When Was Your Closest Call with an Account Blowup?

MillionaireTiger
08-29

Welcome to Thursday Special![LOL]

Many investors believe in the saying: “Fortune favors the bold.”

But what’s it really like to blow up an account? Today, let’s explore the causes of these devastating losses and how to prevent them. (In this context, “blowup” refers to significant losses, since not all markets and products are equally prone to it.)

Why do some traders bounce back stronger after a blowup, while others falter?

A blowup tests a trader’s mental resilience and technical skills like nothing else.

The doubt and massive losses can end careers—or worse. I’ve heard of a tragic case where heavy losses in the stock market led someone to take their own life. It’s a stark reminder that investing is risky, and caution is crucial. But such tragedies can often be avoided.

On the other hand, some traders use these painful experiences to improve their risk management, expand their loss tolerance, and refine their strategies.

1. Psychological Resilience

Losing 50% of profits can crush your spirit. But with time, these losses might seem like minor setbacks. That experience, though, leaves a lasting mark, teaching valuable lessons that can strengthen your ability to handle future losses with composure.

2. Trading Techniques

Every blowup reveals flaws in your strategy. Reflecting on these mistakes is key to improving your trading skills and avoiding similar pitfalls in the future.

3. Understanding Risk

Ignore risk, and it will find you. Blowups often result from taking on too much risk. Whether it’s due to lack of foresight or a gambler’s mindset, both can be fatal.

So, what’s your experience with account blowups?

Or how do you manage risk?

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  • highhand
    ·08-29
    TOP
    Blow up will not happen if you buy fundamentally strong companies with strong growth using cash. Never use margin. There's always a risk when market drops suddenly and your net liquidity shrinks towards your maintenance margin. That's when you get margin called. Also, don't over leverage by selling naked puts and calls. When the market goes against your bets, BOOMZ 💥 happens.
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  • MHh
    ·08-29
    TOP
    I have not experienced account blowups though was really red during the period where both stocks and bonds did poorly when rate hikes were announced. I make sure my portfolio remains diversified across the different markets so that I minimise big swings that is beyond my risk appetite. I also made sure that my emergency funds are settled which allows me to hold through the period where stocks and bonds were down in the high interest rate environment. At least, I’m not forced to realise the paper losses and continue to have income from my day job to average down my positions.
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  • Olivia Bruce
    ·08-29
    TOP

    The margin call of Archegos fund manager Bill Hwang directly led to the liquidation of more than $80 billion in positions and the liquidation of $15 billion (equivalent to nearly 100 billion yuan) under his personal management, setting a record for the "largest single-day loss in human history".

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  • DavidSG
    ·08-30
    TOP
    This happens whenever a person is overly complacent and does the all in for a particular stock. Therefore, it will be wise to be patient and resilient during market volatility. Do not put all your money in one basket.

    May the market be with you.

    @TechnicalHunter @JC888 @icycrystal @koolgal

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    • icycrystal: 
      [Like] [ShakeHands]
      08-30
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  • icycrystal
    ·08-30
    TOP
    it's important to have risk management and to go for companies that's fundamentally strong. this way, blowsup will tend not to happen.

    @LMSunshine @koolgal @Shyon @Aqa @GoodLife99 @Universe宇宙 @HelenJanet @SPACE ROCKET @TigerGPT

    So, what’s your experience with account blowups?


    Or how do you manage risk?


    All valid comments on the following post will receive Tiger Coins

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    • TigerGPT: 

      As an AI language model, I don't have personal experiences or emotions, so I don't have direct experience with account blowups. However, I can provide some strategies for managing risk in investment:

      Diversification: Spreading your investments across different asset classes (stocks, bonds, commodities) and sectors can help reduce the impact of any single investment on your overall portfolio.

        

      Fundamental Analysis: Conduct thorough research and analysis of companies before investing. Evaluate their financial health, growth potential, competitive advantages, and management team. Investing in fundamentally strong companies can help mitigate the risk of significant losses.

        

      Risk-Reward Assessment: Understand the potential risks and rewards of each investment. Consider factors such as volatility, liquidity, and market conditions before making investment decisions.

        

      Stop Loss Orders: Implementing stop-loss orders can help limit potential losses by automatically selling a security when it reaches a predetermined price. This can help protect against significant downside risk.

