My Story- Lessons learned

Bitstream · Jan 1, 2006

Quote from acesup:

I am currently 44 yrs old and have been online trading since early 1997. From 1998-2000 I made over $20 million from starting with a $25k trading account. Today my trading account is down to $400k. Here is my true story. Readers digest version.

In early 1997 I was selling life insurance part-time and playing poker for a living. One day my wife comes home with a stock tip and I begin to seek out how I can buy this stock. I search on the internet and open an account with TD Bank (I lived and still live in the Toronto area) and do the trade through their online investment centre called Webtrader I recall. Slow as molasses.
Needless to say this penny stock tip did not work out but the idea of trading stocks from home online caught my interest. It was virtually online gambling for me. To keep it short I did some research and discovered Datek, a much more efficient and faster online broker.
I deposited $25k with Datek, began reading all I could on the market, and was off to the races. Before long I was down to $5,700 before I figured out how to beat the game. It was my discovery of shortselling that lead to my riches.
I began shortselling highly overbought stocks to great success. The secret was all in the timing as well as having no fear when the trade went against you and averaging up as I always new they would come back to below my average price for the gain.
My account began growing rapidly as I was virtually parlaying everything into every trade and as my account crossed the $150k barrier I would start to diversify and often have more than one short going at a time.
Once my Datek account hit $250k I got nervous about having all that money in one place and opened a retail account with a Canadian Bank.
It took me roughly 12 months to hit the million dollar mark before I had my first big scare. I got squeezed in a stock identified as TUNE one morning. It was one of those shorts I misstimed and got in a little too early and had to average up twice on. My greed got the better of me and I kept hammering at it one morning via my retail account. If you remember those days it wasn't uncommon to see stocks run from $12 to $50 over a few days. This was one of them. At one point in the morning as TUNE was running up to its blowoff top I had to step back from my computer and go lay down. I was scared and in shock.
I had calculated that on paper I had lost my million and was in the hole approx another 7-8 million dollars if TUNE was to close at that time which was near the high of the day . My broker was numb as well and was worried compliance might buy me in. Things moved so fast that morning they never did find out my dangerous predicament. If I recall correctly I needed TUNE to come off and close some $13 from the intraday high for me to have any equity left to begin the next trading day or I was wiped out. Needless to say TUNE corrected somewhat and left me with $300k to rebuild on.
Over the next 2 years I was able to grow my trading accounts (I was up to 1 online and 2 retail accts) up to over $20 million combined. Along the way I had a few scares where I was set back anywhere from $500k-$1mil but nothing that I couldn't handle. At my peak I was averaging $300-400k per weak. It was sick.
One humourous story was when I opened up an Etrade Canada account to try them out. I deposited $250K to start and immediately got squezzed on a Bid.com short with them. My account wasn't 2 weeks old when my starting short position went against me at Etrade and I had a margin call for $800k. I said to the broker on the phone that I would courier a cheque down that day. The gentleman from Etrade was obviously nervous and requested he drive up to my home and pick up the cheque himself right away. He did and then rushed to my bank to certify it. I closed my account a few days later as Etrade was uncomfortable with my action.
It was early 2001 when my gig was up. The market topped out and the days of stocks gaining 300-400% over a few days were few and far between. Still I thought that I was invicable and began looking for the new key to the market. I thought I could write options but that didn't work. I tried picking bottoms but my hands were bleeding from all those falling knives.
Two years later I had given back over $12million of my gains with no end in sight. I couldn't beat the game anymore. In my heyday I did take out a few million and invested in a number of ventures, all of which didn't pan out. In 2000 I got divorced and gave my exwife a few million. As it turns out that was the best investment as her investment advisor has grown those funds so as to take care of her and my son forever. She and I are both remarried by the way.
The summer of 2004 I quit trading to persue another interest. It didn't pan out but it did allow me to step away from the market for a year to refresh and clear my trading thoughts.
This past June I reopened my Datek now Ameritrade account and will be looking at Questrade this week. I am now starting with $400k and hoping to find my new edge or key to the market.
The time off has allowed me to regroup and learn to appreciate a trade where only a few k is gained. I have a few ideas that are working nicely for me right now. Though I realize I will never be able to make those astronomical gains from the past since the market and it's volitility have changed. I do believe and have the renewed confidence that I can double my $400k account this year. Time will tell.

Why do I tell this story? Just for my own wellbeing but also to have in writing a few of my lessons learned.

