maxopedia

Pictures are worth a thousand words.

Go check out this -$116,736.90 loss in a Forex account.

And to top it off, these losses were made with borrowed money!

Ouch ouch ouch.

What I'm curious about is whether he had any sort of hard stop where if he lost X amount of money, he wouldn't let himself trade anymore. I'm guessing not. Also, is this death by a thousand cuts or the result of multiple big blowups? (thousand cuts would at least imply some sort of risk management system)

I assume that these excess losses were caused by the inherent use of leverage within the Forex market. Leverage is icky for beginning traders, stay away. You have to have very solid risk management to begin using leverage.

Although my account is down from my initial deposit, I think if my losses get around $500 I will probably freak out and stop trading. Trading is fascinating and all that, but my goal is to NOT LOSE MONEY.

This guy made a huge mistake - he was trading with money that he could not afford to risk. His mom's money, his broker's money, his bank's money - all possibly the worst sources of capital possible. He was compounding leverage; not only was he trading in a leveraged market, he was trading borrowed funds!

Certainly makes me feel quite a bit better about the -$94 loss I had on my GU trade the other day. However, that loss still lies far outside the bounds of my risk model, and represents a failure on my part in enacting my methodologies.