Margin tradingJFL exactly, it isnt a loan, its an investment so worst case scenario is that you lose all your money an have a balance of ZERO, you cant have negative balance (unless you owe the broker admin/management fees).
I assumeStory moneymaxxing brocel kills himself after $730k negative balance
I assume
How can an option be leveraged if you're a buyer? You pay the fees up front and that's it unless I'm missing something.
Futures are leveraged 50:1 as are many other financial instruments. Sometimes brokers fuck up and don't make sure you have enough account balanced to trade.
When WTI crude went to negative prices a few months ago, people lost more than in their brokerage account. Brokerages didn't code for such a scenario as crude never went to negatives before. Some had many millions of negative in their account. That being said it would have been the broker's fault.
Would you be legally liable for this kind of thing?
google the story of IB and oil futures negative balance
IB agreed to pay for negative balances which were I think 100s of millions
So the fact that you can't loose more money than you put into it remains true right?
in theory, but a lot of brokers are shit
margin is limited to 30% of your account balance usually. shorting on margin is the most common way to wipe out your account as your losses are infinite. but the broker is supposed to code in a margin call before you go to neg balance
only advanced traders might get more, i.e. hedge funds
but anyone with experience who takes on high risk is a fucking idiot and will quickly be fired from the firm he works at
I meant he was trading on margin.
He has no business to be trading on margin. JFL.
The worst thing that can happen normally is that you lose 100% of your investment. This guy must've lost like 500%.
he was doing a credit/debit spread nigga, the risk is fixed. he was likely close to roping before. it was a glitch that would fix itself the next day. he
D
For the best tbh, if he was that low IQ in the first place to not check his actual balance.
Kek
From what I read it wasn't a glitch, it's that his trades weren't fully executed.
no broker would give him more than 50% margin tho
anyway, he didn't have a neg balance, it was a UI bug
Then he killed himself over a bug, which makes it even worse
even if he had a billion, look how fucked up his face is
what does it even matter at that point, lol
gigantic bruh moment
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