1) Never believe you are invincable
2) Remember the old saying that " when you think you have the key to the market be prepared for the locks to get changed on you."
3) When your trading system begins to fail do not get stubborn and press it. Best to sit back and take a break and rework a new strategy.
More...

You are 44 yo and yet u brag about your millions, if u had some intelligence u would have not posted details of your business that quite frankly are very private: I learnt nothing from your post other than you are arrogant beyond belief.
Best of luck with the next big hole in your account.

Urkel · Jan 1, 2006

Quote from jackbyrd:

Urkel, sir, does he not just admit right here that he did, in fact, end up "selling something to somebody"? Or did you miss that post?
More...

Yes he "sold something to somebody" what does that have to do with him posting a story of his ups and downs of trading? What are you getting at?

One of the things that I "got" from the story of his, which traders deal with is keeping their egos in check while looking in the face of a loser. I dont trade stocks, so the strategy that he was talking about of "Averaging Up" seems crazy unless u have a huge line of capital.

In other words, I could give a crap whether the story is true or not. Immediately what this got me to think about were traders whom trade considerable larger than me at one point or another letting their ego get in their way of them making a decision to finally just take the loser and not selling more and more into the rally because their indicators tell them its coming back and every other time it comes back. Thats all.

Pekelo · Jan 1, 2006

Hey, guys, I am having this hangover, so could somebody please help me with the math:

What % gains is from $5700 to 20 million (in about 5 years, the years are little messy in the story)

The best story since Livermore, and I LOVE Jesse!!!

Not to mention he was making money by SHORTING in the greatest bullmarket ever.....

As for evidence, your word is enough for me. As I said, I am having this hangover....

Edit: My hangover is going away, so I would like to point out before any mathwizzard will, that by shorting one can only double his money. On the other hand if you bought pets.com early....

Urkel · Jan 1, 2006

Quote from Urkel:

Yes he "sold something to somebody" what does that have to do with him posting a story of his ups and downs of trading? What are you getting at?

One of the things that I "got" from the story of his, which traders deal with is keeping their egos in check while looking in the face of a loser. I dont trade stocks, so the strategy that he was talking about of "Averaging Up" seems crazy unless u have a huge line of capital.

In other words, I could give a crap whether the story is true or not. Immediately what this got me to think about were traders whom trade considerable larger than me at one point or another letting their ego get in their way of them making a decision to finally just take the loser and not selling more and more into the rally because their indicators tell them its coming back and every other time it comes back. Thats all.
More...

BTW I havent slept since Friday and I only read the 1st paragragh and a couple sentences before my 1st post. The story couldve been a little better IMO.

coolweb · Jan 1, 2006

Quote from vhehn:

"Quote from coolweb:

only idiots doubt."

many doubted your stories. seems they were correct.
More...

Please explain to us where anybody is correct about me

you = sheep

coolweb · Jan 1, 2006

Quote from Bitstream:

You are 44 yo and yet u brag about your millions, if u had some intelligence u would have not posted details of your business that quite frankly are very private: I learnt nothing from your post other than you are arrogant beyond belief.
Best of luck with the next big hole in your account.
More...

Look at newbie Bitstream

he didn't learn anything!!!

OH MY GOD

someone get the police, poor newbie didn't learn anything from a post on the message board.

Do you think this is elementary school?

Say "GrandMaster Coolweb, I am stupid, please teach me something"

I'll write a sentence or two so you can learn something.

Randek · Jan 1, 2006

Wow. Half of you are such unbelievably gullible morons.

Here are some magic beans.

Steve Tvardek · Jan 1, 2006

Once you leave the simulator world and step into the real world of trading, maybe then can you call others "newbies".

Quote from coolweb:

Look at newbie Bitstream

he didn't learn anything!!!

OH MY GOD

someone get the police, poor newbie didn't learn anything from a post on the message board.

Do you think this is elementary school?

Say "GrandMaster Coolweb, I am stupid, please teach me something"

I'll write a sentence or two so you can learn something.
More...

coolweb · Jan 1, 2006

Quote from Steve Tvardek:

Once you leave the simulator world and step into the real world of trading, maybe then can you call others "newbies".
More...

That simulation comment is sure getting old

Its pitiful you keep saying that

Even the most retarded newbies get out of simulation after the 2nd week, sorry try again

Steve Tvardek · Jan 1, 2006

Then step up son, put real $$$ on the line. No more of these wild posts about your simulator trades.

Quote from coolweb:

That simulation comment is sure getting old

Its pitiful you keep saying that

Even the most retarded newbies get out of simulation after the 2nd week, sorry try again

More...