Blowing Up Your Account | Podcast Episode #372

0:07
Hey, I’m Ryan Mallory and this is my Swing Trading the Stock Market podcast. I’m here to teach you how to trade in a complex, ever changing world of finance. Learn what it means to trade profitably and consistently, managing risk, avoiding the pitfalls of trading, and most importantly, to let those winners run wild.

0:25
You can succeed at the stock market, and I’m ready to show you how. Hey everybody, this is Ryan Mallory with Swing Trading the Stock Market. In today’s episode, we’re going to talk about blowing up your account. Now, this is a little bit of a different episode in the sense that I found this particular post on Facebook and I’m a member of this group, that I’m pretty much a lurker in the group.

0:50
I don’t contribute at all to it, but I lurk in the shadows because it is the most toxic trading group I have ever seen. And the reason for that is that people are blowing up their accounts on the daily. I wish you guys could see this, but I don’t want to put it out there simply because I don’t want people to go to it and get sucked into just the the toxicness of this group.

1:16
And it’s not toxic in the sense that people are yelling and screaming at each other. They’re just doing the dumbest things with their money that you could ever possibly imagine. And I think I might have found one of the greatest ones of all time in terms of they blew.

1:33
They didn’t just blow up their account, they blew it to the moon, back over across the Mars, back to Earth. They destroyed their account. I mean, they catapulted it into the stratosphere of oblivion. And so I’m not going to use the guy’s name. I’m not going to tell you the group just because I don’t want to call these people out.

1:52
But for the purposes of this podcast, I am going to name the dude Gomer, because this dude is straight up a Gomer Pyle. And for those who don’t remember what that is, there was a show back in like the Well, it was probably before I was born, but I watched it when I was in the 80s when I was growing up. It was always in black and white.

2:08
But there’s a character I can’t remember the name of this show, actually. Maybe it was the Gomer Pyle show, I don’t know. But the guy was dumb as a box of rocks and that’s where we get the inspiration for today’s name. So, Gomer posted on this particular Facebook group. He wrote.

2:23
I know posting profits is against the rules, but what about a loss? Which is just kind of funny anyways, that people don’t want you posting profits in this group. But he goes on to say I’ve lost huge this year. I was hoping Leap calls on Tesla would recover, but it went the other way.

2:40
I’m pretty much panicking right now. These Tesla calls that were at 262-270-3300 and 310, most were sent before the last earnings call. So we’re talking. I mean Tesla just had its recent earnings here in October. So we’re we’re looking at calls that he bought back in January.

2:56
I thought six months out would be safe. Some expired in November, but most are in January and some in March. Any hope? I am panicking. So some of the comments have actually been taken down. But lo and behold, I was so flabbergasted by the discussion that I screenshotted these suckers.

3:14
So we got the the absolute absurdity of what’s going on here. Somebody asks him. And again, I know this is a little bit different than reading an e-mail, so I’m going to give you like the play by play here. Somebody asks him that are you down $200,000?

3:30
Because he posts a screenshot of all his losses. I mean, he’s got Tesla 255 calls that are expiring in October. He’s down $1100. He’s lost 99% of the value there. He’s got two 60s in April. He’s down 4200 there, down 53%. This is where he starts getting really ugly. He’s got two 70s for November of this year, down $12,000.

3:51
He’s got three hundreds for March, down $6800. And he doesn’t give us all of them, but he gives us a lot of them. He’s got 270 threes and January of next year $44,000. He’s lost 83% there. And then 300th January 24th, he’s down 38,000 there, 90%.

4:11
So we’re talking about some massive, massive losses. So I guess this guy he, you know, that was responding to him, he added it up and he’s like, oh man, you’re down over $200,000 and he says no, I’m down $232,000 as of yesterday’s close, all just in Tesla. And then this guy, this is where he gets so toxic.

4:28
This guy responds backwards. He’s like, I lost over $100,000 in one stock and I only have $80,000 in cash left and another 20 and some other stocks I’m going to sell Puts on QQQ and SPY margin is very dangerous. And of course Gomer responds backwards, like, yeah, I have $100,000 margin that I have to pay interest on until I pay it back somehow.

4:49
So this guy’s actually in the hole, $100,000. He didn’t just blow up his account, he blew up his account and then some. He’s down $100,000 in the hole and he has to pay interest on it. At today’s rates, I bet you the dude’s paying like 1213% interest on this thing.

