TL;DR
A Reddit user lost $308,000 after executing over 3,385 trades in a single month, highlighting the dangers of excessive trading and a possible gambling problem masked as investment strategy.
Story
A Reddit user, boasting the flair of “Autist”, shared a letter from Fidelity concerning their trading activity. The letter, humorously dubbed the “what the fuck are you doing” letter by the user, highlights the sheer volume of trades executed—a staggering 3,385 within a single month. This translates to over 100 trades per day, or nearly 170 if considering only weekdays.
This situation, while presented with a touch of dark humor, underscores a critical aspect of market participation: the danger of unchecked trading frequency. While the user jokes about leverage and risk tolerance, the underlying issue could be a symptom of a gambling problem or ADHD, as pointed out by other Reddit users. Excessive trading often leads to significant losses due to commissions and the inherent volatility of the market, as evidenced by the user’s $308,000 loss. It’s reminiscent of the day trading frenzy during the dot-com bubble, where many were lured by the promise of quick riches, only to face devastating losses when the market turned.
‣ Leverage: Borrowing money to amplify potential returns, magnifying both profits and losses. ‣ Risk Tolerance: The level of potential loss an investor is willing to accept. ‣ Day Trading: Buying and selling financial instruments within the same trading day. ‣ Dot-com Bubble: A period of rapid growth and speculation in internet-based companies in the late 1990s, followed by a market crash.
The user’s flippant attitude towards the loss—suggesting they frame the letter—further highlights the potential disconnect from the serious financial implications. This case serves as a cautionary tale about the importance of understanding one’s trading behavior, setting realistic goals, and seeking help if needed. It’s a stark reminder that the market is not a casino, and treating it as such can have disastrous consequences.
Advice
Don’t treat the stock market like a slot machine. Set clear goals, stick to a strategy, and for the love of your portfolio, take breaks.