This has to be one of the craziest GoFundMe stories I have ever read, and probably one of the craziest trading stories as well.
Here you have a trader who was shorting KaloBios Pharmaceuticals (KBIO) for reasons unknown to me, thinking this stock was going to sell off after rising from $0.44/share to $2.47. Only to find out after the market closed yesterday that the stock he was short is now opening up at $13.94/share. Yes, you read that right, the stock is up 564% from yesterday… and yes, you read that right, this dude was short the stock!
First of all, you never short a biotech stock. These stocks are news driven pieces that can open up 100%-1,000% higher than what you traded it for the day before. The moves are extreme.
Secondly, if you care about risk…at all…and want to properly manage the risk of each trade you make, then you don’t buy biotechs either. These stocks are a minefield just waiting to victimize your portfolio.
And Third, YOU DON’T SHORT BIOTECHS!!!!
As for this gentleman, I really do feel for him. The agony he is feeling right now is extreme. It is a lesson that will stick with him for the rest of his life if he ever does go back to trading.
In general, my losses have largely shaped who I am as a trader and how I manage risk. While I’ve had my share of bad trades in the past, I haven’t ever had anything remotely close to what this individual has experienced.
I’ve always hated the saying, you can experience infinite losses shorting a stock, because we all know, an infinite stock price is impossible, however, this person breathes new life into that saying.
Here’s the GoFund me page should you want to help out this poor (literally) chap: https://www.gofundme.com/jwctrek