5:08
So he’s probably paying $12,000 a year on interest until he pays this thing back. He says this completely messed up my life. This guy that he has like a running dialogue with. He says to him, He says, how long did it take you to accumulate that amount of money? And this guy writes back, and this is what blows my mind.

5:26
This isn’t his first rodeo. He admits here, this isn’t the first time he’s lost a lot of money. He says It took me 20 years to save $1 million and I lost $800,000 and two years alone $800,000. And he goes on to say, and he’s lying to himself here when he says this, He says, I never intended to make a big profit.

5:45
I used to play Zero DTE last year and lost a lot. So I switched to leap calls to be safe. Really tell me what in that equation is safe. But instead of getting out, I added more to bring the average down. Remember we were talking about doubling down last week.

6:02
This is a prime example of why you don’t double down, He said. Some of these positions stayed down for a whole six to seven months and I kept adding so I can get out sooner, but it never bounced. Most of these positions were only 5 to 10 contracts initially, but averaging down turned them into 2050 or even 100 contracts on some and lost even more.

6:24
And then he says that I also have some shares in stocks like TQQQ and SPC and LCID. Dude, this guy’s just a glutton for pain. I mean, I understand some people like to speculate on some stocks and that that’s fine.

6:43
But this dude’s speculating in a time, decaying TQQQ for the long term. He’s he’s speculating an SPCE which has just been gutter trash for years now. And then he’s also speculating an LCID, which nobody has to look very far to see what these EV start-ups are doing right now, they’re they’re trash too.

7:09
Oh, I’m going to be safe by getting them way out there guys. Time decay hits and it hits fast on options. There’s a reason why I don’t do options outside of covered calls and even then I’m not a huge fan of covered calls, but I do do them some.

7:26
And then not only that, he’s got puts that he sold. I mentioned that 300 option contract that he had on Tesla. He’s down about $6800 on it. That’s actually he sold that put at 300. So right now, Tesla’s trading at $213 a share. That means when he buys that, or if he holds it until it expires, he buys it.

7:44
He has to buy it at $300.00 and it’s trading right now at 213. He’s hoping for a big move. He’s hoping for a miracle, but got options. There’s a reason why I say don’t start trading with options. Options will destroy your account. I don’t have any desire to ever really trade options.

7:59
Full blown. I don’t because I understand the Theta, the time decay element of options. It’s brutal. You can be right on the ultimate direction on a stock and be completely wrong on the options trade simply because you didn’t give yourself enough time to work out. One thing I don’t want to do is add more variables to the equation of why I won’t win on a trade.

8:19
I want to reduce those variables. That’s why I trade equities. I don’t get into options because options is a loser game. Most of your options expire worthless and the feedback that this guy got was pretty much garbage as well. I mean just some of the things. I mean some of the things that they did say what was pretty agreeable like hey, maybe focus on equities instead of options in the future.

8:41
I would probably say give up on trading totally. And I don’t say that lightly, but this is, this is toxic, toxic behavior. When you spend 20 years of your life saving up $1,000,000 and you lose it, 800,000 of it in a year and then you take the rest of it and blow it all on Tesla calls, Dude, check yourself into a facility.

9:00
This is bad. This is not trading. You would have been better off going to Las Vegas and putting it all on black or red. So this guy obviously used a lot of margin and I would tell you this, margins. We’re using the word toxic a lot in this podcast episode.

9:16
I’ll tell you this. Margin is toxic. I know for some things that you need margin for, you need margin for shorting a stock. But you should never be long, $200,000 in an account that’s only worth $100,000 in cash. You shouldn’t never go over what you’re putting into the market.

9:33
If you are, then what you have there is a mentality that’s only focused on the profits and not the risk going back to so many episodes playing your trade. That’s our #1 Objective, #2, manage the risk. That’s the second thing that we do once we get into the trade and we manage the risk because we planned out the trade to begin with, and then #3, let the profits take care of themselves.

9:55
Why do I say that? Because if you’re managing the risk and you’re planning out your trade, the profits will ultimately come because of how well you manage the risk plus how well you manage the losing trades. This guy did not manage losing trades at all. Forget about the fact he should have never been in these calls in the 1st place he started averaging down.

