Last week we saw WTI futures in the negative zone. No joke, near-by futures were trading below zero (they felt even at -30$) before the end of the day.
And that is the tricky thing with all margin trading. You can not be sure how much you will lose at the end of the day. Do not believe in stop-loss. It does not help when the market is in a free fall. It will not protect you from falling into the negative territory on your account. And negative does not mean that you lose a bit from your initial investment. Negative means really negative. It means you started with $15 000 on your account, and at the end of the day, you finish with $-15 000. The red color says it all. You owe your broker money: terrible thing and terrible situation for retail investors, who were just playing.
What is the point? It is easy to multiply your investment by margin trading, but the same is also valid for losses. You can lose more than your initial investment.
There are just two ways how to be sure about not losing more than you invest. Go long equities or options. Never trade futures, forex, no shorting of stocks, or selling options. It is that simple.
