• Breaking News

    20 Year Old Rookie Trader lost $700,000 and Decided to Commit Suicide

    Alexander E. Kearns, a 20-year-old student at the University of Nebraska, committed suicide after running up massive losses in a Robin Hood trading account. He generated losses of over $730,000 before taking his own life.

    I decided to write an article about this tragedy can happen to anyone who trades in the stock market without any knowledge and understanding. This tragedy could have been avoided, and the main focus of this article is to discuss how this happened to Alexander, and how we should take this event as a precautious about trading stocks in the stock market.  

    What Happened to Alexander’s Trading Venture.
    Alexander, who is a student at the University of Nebraska, was new to the stock market. Before his death, he was trading stocks in his Robin Hood trading account and had an excess of leveraging. Without the proper knowledge of what he is doing, he was making a risky investment. He decided to take his own life after realizing he had a negative $700,000 balance in his Robin Hood trading account.

    According to Kearn’s suicide note, he mentioned how he never intended to use leverage, and thought his losses would be limited to the amount he placed in his account. The exact details of Alexander’s situation aren’t yet available. There’s some debate as to whether there was a glitch in Robin Hood’s system. It’s possible that Kearns didn’t lose as much as his account indicated.

    It was strange how he had excess to a huge margin since this usually requires the broker to have it approved. Options traders are generally required by law to fill out paperwork that indicates a high degree of market knowledge and sophistication. It was really unclear how a 20-year old college student with no income could have qualified as such an investor.

    What We Should Learn From This Event.
    We should take this event seriously since this can happen to anyone, especially to people who are still new to the stock investing world. The death serves as a reminder that trading stocks can be devastating real-life consequences.

    Anyone who is trading or investing in the stock market should know that using leverage (borrowed money) to trade or invest can be really risky. I suggest anyone not use leverage at all because it has a high risk if you don’t know what you are actually doing.

    Even though I have been in the stock market world since 2007, I avoid using leverage in my stock investing journey. I know that using borrowed money to invest or trade is risky. I would suggest that beginners learn and gain the right knowledge before doing so. This can help prevent making a mistake as Alexander did.

    How can New Traders or Investors Avoid These Traps?
    I want to share information on how traders or investors can avoid traps like the one Alexander encountered. I felt that this is crucial before anyone tries to start trading or to invest in the stock market.

    - Don’t Gamble. Traders shouldn’t gamble, and gamblers shouldn’t trade. If you’re not sure whether you are trading or gambling means you are gambling.

    I was once a rookie investor, and I once also made mistakes when investing in the stock market. Without the right knowledge and experience, I was investing in a stock that was risky. The company that I was investing in was complete junk, and this led me to a huge loss that results in me losing all my investment value. 

    It was a painful experience since the amount I lost was about $28,000. Even though I didn’t lose my principle from the starting capital, my dad gave me $28,000 lost is still a lot of money. This tragic event taught me that anyone to invest in the stock market requires knowledge and understanding. It would be wise to read books about investing before actually starting on your own. This way, it can prevent you from making mistakes as Alexander or I did.

    Learn How to Lose. Every traders or investor have win and losses. Good trading or investing can be described as the art of losing well. Successful traders or investors should know how to cope with losses since this will happen.
    I personally believe that anyone who starts trading or investing should realize that the amount of money they put should be money they can afford to lose. Don’t try to use the money you will need soon since there is a chance that you might lose the money. It’s wise to use the money you can afford to lose; that way, you won’t be in a position like Alexander did.

    Keep Studying. Stop asking other traders which stock you should buy, and start asking them which books you should read. There are tons of good stock investing books out there, and the information you can get can be beneficial.

    After making mistakes in stock investing, I decided to read books on stock investing to gain the knowledge and experience of a professional. Reading tons of books had led me to become a better investor since I was able to know what to do and what not to do.

    One good example I learned was when the stock market plunges. Instead of panicking and trying to sell my stocks, I would ignore the market volatility since I know the stocks I am invested in have great fundamentals. In fact, I would invest more in the companies that have a vast potential that is discounted by the market volatility.

    Bottom Line.
    I hope you readers will be more cautious when investing or trading in the stock market. Alexander Kearn’s misfortune should teach us to be more educated when investing or trading in the stock market. It would be wise to read tons of books on investing before actually starting to trade or invest in the stock market. By becoming knowledgeable will prevent anyone from making mistakes that can be costly.

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