Interesting Barrons article... Several comments/clarifications came to mind:
And the first thing he was told by the firm's principals, he recalls, was that it didn't pay to trade fewer than 1,000 shares at a time. (At the time, the maximum number of shares that could be bought or sold on SOES was 1,000; subsequently, regulators reduced that to 100.)
This statement is incorrect. Actually, regulators reduced the minimum size that market makers are required to display, not the maximum size that a trader is allow to trade using SOES.
"In that one year, he lost $200,000. Much of it came from an inheritance, but the toll also included his condominium and a $30,000 advance on his credit cards. "I lost my home, I lost my girlfriend, I lost my family members, and my health has declined dramatically," he says ruefully."
This is extremely unfortunate. But at what point does a person start to take responsibility for their own actions? If new to trading, and misled into how 'easy' daytrading can be, then I'm might be inclined to open an account. Subsequently, I might trade for a week, two weeks or even a month. Assuming that I consistently lose money, I might even rack up loses of $5-10k while I determine that this is no 'easy' scheme to make a fortune. At this point, I must begin to take responsibility for my own actions. It is my choice. Can I learn to be profitable? Is it worth the risk of potentially greater losses? Should I simply quit now and assume that trading is not for me? It's time for ME to make a decision.
I can certainly sympathize with daytraders that lose money. It is a very difficult, although potentially very rewarding profession. However, losing a $200k inheritance, a condominium, a girlfriend and $30k in credit card debt... AND => It's all the brokers fault??? Come on, man, let's grow up and be an adult.
The firm required a minimum trading account of $25,000, but the optimistic song-and-dance man voluntarily plunked down $50,000 to start. "Evidently, even that was not enough capital," Skiersch recounts, "and they suggested I should sell my condo apartment, which I did -- and that was only two weeks into my day-trading life. So I was soon working with $100,000."
This is unforgivable. Any daytrading firm that would suggest that a new trader sell his condo to raise more capital for trading is totally irresponsible towards their customers fate. Why doesn't Barrons come public with the name of the firm? If true, this is blatantly inappropriate and the firm should pay the price with both bad publicity and possible SEC sanctions. Why not finger the bad apple, instead of the more general conclusion implied that all daytrading firms are bad?
-Eric |
