Essay Fifty Seven, age 61, 2007 : Stock Market losses grow

2006 went well and my money grew. I was ecstatic, feeling powerful with my new ability to make money grow. When I had roped in the Albertson's chunk of cash, it made me feel that I had joined a club I would never have been admitted to in the past. Now I had money, and money had power, a new power that I did not yet know how to use as well as I thought I did. Sure, I had an extensive academic background, with graduate coursework in statistical analysis, but that did not make a person skilled in the stock market game. I savored working with big amounts of money, something I had never been able to do before. Buying thousands of shares came to feel normal to me, and a comfort level with money amounts in the six figure ranges developed fairly quickly. I was trading via Scottrade, an online brokerage. I was given margin trading capability by Scottrade, something I had not had before and did not know the depth of danger it represented. With margin ability extended to me, my %500,000 in cash of my own was matched by an equal amount by the brokerage, so that I was trading with a million. Trading with that much capital can help a trader win big, and double the gain but it can also go the reverse direction and double the loss. That risk had not really sunk into my conscienceness, and as a result I traded in the most flambouyant fashion anyone would ever dare to trade. It won me big returns while the market was going up, but in 2007 the market became a land mine, with shortsellers and options traders, along with high frequency traders, drove stocks down dramatically. I did not know much about all of this at the time. All I knew was the nauseating, and even terrifying, dives of my stocks on the computer screen, as the share prices plunged in seconds and minutes. I lost about $200,000 in one trade on a pharmaceutical company called ViroPharma. It seems someone had broadcast negative news about the company, that later turned out to be false, but it sucked away all the money I had invested. I panicked, of course, and sold at a loss because I did not know how much further it might fall. I was afraid of losing even more, so I sold in a frantic move. Then I shook all over, and felt like I was going to throw up. How could this be happening? What the hell was going on? I asked myself, in despair and confusion. Then I tried to recover the loss with more trades, and each trade lost me more. This went on for months, with every trade losing me more. I had no positive trades at all. It did not seem real, and in my view defied the laws of probability which would rule that at least some trades would be a gain. No, not so. I thought someone might be hacking my system, invisibly draining my funds with hidden transactions. It did not seem real, yet it was terrifyingly real.