Posted on 02/08/2018 12:38:38 PM PST by mdittmar
Day trading is treacherous in a volatile market and the competition is fierce
Some people may feel compelled to take action when they see a volatile stock market, and for one 24-year-old Reddit user, Monday’s dramatic market correction was the time to buy on a dip.
Unfortunately, it backfired.
The Vancouver-based user, a financial analyst at a Canadian pharmacy who earns $50,000 a year, said he lost his entire savings ($10,000) from trying to buy the dip, and he wrote in his thread about using his credit card to trade CFDs (contract for differences), which are investments that mirror assets the trader doesn’t actually own. He initially funded his trading account with $4,000, but when he got margin called a few times (which means the broker demanded he put more money in to meet minimum requirements), he ended up investing $10,000.
(Excerpt) Read more at marketwatch.com ...
Don’t fight the tape. If the market wants to go down, it’s going to go down.
The media, enemies of capitalism, are always wrong about the market.
The market drops and they scream and panic.
For anyone with a brain, when the market drops, we buy!
I tried playing penny stock poker with a small amount of money. I went bust, a victim of the pump and dump insiders.
Idiot.
The bank skims 3% of each credit card advance.
You’re down 3% the instant you make the first buy, and get wacked again any time you put more money in.
Nope, he traded on margins and lost. His money is gone. If he had just bought the stocks, he could have held them like you said.
Buying on margin in a declining market. C'mon, guy, seriously?
I know a young guy who lost 15K on credit cards buying into a bitcoin multiplier scheme. He bought 18 at around 800 thinking he’d get something like four coins for every one. He gave up ownership to the scheme and lost it all.
sparklite2 wrote: “How could he go broke buying on the dip?”
He was buying derivatives: CFDs: a contract for difference (CFD) is a contract between two parties, typically described as “buyer” and “seller”, stipulating that the seller will pay to the buyer the difference between the current value of an asset and its value at contract time (if the difference is negative, then the buyer pays instead to the seller).
He was on the wrong side where the seller would have to pay him if the underlying securities went up in value. When they went down far enough, he lost his 10K.
sparklite2 wrote: “How could he go broke buying on the dip?”
He was buying derivatives: CFDs: a contract for difference (CFD) is a contract between two parties, typically described as “buyer” and “seller”, stipulating that the seller will pay to the buyer the difference between the current value of an asset and its value at contract time (if the difference is negative, then the buyer pays instead to the seller).
He was on the wrong side where the seller would have to pay him if the underlying securities went up in value. When they went down far enough, he lost his 10K.
I figured something like that. Thanks.
You overlooked this little gem:
"he got margin called a few times"
If you can't answer the last margin call, say goodbye to your investment.
Margin - it separates the gambler from the investor.
I think he bought derivatives that expire once they go below a certain amount. Buy stocks. You can hold them.
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