This trader got his short position crushed overnight. Before going to bed he had $37K in his E-Trade trading account but when he woke up next morning he had a debt of $106K in his trading account. His name is Joe Campbell, and he claims he went to bed Wednesday evening with some $37,000 in his trading account at E-Trade. One notable development on the pharma front later, and Campbell woke up to a debt of $106,445.56. Now, he may end up liquidating his 401(k). And his wife’s.
This is what happens when you ignore risk and try to play big. If you are a new trader, you should read this article a few times. This is what happens when you are not trading but gambling. As a trader, always follow strict risk management rules. Don’t ever try to take a huge risk in the hope that you are going to make it big and hit a home run.
Trading is a game that needs to be played long term. Always make sure you are not risking more than 2% of your account equity at any point of time. This article should be a good lesson to those traders who are more of gamblers than traders when they simply ignore risk management.