Robbie Burns
Robbie Burns's columns :
17/05/2011EXCUSE ME
13/12/2010OIL BE BLOWED

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Robbie Burns – The Naked Trader

Robbie has been trading full-time since 2001. His book "The Naked Trader" (which also has useful information on how to use advfn) has become one of the biggest-selling finance books, reaching the top 150 books on Amazon - order it here. Trades made for Robbie's website have amassed profits of more than £300,000. You can read about his buys and sells daily at



When I hold seminars I often hear some terrible stories about trades gone wrong.
It's usually about someone holding onto a share for far too long. buying more as it goes down, and building up too big a stake in something that's a stinker.
I've met lots of people for example who bought Northern Rock near the top and held all the way down and many people who held onto shares that went bust like Connaught and Aero Inventory.
However this week I met someone with a terrible story to tell.
  A lovely guy bravely told us a terrible story of how a series of bad trades had a terrible impact on his life, his health, nearly cost him his marriage his house and everything.
The basis of the story is he bought CFDs in a company, it carried on going down and he kept buying more and more CFDs. And then more. The share kept on going down and soon he was borrowing from family and friends.
The CFDs were costing him a fortune to keep open and he grew more and more scared. I asked him if he's tell me his story in writing and he kindly did and allowed me to publish it and here is the edited version. In particular this is an excellent warning read for newcomers to the market.

"I had been buying shares / tracker funds for years and thought i could walk on water I had made more in a year through the late 90's than I could earn as a wage.
I had a good share portfolio and was doing very well indeed. i wanted more, so much more, driven by the fact i wanted to retire at 50..
I bought CFD's without knowing what the hell they were really......  Bought 1500 CFs around 380, went up, bought 5000 more on the profit (still holding all) at around 430, bought 5000 more at 501 and making a killing!  so bought 5000 more at 510.
It went all the way up to 586. I was so happy and was on paper very rich for me. 
I was invincible and a super trader! So very confident. I made a loss of £2000 in another CFD position but learnt nothing. What was £2k when I was so far up on this one share...
i was paying around £300 - £350 month interest but the paper profits meant this was nothing... I never bothered looking at the global meltdown around me.
It started to unwind.. but I was too ignorant or stupid to work it out just yet.
It kept falling and falling, by the time I realised what was going on, I was way over my head but managed to close out the first two trades - but was left with an average of £5.05.
It fell down to around £1.08 intraday over a lengthy period.. I was in trouble..
In this period, the broker moved the margin to 30% from 10% and placed a huge call and gave me until the end of the day for the funds..I borrowed on credit cards again. I could not afford to lose, I had already sold every share I had to shore this up, I borrowed from family, I actually had a wedding looming and my job was looking shaky. I was a dab hand now at moving my maxxed out credit cards at 0% for a number of months. The next task was to borrow against the house.
 Family were asked for funds but not told why. I have a good family who helped me along, whilst I was still paying this huge interest each month.  I got wed to a beautiul intelligent lady in this period (which I paid for with a bank loan, the ring cost me 2 months take home wages...) who knew I was in trouble but was not in a position to help - I was so close to a complete nervous breakdown and friends were concerned as was family and the now wife..
So, cards maxxed out, 3 loans from banks (all done together to ensure it was not all registered) and then an equity release for the house. Not much left to go..  Oh yes, I asked the wife to rid the joint account for which she agreed....I now had a baby on the way and a car that was on its last legs.
The job front eased off and I managed to get a higher paid job closer to home which helped the funds....Thankfully I had enough to keep me going, just......
Oh yes, I forgot to mention that we also had a baby in this period. talk about stressed.
My health suffered greatly, I hurt my back and was off work for weeks and one of my parents suffered a heart attack. I thought they were going to die... I felt dead inside and was despairing. It would have been easy to hit the bottle but I had a good upbringing whereby you face what you have done and sort it out.
The share has only just (Jan 2011) gone above the price I bought at..... Now I am in profit and going on your course, (and reading the book), I have set my stop losses and will now make a few quid on the buy price. (ignore the £000's of interest I have paid).  I have become quite hardy, although I am not sure why I did not have a complete nervous breakdown...
The moral of this story is, don't play with more than you can afford to lose, don't be a "cocky sod", (thats over confident in Northern speak), and understand what the hell you are doing and the risks. If you dont get it, then don't do it.
Before your readers start to slash their wrists, I have managd to re-build my portfolio and managed to make a good amount (for me) to the point I could make myself mortgage free. Good things can happen, eventually. 

No-one knew the full extent of this until now. It has been quite a good therapy typing this to you  but if just one person is "saved", then I am happy enough for you to post this.
The wife and I are fully open with each other now as i felt that although I had kept above water and protected her from the truth, she should have known. I have shown her all my accounts to show we are actually in a good position now.
I nearly lost the lot, job, health, family, house, marriage, son. I may not make retirement at 50, but I will be in a better shape and will try not to repeat my experience - it has left many mental scars.

 A terrible story. He sums it up well.. but the moral is: Don't play with more money than you can afford to lose, don't buy derivatives if you don't understand what you are buying and use at least some kind of stop loss.
 You ought to never get in such a position. I hope too this story might just save one of you out there that might be about to go down the same route.
Also while you may note the story had a kind of happy ending, he knows he was really lucky. The share in question could have gone bust.
Actually one other moral is, he is right, do not be "cocky". I call it "smug".
 I may have made a lot of money from the markets myself but I could easily give a lot of it back. My way round it is only to add the isa money in every year.
But to be honest, yes, I have on occasions felt cocky myself. And that is just when the market will come and kick you where it hurts. Always treat it unemotionally as a business.
And finally never be tempted to buy more and more of one share as it goes down. It can lead to you losing your capital. A balanced portfolio with sensible stop losses is always best.

You can read Robbie’s daily market comments together with his latest buys and sells at his website

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