How I lost $350K daytrading stocks and what I learned from it.

Hello tech light, welcome to another episode, today we're going to talk about how I

lost

$350,000 and it was actually even more than that and how it felt, now it's coffee time, this is a story I've never shared. so far not because it's too personal and painful, but because there have never been any good dinner time opportunities where I can walk up and say hey guys, I

lost

$350,000, you know, it's just not good table conversation material, one of the worst. What I would say about this loss is that there is not much to learn from it, it was through day trading

stocks

and it is not like you had to build a business, invest a lot of money in it, have a lot of learnings, the business fails, I lose. a lot of money, but I still come out of it with a lot of good lessons some things like a rat on my resume some nice stories I can tell future employers no, this was essentially a skill, that's right, I just walked in there and thought that I could earn some money.

I didn't really know why I read a lot of news. I tried to figure out

what

was going on. I have a few theories here and there. This was especially painful for me because I've actually been trying to get better for like a year. ideas trading I have

learned

everything about technical analysis I have been reading about news, keeping up with The Economist reading that every week and still managed to lose so much money it made me wonder

what

I am doing here. By the way, this video is sponsored by Bright Hour org Slash Tech Li, check them out to learn some new skills.

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stocks

checking every price move reading all the news a bunch of different trades or I can spend an entire month on the long term buy and hold strategy and there's no telling which method will actually come out ahead, like this I'll keep this story short, but what happened was I bought a bunch. of commodities, you can see my tax return.

I have bought some RJ irj to DP ad BC some precious metals like gold silver. These are mostly stocks that represent underlying commodities and the commodities are like agricultural grains, rice, corn, basic commodities, industrial metals, copper, things like that. The reason I bought a lot of this stuff was because commodities had had a good rally in the first half of 2014 and also because I felt the dollar was weak and I thought it was a good diversification and I thought commodities were relatively stable. maybe because they represented real physical materials underneath but what happened was that in the second half of 2014 commodities fell by 40% and this became known as a 2014 commodity price shock if you look at people he doesn't really know what happened according to Wikipedia.

The commodity price shock cannot be attributed to any defining factor or event; was caused by a number of industry-specific macroeconomic and financial factors coming together to cause this huge simultaneous drop and therefore, despite all the news, when reading the technical analysis that was playing with Bollinger Bands, simple moving averages, Fibonacci lines, none of that really worked and I just lost my shirt in that whole game and there were days where I was losing twenty-three forty thousand dollars in the day and meanwhile my job was paying. I made a few hundred dollars that day and I think it was around that time that I had quit a lot of my jobs because I just didn't see the meaning of it and I really wanted to focus more on day trading because I felt like I had more fun with your impact, but For me, despite how hard I tried, I don't know if any of my efforts in stocks really had any impact, true, some of it could have just been imaginary, maybe I was making money just because I got lucky sometimes, but I think I can attribute my losses to a few factors and these can be good learnings.

One is that I was new to the game and I was feeling a little overconfident and I was starting to make money from the beginning and I thought that all this could continue, but you can only be lucky for so long, so during this time I would make a lot of investments leveraged loans where I would take out loans from the brokerage at a lower interest rate and then invest them in the stock market believing I could beat the interest rate at least and for a while this actually worked well for me, the reasoning was that I had no intention of buying a house in the first place, right, most people would buy a house worth 30 times more. leverage and so I felt like if I was going to invest in the markets I also needed to have some leverage so I could keep up with all the other people who might be buying houses and you can see that based on this chart that you know later.

It had been on a good rise and it just started falling and they just fell every day and went down and down and I kept believing that maybe it would go up and it wasn't a steep fall, it was just a gradual decline of the kind that really takes you by surprise for a while. long period of time and you keep thinking, well, maybe it will go up, maybe it will just go up from now on, maybe next week it never really recovered, after that you can see it just went down all the time. a 40% drop and it just kind of floated there, you know, I think a problem for me was that I also thought I was pretty smart.

I started reading the site called Zero Hedge, which is popular among traders, but is also very biased. In the news, they would have all this kind of doom and gloom news where they would say you know the US dollar is going to collapse, you have to buy commodities, you have to diversify your assets. Goethe and the money are going to rise and so am I. I actually believe some of these things from time to time, you'll find some of his advice was helpful, but timing is everything in my head. I was very confident because I was only reading the news that I wanted to read after this whole experience.

