All in all I'm extremely happy with progress
Before heading into trades, I thought especially for new entrants to the market to tell you a warning story. A lovely guy at last week's seminar bravely told us a terrible story of how a series of bad trades had a terrible impact on his life, his health, nearly cost him his marriage his house and everything.
The basis of the story is he bought CFDs in a company, it carried on going down and he kept buying more and more CFDs. And then more. The share kept on going down and soon he was borrowing from family and friends. Anyway here is the story which I've edited down.
"I had been buying shares / tracker funds for years and thought i could walk on water I had made more in a year through the late 90's than I could earn as a wage.
I had a good share portfolio and was doing very well indeed. i wanted more, so much more, driven by the fact i wanted to retire at 50..
I bought CFD's without knowing what the hell they were really...... Bought 1500 CFs around 380, went up, bought 5000 more on the profit (still holding all) at around 430, bought 5000 more at 501 and making a killing! so bought 5000 more at 510.
It went all the way up to 586. I was so happy and was on paper very rich for me.
I was invincible and a super trader! So very confident. I made a loss of £2000 in another CFD position but learnt nothing. What was £2k when I was so far up on this one share...
i was paying around £300 - £350 month interest but the paper profits meant this was nothing... I never bothered looking at the global meltdown around me.
It started to unwind.. but I was too ignorant or stupid to work it out just yet.
It kept falling and falling, by the time I realised what was going on, I was way over my head but managed to close out the first two trades - but was left with an average of £5.05.
It fell down to around £1.08 intraday over a lengthy period.. I was in trouble..
In this period, the broker moved the margin to 30% from 10% and placed a huge call and gave me until the end of the day for the funds..I borrowed on credit cards again. I could not afford to lose, I had already sold every share I had to shore this up, I borrowed from family, I actually had a wedding looming and my job was looking shaky. I was a dab hand now at moving my maxxed out credit cards at 0% for a number of months. The next task was to borrow against the house.
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