We can never highlight the “too good to be true” story enough and here is another example.
A story from Business Insider tells the all too familiar story of getting burnt on a trade purely down to getting taken in on a sales pitch.
A former US defence contractor turned day trader learnt the value of research after losing $4500 on a stock trade after being sucked in by a company video.
The man named as “David” was up $7500 at one point then, through research he should have done before entering the trade, managed to get out for the $4500 loss, which could have been much worse.
His comments are reflective of many who try their hand at trading and serve as an important lesson that you sometimes need to feel some pain for the greater good.
“If a company plans on getting an auditor, it means they’re legit. For a penny stock, that’s pretty important.” he said before buying a couple of grands worth
“All of the stocks surrounding pot just exploded in anticipation of it becoming a more legal industry,” he explains. “I wanted to get in early on the investment.”
His stake jumped to $7500 so he decided to trade full time
“I just thought I might want to try something new,” he says. “I liked the idea of being my own boss, making my own hours.”
He then describes the collapse of the trade and losing $4.5k as an;
“eye-opening experience.”
“It was huge,”
“I’m not rich.”
The only thing that saved him from losing all his money was that he finally looked into the company in greater detail and discovered the risks, even if it was too late by then to salvage his stake.
The details of the story are one we’ve all heard a thousand times before but it’s another reminder of how financially dangerous this trading game is.
It matters not what you trade. What is important is that you research and learn about what you are stepping into. It is also just as important to keep on learning throughout your trading career.
The lesson isn’t to learn how to be right, it’s to learn how to be wrong less often.