Here’s a guy who came to us from the real estate world. His job was to assist banks in their foreclosures in the northeast, back in the day. In particular, Ed had to evict residents. While he made lots of money doing this, the emotional stress of it all started taking its toll. It really was not a pleasant experience.

He’d heard about trading and found our system to be quite attractive. We signed him on. He took a few quick lessons and before we knew it, Ed skipped the whole paper trading exercise and went directly to trading real money. Oh, not the usual few contracts most people start with, no, not Ed. He was beyond that. This trader began putting in $20,000, $30,000 even $40,000 into his trades!

Whoa there, cowboy! “But I’m doing great… look how much I’m making!”, he would say. Yes, he was doing quite well, pulling in a few thousand with most trades. But this ‘bull in a China shop’ trading would be short-lived if he failed to negotiate some down turns. In fact, his arrogance grew as he was making money. He started taking riskier and riskier trades, despite my attempts to reel him in. Many times, he just got lucky.

Then one day, it all hit the fan. I don’t recall the numbers but he was in heavy and he had very little time left, maybe 3 or 4 days, before expiration. His emails to me suddenly shot up, seeking assistance. I offered whatever I could but I was straight with him. That trade turned out ok and we had a little chat. “Ed, don’t do this anymore… keep your capital lower. The next time, you may not be so lucky.”

For reasons known only to Ed, he was doing it again, crazy market swings while he was in hot and heavy. I got angry with him and told him that unless he has a cool million in his trading account, he should not be putting $50k or more in any one trade at this early stage in his trading career. Sure he had some wins, but the losses were also starting to come in. When they did, he would try to make up for it. The volume of emails increased once again… 4 or 5 a day. Eventually, as his losing positions mounted, he would become even more irrational, seemingly trading on whims, totally disregarding all he had learned.

I tried to rein him in. Then his wife got in the mix. He became agitated with the both of us. He would make some gains, then lose, often times losing much more than he could afford. His account dwindled. His wife threatened him. With each profit, his high water mark rose, so he had a very difficult time accepting losses. The he would try harder and harder. Successful trading does not work like that.

Eventually, I stopped hearing from Ed. I just figured he stopped trading. Some time later, a mutual acquaintance told me the rest of the story. Ed recognized his weaknesses but instead of fixing the issues, he handed off what was left – $300,000 – to a ‘friend’ to trade on his behalf. In less than a month, the ‘friend’ blew out the entire account. $300,000… gone. They are no longer friends.