10:12
He never had an exit to get out. He assumed when he got into the trade he was going to make money. And I come across as a little bit angry because I’ve seen this play out so many times. This is this is an incredible extreme, but there’s been other extremes too that I’ve come across over the years. But I couldn’t pass up the opportunity to make a podcast episode off of this.

10:31
It was so blatantly nuts that it had to be addressed. There’s no risk management. He went into the trade assuming that he would have to be right. He didn’t even give thought to the idea. What if I’m wrong? And indeed, when you don’t consider the fact that you’re going to be wrong at times, you’re going to blow up your account because ultimately you’re going to be wrong in such a way that you can’t recover from it.

10:54
And this is where he’s at now. He can’t recover from this. And if you don’t learn it from this podcast, that margin is bad. Believe me, you will learn it from the market. The market will make you a believer of it. I’ve traded margin before, decades ago. I paid for it too. Not to this extent, no.

11:10
At least I was still managing the risk. But I’ve paid for it though. And then the time decay. It’s a great reason not to trade options and I get why so many people do it, especially newbies in the stock market. They’re like, oh, I can control a whole lot more shares if I trade options. Guys, there is so many elements to options that I’m not gonna sit here and act like I understand it completely.

11:30
Cuz I don’t. There is a great number of ways to lose your hide in options and if you’ve never traded before, if you don’t have 1015 years of experience, I wouldn’t go near options and some of you listening will not agree with me on that and that’s OK. I’m not here to be agreeable, I’m here to tell you the truth.

11:48
Options are dangerous and most of the reason why so many traders get into options. It’s not the sell covered calls. I have a lot more respect for people who sell covered calls because at least they have the shares to back them up if they’re wrong.

12:04
In essence, all they do is they don’t get to maximize the full potential of the trade uncovered calls. If the contract expires worthless, that’s great, they wrote the call. If the call goes way up in value, OK, they collect the premium and whatever you know their share price was versus the the strike price and they collect that much in profits.

12:22
Fine, they don’t get to maximize it, but at least they’re not taking on a loss. Holy cow. One thing that is not toxic is swingtradingthestockmarket.com. swingtradingthestockmarket.com is a great place to go to get all of my stock market research. You’re going to get videos each and every day.

12:39
You’re going to get watch lists. You’re going to get follow-ups to the watch list. You’re going to get updates on the overall market. You’re going to get my bullish and bearish master watch list updates each week. On top of that, you’re also going to get updates on big tech. It’s a really, really great thing that you can get. You’re supporting the podcast as well.

12:54
It’s cheap. Check it out. swingtradingthestockmarket.com. So gomer here. Usually I have advice for people that kind of keeps you in the game. I think in Gomer’s situation, trying to keep this guy in the game of life because there’s only so many times that you can recover from this.

13:09
You spend 20 years saving up your money. You better not be throwing that into calls that expire in six months. You best better not be trying to trade 0 DTES. That’s how he lost his first $800,000. From what I can surmise from his post, he lost like $800,000 or so trading 0 DTES.

13:26
That’s all the rage after what everybody you hear people talking about, man, people are getting creamed on zero DT ES. I’ve yet to meet a retail trader successfully trading zero DT ES, yet I’ve never done it and I won’t. I think it’s stupid, but you guys are learning from this podcast.

13:43
So many stories of people blowing up their accounts, getting themselves into bad situations, bad trades, countless stories. Guys, this is episode 372. If you won’t learn from this podcast, if you won’t take what you’re hearing from me on this podcast and apply it, why are you still trading?

14:00
Why? Because ultimately you’re going to be a Gomer. If you enjoyed this podcast, I would encourage you to leave me a 5 star review. Those things really helped me out quite a bit guys. I come across a little bit hard on this particular episode, but it hurts to see people suffering like this, somebody losing 20 years of savings for a few moments of stupidity.

14:19
And so I do care about you guys. I want to hear your stories and don’t let this episode shy you away from wanting to send me emails. ryan@shareplanner.com I thrive off of your emails. I’m not going to call you out. Personally, I might have some tough love for you, but I only do that because I care.

14:35
So keep sending me your questions. Keep sending me your problems. I want to hear about them. I want to make a podcast episode out of it as well. Plus check out Swing Trading the-stockmarket.com Thank you guys and God bless.

14:51
Thanks for listening to my podcast Swing Trading the Stock Market.

14:54
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15:21
If you have any questions, please feel free to e-mail me at ryan@shareplanner.com. All the best to you and I look forward to trading with you soon.