In fact, I started putting more mainstream news like Yahoo Finance on the bookmarks I checked just because I wanted something more balanced for the end of the year. I logged in and came to the honest conclusion to just cut my losses. You know, I didn't believe it. in commodities or gold, at that moment I saw that all SMP stocks were rising or at least neutral and I felt like I had been tired and brainwashed by the new perspectives I had been reading these days. Frequency trading accounts for around 90% or more of daily stock trading. You know you are no longer trading against normal people, you are trading against robots and what I realized in my trading was that as soon as news like the CNN cover or market watch on the front page came in it was already old news by then it was all over. the transactions have already been made by the robots that trade on news milliseconds simply using machine learning algorithms no one reads any of the news anymore which is nonsense because normal people like you and I are trying to read the news , we are trying to read them to try to understand which direction the stock is going to move, but the machines don't actually read them, and yet they do 90 percent of the daily trading.

I also realized that as an individual, I would be trading with entire teams of people like, say, Goldman Sachs, who are focused on the oil industry or technology or commodities or precious metals or whatever and are sharing information. and reports between us and yet here I was one person. I have no team, no one tells me if there is a macroeconomic movement or if there is any other news on the other side of the world that could be affecting my trading and my commodities, it is too much. There's too much news for one person to keep up with, so for me one of the main takeaways from that experience where I lost a lot of money was that it doesn't matter if you're right, you know, maybe you read a lot of news. maybe you'll get a good tip and yes, maybe you'll make some money there, but what really matters is your system, what is your system to limit your losses?

Because even if you trade successfully 99% of the time, that 1% most of the time can kill you if you are highly leveraged and don't have a proper stop loss and don't have a way to limit your losses and just read the line. trending down like I did. I wrote it down at 40 percent, you know, I'm not sure if there is a really good system, for a while I thought it was okay, everything should have stopped losses as soon as the stock fell 2%, I would just sell it and would cut but I would let Rhys if possible, the trailing stop loss is really difficult to correctly time the amount of the stop loss level because most of the time your stop losses were just being hit and you just lock losses wherever you go, which I did . after that i looked into using algorithmic trading so i use this platform quanto pian comm which i am not sponsored and there are some other platforms like this where you can write python scripts to make trades for you so i would try a few different algorithms, you know, you would trade based on earnings reports and if the earnings report beats the forecast, then you would have to use the algorithm to automatically buy that stock, hold it for three days and then sell it.

I also stopped shorting stocks, which I used to do. many, but I realized that the natural movement of stocks is to go up, it's not that a stock has a 50/50 chance of going up or down, it actually has a higher chance, I would say, of going up, so using how peon I was I was able to come up with a backtest of the algorithm with historical dates, see how the algorithm would have performed and then I ran the algorithm and tested it and it made me like 2000 dollars here and there, although it wasn't much and what happened is actually would incur a lot of fees and brokerage.

I finally gave it up and decided I'm going to go for a larger asset allocation, so I could say I want 10% to go to 20% to bonds, 20% to commodities, 20% to tech stocks or something like that. The analogy I like to think of is to imagine that I was like a sailor with no country and I was working and everywhere I went people were paying me so I could go somewhere and someone would just say that they don't actually have any US dollars, but they have a lot of corn so they pay me corn or someone else can come and say they only have Microsoft stock, they pay me some Microsoft stock, someone else may have only Japanese yen, some people have oil, some people only have bonds , so that's really the theory behind asset allocation, you know, it's just as well what type of currency you would like to accept and hold your assets in so let's talk about how this felt to me and I often compare it in my mind to losing a Lamborghini. and you know maybe that's why I don't drive a Lamborghini because in my mind I already lost one and other than that it set me back several years in terms of income and I imagine you know if I was the type of person that was fighting really hard every year at the job I hated, then it wouldn't be worth it, right?

I would feel pretty bad, I would feel desperate that I had given up years of my life for this and that I had struggled and it was painful and I thought I would get money but then I lost it all in the blink of an eye and then I would have to redo the whole thing. new, but it's not really like that for me because I've been enjoying it. Life as it came and especially after this experience made me realize that money can be made and lost and that I should never focus only on that aspect.

If you're getting a job, it should be like that, I think for a similar lifestyle. Well, don't bet on being able to keep that money forever because you could lose it, you could lose it in a number of ways and to make sure you have a good time having fun while you're earning it because that's what's going to end up being yourlife too, it's not just an exchange of your time, your effort for money, you're also giving away your lifestyle, which is why I personally enjoy working in really nice companies, like nice offices, that's one of the main things that I really What I look for when I apply for a job, I am simply looking for a good, clean and comfortable work environment, you already know this personally.

For me, I wouldn't be working in an office like in a really horrible, hot, stuffy startup environment where people treat me like garbage. I won't do something like that because it's not worth it even if money can be made, because money can also be lost and in fact that kind of experience would happen to me again and again. You know, I'm not sure I

learned

anything. of that because even after that I still lose money in the stock market even today, so these days I tend to avoid playing too many games with the stock market and then dedicate my efforts to other more interesting and satisfying things. which you know I can develop skills that I can learn from so let me know what your investment strategy is if you liked the video please like and subscribe.

See you next time bye