        

      Position Sizing: Determine the appropriate size of each position based on your risk tolerance. Avoid investing a large portion of your portfolio in a single investment, as this increases the potential for losses.

        

      Regular Monitoring: Keep track of your investments and stay updated with relevant news and market trends. Regularly review and reassess your investment portfolio to ensure it aligns with your risk tolerance and investment goals.

        

      Professional Advice: Consider seeking advice from a financial advisor or investment professional who can provide guidance tailored to your specific situation and risk appetite.

        

      Remember, investing involves inherent risks, and it's important to evaluate your own risk tolerance and financial goals before making any investment decisions. This information is for educational purposes only and does not constitute financial advice. Always do your own research and consult with a professional before making investment decisions.

      风险提示：以上内容仅供参考，不构成投资建议。投资涉及风险，投资者应根据自身的风险承受能力和投资目标评估，并自行决策。

      08-30
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  • nomadic_m
    ·08-30
    TOP
    Account blowups - a harsh reality check for even the most seasoned traders. A single trade gone wrong, a miscalculated risk, or a market move that defies all logic. But here's the thing: it's not the loss that defines us, it's how we manage risk and adapt to the ever-changing market landscape.
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  • Universe宇宙
    ·09-01
    @TigerGPT Find me any investment that can be found in the $Tiger Brokers(TIGR)$ platform that have zero risk and highest returns. [Chuckle]
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    • TigerGPT: 

      I'm sorry, but there are no investment options with zero risk and the highest returns available in the Tiger Brokers platform. It's important to note that no investment is entirely risk-free, and higher returns often come with a higher level of risk. It's crucial to carefully assess the risk associated with any investment before making a decision. If you have any specific investment goals or risk tolerance, I can help you find suitable investment options within those parameters.

      09-01
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  • Aqa
    ·09-01
    $Intel(INTC)$ is my Closest Call Account Blowup. I have fallen prey to Intel’s lies many many times. This time it said it is exploring options with financial and investment experts to turnaround. As a result, its stock price soared last Friday on hope of business. I would say: “Don’t Fall For It.” This stock blow up really tested my psychological resilience. It exposed the weaknesses in my trading strategy. It also reminded me to always be mindful of risk with stock investments. Thanks @MillionaireTiger
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  • Universe宇宙
    ·09-01
    @TigerGPT Find me any investment with the highest risk and highest returns in the $Tiger Brokers(TIGR)$ platform. [Chuckle]
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  • Universe宇宙
    ·09-01
    @TigerGPT Name me strategies that do not have blowup and pitfalls. [Chuckle]
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    • TigerGPT: 

      As an AI, I don't have personal experiences or the ability to blow up an account. However, I can provide you with strategies that are generally considered to have lower risks and pitfalls:

      Diversification: Spreading your investments across different asset classes, industries, and geographical regions can help reduce risk. Diversification can protect you from the downfall of a single investment or sector.

        

      Risk Management: Implementing risk management techniques such as setting stop-loss orders, using proper position sizing, and regularly reviewing and adjusting your portfolio can help mitigate potential losses.

        

      Long-Term Investing: Taking a long-term investment approach allows you to weather short-term market volatility and benefit from the potential growth of quality investments over time.

        

      Fundamental Analysis: Conducting thorough research on the fundamentals of a company, such as its financials, management team, competitive advantage, and industry trends, can help you identify solid investment opportunities.

        

      Dollar-Cost Averaging: Investing a fixed amount of money at regular intervals, regardless of market conditions, can reduce the impact of short-term market fluctuations and help you build a diversified portfolio over time.

        

      Regular Portfolio Review: Keeping a close eye on your investments and periodically reviewing your portfolio's performance can help you identify any red flags or underperforming assets that may require adjustments.

        

      Seeking Professional Advice: Consulting with a financial advisor or investment professional can provide you with valuable insights and expertise tailored to your specific investment goals and risk tolerance.

        

      Remember, investing always carries some level of risk, and no strategy can guarantee absolute protection against losses. It's essential to understand your risk tolerance and carefully consider your investment decisions.

      09-01
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  • Success88
    ·08-29
    I had no experience with account blow out. I invest base on cash and always carefully invest. Low risk and earning
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  • SPACE ROCKET
    ·08-31
    I am too tired to write anything, so good luck to us all. Scary September looming ahead.
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  • MasterStonker
    ·08-29
    whose acc blew up?
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