I have enjoyed reading the "Happiest memory (thus far) of trading?" thread. Kind of reminds me of reading Jack Schwager's wizzards books back in the day. So I thought I would start another thread about "worst" experiences to hear about the other side of things. I've had quite a few blunders myself, but I'll highlight just a few. I first got interested in markets when I heard about the great market crash my first year working full time after college (1987). I remember thinking that I had read people who bought after past crashes eventually did well. Unfortunately, I didn't have any money to invest, so I watched the quick recovery from the sidelines. Then two years later, there was the "mini-crash" of 1989. By then I had money to invest. So I spent plenty of time reading up on how markets work. In early 1990, I began buying stocks. I remember I would go to the library and they had books (by Standards and Poors I think) that had a page showing fundamentals and a price graph for each stock. No internet back in those days. I looked through these books and picked a few stocks that were attractive to me. I had beginner's luck, and my largest holding (Telecom USA - TTT) got taken over a couple months later. I nearly doubled my money, and was convinced I was a market guru (even though my other stocks were basically flat). So I started telling anyone who would listen how much I knew about the stock market. I wanted to impress my father, who I knew owned a few stocks. I knew he was big into utilities and dividend stocks, so I searched and found the utility stock I was sure would make a fortune for him (Public Service of New Hampshire - PNH). As I recall, it was trading somewhere around $2 or $3 a share. It was so low in price, and I knew people would always need electricity, so I told him it would be a great stock to buy. He bought some, and it immediately began moving lower. Soon it got de-listed! He was not angry at me, but I was very embarrassed whenever the topic came up. Shortly after that, in August 1990, Iraq invaded Kuwait, causing a bear market to begin. My other stocks lost a significant percentage of their value. Not having been through a bear market before, I got scared and sold everything at a substantial loss. As for PNH, eventually they got bought out by another company, with shareholders receiving a complex combination of stock, bonds, and other securities. My father had no idea what the securities even were, so he offered to give them to me! But I was too embarrassed to take them so said I didn't need them either! In the mid 1990s, I decided I wanted to play with options. I understood how they worked, and knew that the majority of retail traders who buy options blow their money. But I thought I was different, since I worked in IT and felt I had a better understanding than the general public of which technology companies were likely to do well and which ones were not. In particular, I remember I wanted to "bet" against America Online (AOL). I picked a full-service broker, because one I talked with did his own screening on a computer (back in the days before this was easily done by anyone), and he was going to find companies for me to consider. Anyway, I bought put options on AOL, plus on one or two other companies he had showed me. Sure enough, AOL went down, and within a couple weeks my AOL puts were up over 50%. My broker called saying he recommended I sell. But I told him no, AOL was going to zero and I could do much better. The puts continued going up. My broker called again a couple weeks later, again recommending I sell, since some important news could be coming out the next day (earnings?), but again I said I knew what I was doing and held on. The news was positive for AOL, and my puts lost the majority of their value. I sold at a substantial loss a few days later. Meanwhile, the puts on the other two companies, which has been steady, began dropping rapidly as the time premium began to run out. I also sold them at a loss. I lost about half the money in my account. A couple months later, I decided to close the account. My broker knew what I was going to do as soon as I called him that day. I guess he had seen the same scenario play out before in others who speculated in options. He only made feeble attempts to talk me out of it. In 2000, I was amazed to discover that it was now possible to trade online, and for only $7 a trade, at Scottsdale Securities (later called ScottTrade). I was used to paying closer to $40 to buy and sell stocks. I realized that we were in the late stages of a bull market, but decided to open an account nonetheless. I bought a bunch of tech companies just in time for the 2000-2001 bear market. However, this time I had done my research. I knew I owned solid companies, and that they were likely to recover. Ultimately, the companies all recovered and went on to substantial gains. I continued to trade stocks, many with great profits, in coming years. I still trade in that account today (the company is now owned by TD Ameritrade). The most recent embarrassing blunder was in 2015. I had some money I wanted to get out of a bank account that was paying almost no interest. But I didn't have much time to research tech companies. Normally in that situation, I just buy an index fund until I decide what to do, but in this case I decided to "diversity". I bought Kroger (KR). I figured - it's pretty conservative. People will always need groceries. Well, I bought very close to the high. Although I was smart enough to get out in late 2016 (well before an even bigger drop in early 2017 due to the Whole Foods situation), I still lost something like 1/3 of my money in that stock in under a year.
Not really of a loss, but FOMO. I was putting 100% of my unspent student loans into Redhat. Trading at 7.10, put in a buy at 7.00. Near my buy, moved it down to 6.95 or so? Never came back. Literally the bottom. Learned to avoid picking bottoms. Except maybe I still do it (S&P, looking at you.)
While I did successfully advise my dad on a few stock stock purchases before that, my first own "trading" (investing) in my late teens didn't go super well. It goes without saying I didn't have a clue what I was doing. IIRC I put 50% of my capital into a shit Turkey fund with zero transparency and huge time lag for withdrawals; it managed to lose half of it (also because I was naturally struck with fear and disbelief, and so unable to act). As for actual trading, my least impressive moment was losing an equivalent of 15kusd (which at that point was a large chunk of what I could trade with, and still is as it's not more than a couple of years ago) in a few minutes on a 125x leverage trade on leveraged index warrants (Swedish), on a shit platform where only stoploss is warrant price (nontransparently set by market maker) dropping to zero. Suffice to say that's a trading style I've abandoned. Getting out my twenties has been good for reducing overconfidence.
WORST MEMORY - I KEPT MY LOSS SMALL. So don't listen to the experts who keep on saying keep your loss small. Follow your own trade plan and keep your loss bigger. ___________
I only recently started dabbling into selling naked options. First couple went well, but third time was...not a charm. I knew about tail risks in selling options, but didn't expect to get hit so quickly. I sold TLRY options the day before it decided to go from something like 120-->300. My eyes nearly popped out. My account nearly got wiped out. I was lucky that I got out on a correction that allowed me to save me a phone call w/ the broker.
Worse memory was hands down watching my account blow up due to hope and greed. And not having a stop loss. Terrible, but it gave me the pain that ingrained the trading values I have today which lead me to a consistently profitable trader so its not that bad in the bigger picture