Whether true or not, this is a good tale of OMGWTF! (And to note, almost 10% of the float was shorted so he is not alone in the Boat of Sudden and Extreme Pain.): I owe Etrade $106k, ouch. Hello to all you traders out there. I'm starting this page out of the recommendation of other traders in the community. I hesitated on doing this but I literally owe Etrade $106,445.56 as of this moment what would you do if you were in my situation? I'll do whats needed and sell what I have to get them paid but if someone feels my pain and is willing to help out---who am I to say no? If you don't want to donate I understand, at least read my story of what happened today and protect yourself from the same happening to you! This is a terrible lesson for me but if this helps just one person than I'm happy I wrote this. I'm a fairly new trader, been trading since about March of this year. I have learned alot about the community and trading...well not enough about trading as you will soon hear. I have a fairly small account, but its over PDT. As of this morning it was $37,000. I keep it small because I wanted to manage risk, the most I can afford to lose is what I have in the account....$37,000. When I get some profits I take them out of the account because I wouldn't want to lose more than $37k. I was holding KBIO short overnight for what I thought was a nice $2.00 fade coming. At the close of the bell I saw the quote montage clear out and figured today there was no action after hours in the stock. So I went to my office for a long meeting. I got out of the meeting and saw a message from one of my buddys, he asked if I was ok since I was short KBIO....my heart dropped. "Shoot did I blow up my account, everything I worked for? I don't want to lose all $37,000 that would be terrible." ---It was much worse. The stock was at $16 and my account was negative over 100k. I figured it was a mistake, Etrade would never let that happen, they must have cut the position when my account got to $0....nope. I immediately called them and they confirmed I still owned all the shares. He says that it got out of hand too fast for them to cover me, he says that all he can do right now is cover. I was devistated. I asked him to cover at $16 and he waited trying to find me a good exit. I told him to do it asap and the fill was around $18.50 avg. At the moment not only is my $37k gone, but I now owe ETrade the negative balance of over $106k. I always knew I could blow up an account and I was financially able to "afford" to lose the $37k. Never in my wildest dreams did I imagine that Etrade would NOT have some sort of stop or circuit breaker in place that would automatically cut a position if the account went to $0.....how could they ever let it get to -$144k loss on a account that small! Also, why did I have to call them to find out what was going on, why did they not alert me or call me when it went neg??? I'm never one to ask for a handout and honestly I'm kinda not sure if I should post this but here we go. I'm sure it will cause lots of controversy on whether or not I deserve even a $1 donation but it doesn't hurt to ask. Anything you traders can do to help me get a little out of this hole would be a blessing for me. Anything donated will go 100% to simply paying Etrade some of this $106,445.56. My plan moving forward is to liquidate mine and wife's 401k's and try work out a payment plan with Etrade. I'm also going to ask them to help out in some way...thats a longshot. I will pay them and be back trading....only with set stops this time. What an expensive lesson that was. I hope my story helps someone else from the same. Here are screenshots of the damage.
You shouldn't touch your wife's 401k. This is yours or your brokers screw up, not hers. In your situation, I would offer to work for them to pay off the debt.
why would you be short an illiquid $2 stock even if it goes to 0 you only get $2 in profit and if it takes off like this you stand to lose so much more. The first thing I learned was look at what my downside could be.
Forget asking for donations..your credibility just for asking went to a negative, just like your "supposed" account. Advise: Don't do anything just yet. By now your account has been closed by the broker and if this is "real" (you are not a liar and a scam) then when you get a demand for payment, contact an attorney for a one hour consultation and then either the broker will, 1.) Forgive the debt. 2.) Settle for less 3.) Sue you, in which case you will have plenty of time to consider your options i.e. sell house, file bankruptcy, etc. Time is on "your" side. But please don't beg "here" !!! It's so Nigerian.
I wouldn't touch your wife's money, they might not even sue or go after you, they're partly to blame anyways. I believe Oanda forgave their customer deficits when the swiss/usd exploded earlier this year. You shouldn't have been shorting biotech in the first place, granted you are new, but those companies have a tendency to pop multi hundred percent, I've seen it so many times. All it takes is one FDA announcement to blow you out of the water. Also, Etrade can't do much about it if it gaps up huge, to loose more then 100% ( if short ) is pretty common in those types of events. The stock did not trade between 2 and like 14 dollars or whatever it opened at.
This is not my account, read the part of "whether true or not," that should've been a clue that I am referring to another source. I thought Etrade didn't allow retail to short sub $5 stocks or at least have a list of illiquid penny stocks that aren't shortable. I think this is a scam.
holy batman that is a bad day at the office. I know some pro traders who have taken big hits in the last 2 months, one of them dwarfs this loss. it's risky out their folks.
Ah gotcha, maybe you should forward some of the advice given here because I feel like he's about to make another big mistake by giving the broker another 100k