Timeline for How did this day trader lose so much?
Current License: CC BY-SA 3.0
9 events
| when toggle format | what | by | license | comment | |
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| Jan 17, 2017 at 9:56 | comment | added | David Schwartz | And brokers will discuss this with you directly before they will authorize your account to take short positions. And their web sites, mobile apps, and paper forms say that losses can exceed amounts invested and on deposit all over them. This is one of the reasons many people who take these kinds of risks use a vehicle like an LLC rather than a personal brokerage account. | |
| Nov 23, 2015 at 17:22 | comment | added | Jared Smith | @keshlam there is no worst case. That's the whole problem with shorting. In the USA for instance the SEC already requires individuals to pass certain income/net worth thresholds to engage in certain types of high-risk investing (like venture capital investments), I fail to see how a similar argument could not be applied to shorting. | |
| Nov 23, 2015 at 17:19 | comment | added | Jared Smith | @DmitryGrigoryev ignorance. Or feigned ignorance in an attempt to garner sympathy. I find it somewhat incredulous that someone who would risk their entire brokerage account would be unaware of this since the phrase "potentially unlimited losses" comes up a lot when talking about shorting (as shown by the answers in this thread). | |
| Nov 23, 2015 at 14:00 | comment | added | Dmitry Grigoryev | From reading the trader's site I understand that he was convinced he could not lose more than he had in his account, $37000. Do you have any clue on what made him think so? | |
| Nov 22, 2015 at 23:20 | comment | added | keshlam | Shorting is legal; it just isn't wise unless you are absolutely certain you can tolerate the worst-case loss. There are ways to use it to hedge a position which are absolutely legitimate. Like a chainsaw, it's a fine tool when used properly by someone who knows what they'rd doing and is wearing safety equipment; dangerous but able to do things a less dangerous tool can't, and the danger can be limited. In the hands of someone with no training or who ignores the hazards, it can take off a leg or worse before they know what happenned. | |
| Nov 22, 2015 at 15:49 | comment | added | Anonymous Coward | Many financial operations are arguably legitimate. With shorting and high frequency trading considered even less legitimate than other financial operations by those who oppose their legitimacy. | |
| Nov 21, 2015 at 1:10 | history | edited | TainToTain | CC BY-SA 3.0 |
added 12 characters in body
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| Nov 20, 2015 at 23:55 | review | First posts | |||
| Nov 21, 2015 at 0:07 | |||||
| Nov 20, 2015 at 23:55 | history | answered | TainToTain | CC BY-SA 3.0 |