How to Lose $10,000 in one week
Let’s not focus on my identity too much, because I am a pretty well-known character online. Let’s just say I received an email from a company that seemed pretty reliable and guaranteed that with their mentorship you can get to making $10,000 in a week. I invested the same amount into that promise, and guess what? Lost it all in a week to penny stocks.
Here’s how it played out. I was making a pretty nice living at the time, so I decided it’s time to invest a bit. Having zero knowledge about stocks, bonds, all that stuff, I started researching online. Obviously, soon enough an ad caught my eye – for a day-trading guru who teaches you how to make so much money so quickly! Who wouldn’t jump on the bandwagon? I surely did.
This ‘genius’ teaches you how to make all that money by trading penny stocks. How does it work? You log into their trading room and they tell you ‘exactly’ what to do. They problem is that they tell you what to do after it’s too late! So you follow his advice buying penny stocks cheap, and then when he tells you to sell at a profit – it’s already too late and you lost your money by then.
I asked them several times how to do it right and they kept saying I was doing everything right, just give it some time. So happy I only devoted a week. But was too greedy and lost $10k.
Anyhow, my bottom line is that if you really want success in the stock market – you need to study everything from the beginning and walk through it slowly and responsibly. I am pretty well off, so it’s not the end of the world for me to lose that kind of money. But for other people it can be much worse. Be careful.
Trading Crypto is a Terrible Idea
I used to trade stocks and bonds back in the day, and always felt quite comfortable doing so. I am, indeed, an experienced (now retired) tax adviser, and have heard the good, the bad, and the ugly of the trading world – and everything in between.
But as recent as 2018, I was suddenly exposed to the idea of day trading crypto assets. Well how does that work? It’s pretty much the same as trading stocks, but this time, the underlying is a hybrid between currency and equity, and behaves like either (or both).
The problem is the lack of maturity of this market. While the stock market has been around for years, and any stock with over 250k volume and more than $5 in price is all but resistant to manipulations, the crypto world is new, unregulated, and immature.
What happens is that there is no single exchange in which you can trade, but over a dozen. In general, competition is good. But in this case, it was nearly impossible to track down the ‘mid-point’ of an asset and see its true value.
On top of that, and much worse, you had them spreads. Oh my gush. They were terrible. Most currencies could have the spreads widen to up to 40% between the ask and the bid. That means once you bought the asset you start at a 40% loss. You really need to be lucky to beat that.
And lastly, the volumes are not there. Apart from Bitcoin and Etheruem, plus a couple other coins who are concentrating most of the trading, most other currencies are barely getting any trading volumes. That makes is very difficult to trade, as you need to trade based on one or two trades a day, on some currencies.
So I put a few thousand into the world of crypto, and lost all of them in a matter of days. And I will never touch crypto again. It’s a market you can’t beat