What they don't tell you about trading...

Hi everyone and welcome to this new video. The topic today is a little different from usual because if you have attended courses, you read book, you watch videos on YouTube, it's very easy to find information on how easy it is to trade, what are the best techniques to use, what are the main ideas behind fundamental and technical analysis. And many of them are also discussed in this channel. But what is often overlooked is when things go wrong. What do you do when you face unexpected situations, something that nobody told you could happen, something that the course you have attended never discussed, and yet you are there facing this situation that you don't know how to deal with, Then what do you do? And I want to discuss today three of these scenarios that happened to me personally. And the number three happened actually today. So it's very recent. But I want to start with the first one. It happened a few years ago when I was still trying day trading. Why did I try that? Because I think it's good to be exposed to different types of investing and trading styles. So I was also trying day trading and the idea was that as soon as the market opens, you enter and you have a very, very tight order, meaning to say your entry price and stop loss are really close. So what is the idea behind? Basically, you will profit for a small movement, but in order to profit, you need to buy many shares because let's say that your entry price is $0.20 above the current price and your stop loss is $0.10 below. For each share you are risking $0.10. So if you want to risk, let's say $100, you need to buy a thousand shares. And if the share is trading at, let's say $50, it will be a $50,000 position. So probably you need margin and so on. If you don't know what is margin, don't worry, you can watch some of my videos. But just to say that to do this kind of trading, you need huge capital or you need to take risk because you are using more money than what you have in your account. Now, what happened that day? I remember I entered my trade, I was fine, everything was good. Then the market opened and when it opened, my order was filled. So I was in, I was in the trade. So I checked the price going up and then suddenly started to go down. And I said, okay, is it in my stop loss? Too bad, I lost $100, I thought. But actually what happened, my stop loss was here. And the way stop loss works is that whenever the price goes down and hit your stop loss, you will actually it's not the Cue. But the system will automatically sell your position to cut loss. But it didn't happen. So the price was going below my stop loss and the stop loss was still there. And the position was not sold. So Instead of losing $100, I am looking at the screen. Imagine that you're looking at the screen and you see that you're losing 200, 300, 400, 500, and you don't know what to do. Because in theory, what everyone is telling in the videos, in the courses and so on, is that the stop loss is there to protect you. So whenever the stop loss is hit, the position is closed. But it was not happening. And I didn't know what to do. And there was no guru, no book, no creator of the video there to tell me what to do. And I was losing money. So what happened after that? I'm still looking at the screen, thinking at, oh my God, what happened? And then suddenly my stop loss order disappeared. And then I got the message, your order has been rejected. I have no idea. Like, this was not even discussed. It's something that I didn't know could happen, but it was happening right in front of my eyes. Not mentioned in any course, not mentioned in any book. But my stop loss was rejected and I was losing without any limit. So I had to quickly do something. What did I do? I manually closed the position. So I sold with a market order that you should never do. But this was an exceptional situation that requires some exceptional action. So I sold with a market order to cut my losses as quickly as possible. And eventually I ended up losing $1,000, actually slightly more than that. So imagine I entered the trade knowing that, hey, worst case, I will lose $100 or so, and I lost 10 times more. So I wrote to the broker and then basically they start to tell me some kind of explanation that didn't really make sense to me. What happened is that there was an issue with their platform and they didn't want to take responsibility. But the net result is that they lost 10 times more than what I had to. And this is just one case because then there was another one again related to stop loss. So what happened that time? I had my position. It was not day trading, it was normal trading. You know, you place your stop loss and then maybe your position will hit your target or stop loss, usually within one week, two weeks, something like that. So it's not very tight. You have room for the price to move. So remember I had two ETFs, and if you don't know what ETFs are. They are something that you can trade like stocks, but the nature is similar to a mutual fund. So they include a basket of stocks. They are tracking a basket of things like stocks or commodities, whatever it is. And at that time, what happened? I had my stop loss day after I checked my trading platform and again the stop loss were there. The price was below the stop loss so in theory should have triggered, but it didn't. Similar to the first case. And again I was like what's going on? This should not happen. Why the stop loss is there? Like they always tell me that whenever your stop loss is there and the price goes below, you are not sure about the execution price of your trade. Because the stop loss is a trigger. It means as soon as the price hit the stop loss, a market order to close your position is sent. But the execution price of the market order may be different from the stop loss. This is very important if for example, you have a gap, right? But in that case that was not the the issue. The issue is that the price crossed the stop loss so the selling should have been executed. And it was quite a liquid stock. So there was enough volume to execute my trade. But it wasn't and for two positions. So again, go through the broker, ask what happened. They didn't explain. Again, I think it was some kind of problem with the trading platform. This was another broker by the way, compared to the first case. And in that case at least they refunded me the difference. Something they didn't do in the previous case. But again, unexpected situation. The last one is what happened to me today. So I have a portfolio, you have some position with stop loss and everything. So today I did log into my trading account as I do every day to update my journal and see if there is any new trade that I can take. And then I see that actually I received a message saying that oh, all your orders have been cancelled because you don't have the trading permission. I was what the hell is that? I'm trading like it's already a few years, I trade with this platform and then suddenly I don't have trading permissions. And then you cancel all my stop loss and take profit. What's going on? And if you know, during weekend usually the system goes through some maintenance. So I was not able to chat with the support. And what I did was first I checked if I still had my trading permission and everything was in order. There was nothing wrong. So I had to manually re enter all my orders. And luckily nothing bad happened. Like during the trading day, it didn't happen that the price was going below the stop loss and it was not triggered, it was still in the race. So nothing bad happened except that they canceled my orders. And this is very scary because the stop loss are there to prevent you to lose more than what you should. But then if these orders can be removed by the broker without any reasonable explanation, that is something scary. And again, in theory, all these three situations should not happen. Orders not triggered, orders rejected, orders cancelled. Only in the second case they took accountability to refound me the difference. But in the first case they didn't. So why am I mentioning that? Because many times when we go through education on these topics, people tend to simplify a lot. And in a way it's good because you want to explain something that is not so easy and you want to make it simple for people to understand. But this should not be taken as, oh, you know, it's super easy to make money. You just do this because they tell me that this will happen. They tell me that I enter here, stop loss, there I make money, no unexpected things will happen. So that's why it's very important that you experience first. Start with a small amount and start to trade. And you will find many, many situations that were not discussed during the course. Because everyone is able to show you a nice chart and say, look, if you buy three months ago now you would have made money, but nobody is there to tell you, oh, look, if you buy three months ago with a stop loss and maybe the broker cancels the stop loss, then you may have lost 10 times more than what you should. And yet it can happen. So the suggestion I have for you is really to practice a lot. Start with a small account, build your confidence, you will go through situations like that. But this is part of the learning process and it's very important that you go through that. Don't listen to people that are just there to tell you, oh, you know, it's very easy, just do this, do that, and this is basically what you will experience. No, there are so many unexpected situations that you know is important to go through because next time it will happen, you don't panic. At least, you know, I had an experience like that before, so I know what to do. And that's all for today. I didn't mean to scare you with this video. I still think that learning how to trade and invest is important. At the same time, I also think it's important to be aware of the kind of issues and challenges you may face, especially if you never experienced that. Because the worst thing is to panic and do something stupid. So by sharing what happened to me, I hope that I can help you avoid such issues. And you know this is something that can cost you much more money than what you wanted to risk. And that's all for today. Thank you for watching and as usual, see you next time.