Reading Your Account Balance: An Important Trading Lesson

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Keeping an eye on your account balance is a crucial part of trading.

Before you place any trade, you should know how it will affect your account – it’s all part of rules-based trading.

This was made clear last week in a terrible tragedy involving a young trader that I want to talk about today.

Before you watch, know that this is a heartbreaking story – one in which an incorrect account balance led to an absolute tragedy.

That’s why, in today’s video, I want to show you exactly how to read your account balance when placing trades.

You can watch right here.

Thanks for watching, Power Profit Traders. Understanding your account balance is one of many important trading lessons.

Again, my heart goes out to the family of Alexander Kearns.

Sincerely,

Tom Gentile

12 Responses to “Reading Your Account Balance: An Important Trading Lesson”

  2. Scott A. Berger, M.D.

    Great video Tom!!! Thank you. I literally had this happen to me YESTERDAY!!! I failed to close out a bear call credit spread for ERIE, and the next thing knew, I had short 100 shares of ERIE!!! I had to call my broker and get some clarity, but I only wish I had seen this YESTERDAY morning, not today. But is is a really good lesson. Love your stuff Tom. Hopefully we will be moving on board with your platform soon. Looks amazing!!!

    June 23, 2020 at 7:54 am
  3. ARTHUR DAPRATO

    Thank you Tom,
    You explained that perfectly. I have had a few margin calls over the past few years and I was frightened the first time it happened. I decided to take Warren Buffets advice and not gobble margin to buy stocks @9%/day. No more negative balance issues.
    I was saddened when I read the article about Alexander Kearns. Such a tragedy. I will be watching to see how Robinhood handles this.

    Art DaPrato

    June 23, 2020 at 8:26 am
  5. Capt. Sam K. Kumaran

    Although I have been involved in Currency Trading, Stock and options trading are new to me. I am interested to learn.
    I need a starting point at level 101, first to get familiar with the mumbo/ Jumbo of trading terminology. Can you guide where to make a start ? Perhaps “Options and Stocks Trading” for “DUMMIES” !!!. Would appreciate the kind guidance. Thanks. Sam K.

    June 23, 2020 at 2:31 pm
  8. Brian H

    Appreciate the input and your sincerity of concern and desire to understand and to possibly prevent another from same faith.
    Now with that said how can I use your trading platform shown in this video ???

    June 24, 2020 at 4:44 pm
  9. WALTER DENSON JR

    Tom, I am sorry to hear the news of this young man losing his life for not understanding the process of operation.
    I am new also to the process. I am glad to hear your voice of guidance on the precautions to take when investing.
    I have a lot to learn. Thanks very much.

    June 24, 2020 at 4:49 pm
  10. Walter Denson Jr

    Tom, I am sorry to hear the news of this young man losing his life of not understanding the process of operation.
    I am new at the process also. Thanks for your voice of knowledge of advice.

    June 24, 2020 at 4:55 pm
  12. Bob Fontana

    A similar stock spread situation just happened to me this week. I had a vertical call option on HUM expiring last Friday, buying a call at $380 and selling it at $385. Both ends were in the money all the way until Friday, June 19th, expiration day, where it closed at $380.76. Because one of the options was slightly in the money, it was automatically assigned. I assumed I would get a nominal $76 back, because it was assigned at $380 and would sell for $380.76, the price it closed at. Then I learn that I couldn’t sell it until Monday at whatever the market for HUM was on Monday. In talking with my broker, I learned that I had to enter a working order to sell it—-that it isn’t an automatic transaction. The market opened significantly lower on Monday and I suddenly had a $38,000 margin account opened on a stock that was worth $500+ less than what I acquired it for. I had thought the most I could lose was what I had paid for the option, about $272. I immediately opened a sell work order at a limit price of $383 to recoup my negatives. Luckily, it sold late Tuesday at $383 before it then plummeted to $370 a share. I was very lucky the way it turned out and learned several things about how spread options work regarding assignments. It could have been a very expensive lesson on what I had thought was a completely safe option.

    June 24, 2020 at 11:39 pm

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