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Hey hey, what's up my friend! So... I lost 100k in 48 hours. The price dipped to a low of $30, and I felt it was a bargain. After all, I was confident the oil demand would return. Why? Because, can you imagine a world without oil? Planes need oil. Cars need oil. Even my horrible cooking needs oil. So, I bought $50,000 worth of oil for around $30. A few days later, the price of oil rallied higher. I patted myself on the back for making a good call. "Great job, Rayner! You're da man! You're basically the Warren Buffett of oil trading!" The following week, the price of oil went back below $30, and I was now sitting in the red. I thought to myself… “How much lower can the price of oil go?” Eventually, the price of oil collapsed to $10. I thought this was a level where traders and investors would step in and push the price up higher. So, I bought another $50,000 worth of oil. At this point, I’ve invested $100,000 in oil. After all, Warren Buffett said… “Be greedy when others are fearful. And fearful when others are greedy.” So, judging by the quote, I’m doing the right thing! By the way… When I have a huge position, I can’t sleep well at night. I’ll get up and check on my position, wanting to see how much money I’ve made or lost. On this date, April 20… I got up around 3 am to check on my oil position. I choked when I saw my account. I thought the trading platform had a bug or something. It can’t be right. Because my $100,000 oil position is now worth close to nothing. What happened? Well, the price of oil went negative $37! Yes, you read me right. The price of oil went negative! Not zero. Not close to zero. NEGATIVE. (This is due to a huge imbalance between supply and demand. The sellers didn’t want to take delivery of the oil because they had no place to store it. So they sold their position at a loss. This means they were paying the buyer to take over their position.) So my broker closed my position before it went negative, leaving me with close to $0. The lesson? If you want to place a macro bet, spread your risk across different instruments. Looking back, I should have spread the risk across different markets, such as Brent crude oil, options, and ETFs, rather than putting it all on WTI. Doing this would have easily made a 3x on my investment. Still, there’s no such thing as failure, only feedback. So that’s my $100,000 feedback. Cheers, Rayner "sharing-his-feedback" Teo |