered, hit rock bottom ... slowly he clawed his was back to have a half decent job after a few years and cleared his debts.

The moral of the story ... Don't think about giving away your day job until you have survived and traded through at least one giant correction. I survived the Asian Crisis, the Tech Wreck ... but still got "pantsed" by the GFC as it was a different kind of crash... a growing Snowball of destruction as opposed to sudden Tsunami.

So a bit of objective self analysis is in order... is your Ego getting out of hand... if so then your showing the 1st danger signs ... you would do well to keep this behaviour in check because the next Tsunami will come as sure as sun will rise tomorrow... It might be early in 2016 or 2017 or 2020 who knows but it is coming ... We may be high on a crest right now or not who knows but not many will see it coming they never do??? But key is never over extend yourself and be ready to go to cash at a moments notice... If you are a hoarder of failed Short term trades and your bottom draw is filled Stocks deep in the red then you are future cannon fodder. If you have trouble cutting your losses early you are future canon fodder... I only store "Green" coloured stocks in my sock draw not red ones. And those stocks need to be growing "bright green"

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Great post! I never understand why people want to live the high life just because you make money for a few years.. All I want is to make a living in my pyjamas and not answer to a boss lol not a fancy car or house