There was this young guy about 8 years ago who had an old 401K account that had about 16K in it. No big deal. Compared to others and their 401Ks it was chump change. But $16,000 is $16,000! 선물옵션
Well, this brother had been studying about trading and in particular about Swing Trading for awhile. He had taken his own account to some pretty high levels in a relatively short period of time. So this brother decides to show his rate of return to the brother with the old 401K account. We will call the one with the 401K account Tim and the one who has had some great success with trading,Ed.
Tim Lets His Brother Ed Start To Trade His 401K Account
So Tim sees his brother’s success and becomes interested in giving money for him to trade. Of course, this was the intention of Ed showing his trading prowess to his brother, so Ed is just tickled pink when Tim decides to give him is old 401K account to trade.
So Tim transfers the money into a separate E-trade account of brother Ed’s. And now Ed is set up to trade a nice amount of seed capital for Swing Trading.
Ed’s Trading Plan For His Brother’s 401K
Now Ed has a pretty good trading system in place. He knows exactly what stocks to pick and what his entry points and exits points are so that he will either make a nice profit on the trade or come out with a small loss.
Ed Trades His Brother’s 401K on Margin… He is Doomed!
The only thing Ed lacks in his system is this one critical factor… Do not trade on Margin. This is where an Online Trading Company will let you trade more than the actual amount in your account. In affect, you are borrowing money so that you can completely leverage the trades you get in and out OF. Huge mistake. To anyone out there do not start trading or even investing on Margin. This could be a recipe for a disaster. Some professionals swear by using this tool. I simply do not!
So back to our story here. Ed proceeds to double down and indeed use Margin as a tool to leverage and be able to buy more shares of a stock to Trade than he ever could imagine.
At First Ed Does Good in Trading His Brother’s 401K
After a month or so Ed has some pretty good results. He has taken that account of his brother and appreciated it from 16K to over 2OK. Of course, they are both excited and Ed just cannot wait to get in the next trade. He had been trading APPLE and during this time the I-phone was coming out so anyone who was putting any money into Apple was hitting a home run.
Ed Feels Like He Is the All Mighty GOD Of Swing Trading
So Ed starts to trade some other Stocks. Within a few weeks, he is up another grand or so. He is riding high. Unfortunately, from here on out things begin to take a turn for the worst. Ed’s euphoria for having picked so many trades begins to take control of his emotions. He starts to believe he is just infallible. Like he is the Superman of trading.