I've been thinking about writing this post ever since I read the Forbes' story on Alexander E. Kearns who died by suicide over a $730,000 negative balance.
According to the report:
Kearns may not have realised that his negative cash balance displaying on his Robinhood home screen was only temporary and would be corrected once the underlying stock was credited to his account. Indeed it’s not uncommon for cash and buying power to display negative after the first half of options are processed but before the second options are exercised—even if the portfolio remains positive.
It's possible he might've survived had he waited longer for further confirmation of this negative balance but its so sad that he decided it was time to go. He began trading early in life, so there was more than enough time to learn and grow. Maybe he'd have done well over time and recovered-we'll never know now. I just wish he hadn't taken this decision!
Everyone in crypto including myself by default are traders of speculative markets and it really saddens me to read news like this where traders take their life. It's happened before and likely to happen again but we must be informed as individuals and traders in order to prevent these scenarios.
Even long term investors are basically traders in a market and everyone is at risk when they are opening a position. I thought it would be good to discuss a few things that were on my mind:
- We are all retail investors here and speculative markets are extremely hard to trade in general for most people.
- It's important to learn technical analysis but money management is the key to stay in the game. Managing our risk takes time to learn and its important to be in position to come back after a loss.
- Options and leveraged markets are extremely hard to trade. It's easy to pull the trigger and enter a position but to consistently make money in these markets month after month isn't easy.
- Never invest more than you can lose. We hear this all the time but few actually understand the depth of this statement as everyone wants to make huge overnight profits-especially in crypto markets.
- If you are facing loss in trading, take it as fees paid to the market to teach you what not to do in the future but don't give up on life itself.
- Avoid leveraged markets and options trading early on. Some of these markets are very complex with the way some of the assets are structured and traded. There's ample opportunities in spot/cash markets.
- Don't rush into any kind of trading with all your money. Start small and as you win often you can consider scaling up.
- Margin trading has allowed anyone to take ridiculous amounts of risk. You must learn to walk before you can run. Quite a few people I know have tried randomly trading futures, options and other complex derivatives and lost money quickly without even understanding the basics first, forget mastering anything.
- Just because it's hard it doesn't mean the markets are bad or manipulated or whatever. It means we need to improve our knowledge and skill to deal with whatever comes our way.
- Everyone goes through periods of losses in trading. Even the best traders would've had a few major losses. It happens. Don't let that stop you forever and don't force yourself to do something you can't back out of.
- It's good to get involved in speculative markets early on in life and trading is a great skill to master. But it takes practice similar to everything else in life before you can be good at it. Profits will come steadily as you keep getting better at this.
- Trading is a game of probabilities where preservation of our hard earned money is everything. If you lose it all in one trade there is no going back to the markets. Take it easy.
- All of these markets will be here tomorrow. Same opportunities will be there. If you can build your skills in trading you can survive trading in any market over a long period of time.
- Majority trading is done by bots running on algorithms. Traders who run them know how to cut emotions out of trading and follow their plan. They are also well capitalised. Rest of the market cannot do this similarly, and successfully early on.
- It takes time for most people to remove fear of risk and fear of missing out. Start small so you don't give up easily!
If you are new to Hive or cryptocurrency in general, you are likely to use an exchange as your fiat gateway. You have no option other than trading in and out of these markets. Please don't take huge risks if you decide to try your hand at trading regularly down the road.
Trading is a zero sum game in its purest form. Risk small if its your capital, take even lesser risks if its borrowed capital. It doesn't matter if Bitcoin or any asset is at some specific price. The opportunities to make or lose money are always there irrespective of what price your preferred asset is trading at currently.
Please take care of yourselves and if you have friends or family who are going through a difficult time mentally, try to be there for them.
I've seen some pretty screwy things with balances happen for various events, including entire balances of shares disappear. It's shocking that his first instinct wasn't to seek clarification.
You're right. It's pretty crazy when you think about why he didn't seek any clarification. I doubt Robinhood would release any further information about this even if they have unless some investigation forces them to.
May he RIP and may others learn from his mistake.
Indeed! :(
This is really sad. I’ve actually had this happen to me on the same strategy. However, I was confident in my knowledge And got ahold of cut under service to tell them they for got to execute the second half of my trade. It showed I owed $16,000 but unreality I ended up only paying -$40 for the trade. I do find Robinhood interface to be misleading and if I did not know what I was doing I would I freaked out too. This is a traffic story of the uninformed and a poorly designed app.
I wasn't expecting someone to share a similar experience. Wow! One thing i have heard is issues with Robinhood from a few friends in US who tried it before switching to another broker.
Yeah I was mad because I was questioning my knowledge of options and I was 100% sure I knew what I was doing, but still it was panic inducing for a second until I saw the second d half of my trade was still there.
A tragic example of the desperate need for more financial education in the world. I hope people wake up to the reality of how important this is not just in the U.S. but all over the globe
Posted Using LeoFinance
True that! The whole world is so dependant on these financial markets and yet we are taught nothing about them growing up!
that is horrible, another example of companies so desperate for growth at the expense of the customer! Robinhood is renowned now for being the place where the dumb money pile in, there are like any platform a few smart traders that pile in and the recommendations feed pumps everyone jumps on a stock and most lose. Trading stocks in the modern age where there are little or no dividend worth holding for makes it a lesser fools game.
This may be the most public case, but sadly there are more like him that we don't know about, all falling for this Ponzi scheme
Yeah man! It's a real shame as thousands are pulled into this and it takes a while for most people to get used to the nature of these markets. I hope the broker is also investigated for any issues on their end but modern day trading is done by majority of bots and its extremely hard for the average joe to make consistent profits year after year. It's very easy to blow up your account while trading. There's a learning curve one cannot skip and even then there are no guarantees. As for Robinhood I tend to agree as I've heard similar things about them from a while now.
Unfortunately those who go through a difficult time barely say that to anyone - I have lost a good amount in crypt - but life is not all about that.
Yeah i totally agree!
Rip to the enthusiastic kid. Really sad. Hope he waited a little long. thank you for advice.
This is a tragic and sad situation. How many people think that Robin-hood should take more responsibility for this?