The 6 Fatal Investing/ Trading Mistakes That Made Me Lose More Than $1M

The worst nightmare of any investor is to lose a lot of money in the stock market. In this article, I want to share with you how I lost more than $1M in the stock market over the years, so that you can prevent yourself from repeating my mistakes and losing your hard-earned money.

Mistake No 1: Chasing Hype Up Singapore Stocks & Not Exiting In Time (-$135,715)

When I first started investing in 2012, I bought into the top picks at that point in time, which were the Oil and Gas (O&G) companies such as Keppel Corp and Sembmarine, and the dividend darlings such as SPH and Neratel. However, some of these companies were cyclical in nature while others were sunset businesses that were going into demise.

When the demand for oil started dropping and with social media emerging, and the share prices of O&G companies and media companies started to correct, I averaged down instead of cutting loss and exiting those positions. Some of those companies never recovered, and I cut loss eventually.

Full list of stocks that I bought and cut loss that amounted to $135k of losses:
I Cut $135,715 Worth Of Losses In The Last 1.5 Months

Mistake No 2: Buying The Dip Using LEAP CALL Options Before The Bear Market (-$415,000)

After a successful 2021, which was my first year in options trading, I used the same strategy that help me made more than 200k, and continued to buy the dip at the beginning of a new bear market in 2022. I then built a $453k LEAPS CALL portfolio made up of the strongest big tech companies but they still collapsed when share price plunged and the options contract values dropped rapidly. I eventually cut a loss of 415k as the entire LEAP portfolio crashed to almost nothing left.

Read more here:
I Closed All My Remaining LEAPS CALL Positions At A Total Loss of SGD415K (USD306K)

Mistake No 3: Not Recognizing That The Market Has Turned Bullish In 2023 and Becoming Overly Bearish In 2023 (-$40,000)

At the start of 2023, I cleared away most of my LEAPS CALL positions because there wasn’t much value left, and I was concerned that 2023 could be worse than 2022. I also placed up to $40k of bearish bets (BULL CALL Spread) at the start of the year and eventually lost all of them because the market turned bullish, and the contracts expired worthless.

Mistake No 4: Selling Covered CALL At The Worst Possible Time With Low Strike Prices & Not Cutting Loss Early

Losing $40k on bearish vertical spreads contracts was the tip of the iceberg of what was to come. Being overly bearish, I sold Covered CALL on my shares at ridiculously low strike prices because I wanted to earn more premiums out of those contracts.

I sold these contracts at the worst possible time, just before the market bottomed out in 2023. As the share prices eventually jumped multiple folds, and in the cases of Nvidia and Palantir, which had 10x in share prices, my unrealised losses in those contracts snowballed to a huge amount. I did not cut loss and exit those positions, as I thought that I could handle the worst-case scenario of selling my shares at the strike prices agreed in the options contracts.

However, the worst-case scenario was not selling at the strike prices or early assignment, but for the huge unrealised losses to be realised somehow, way before the actual contract expiration dates or actual assignment happens. That was something that I had not expected, and it happened (see mistake 6).

Mistake No 5: Selling Away My Nvidia Shares While On Covered CALL To Go Naked On Options

Back in 2023, I was caught in this situation whereby I had significant unrealised gains in my Nvidia shares, but they were locked up by my Covered CALL contracts, which on the other hand, had significant unrealised losses.

Read more: How A Wrong Move In Options Trading Stopped Me From Taking $66k Profit | Disadvantages (Risks) Of Selling Covered CALL Options

I made a bad decision to sell away 2000 out of 3000 Nvidia shares and go 2000 shares naked for my 20 Covered CALL contracts. My plan was to keep rolling those naked Covered CALL contracts to a later date so that I had time to cover back my shares or to exit the positions when Nvidia eventually crashed. I also wanted to redeem my capital and realised my gains when I sold those 2000 Nvidia shares because I had other purposes for those funds.

Read more: Nvidia Catch-22: How I Attempt To Unwrong A Failed Covered CALL Trade

It was a really bad decision because Nvidia’s share price continued to rise to 3x the price that I sold, which meant that my gains could have been more than 3x if I had sold a later time. The most damaging thing was the unrealised losses on those 30 SELL CALL contracts (10 covered, 20 uncovered) continued to grow rapidly until a stage whereby my liquidity started to run into problems, as Nvidia continued to rise in share prices throughout 2023 and 2024.

Read more: My Nvidia Time Bomb (-USD141.5k Unrealised Loss & Counting) | Why You Should Never Sell Naked CALL | The Danger Of Short Selling

I attempted to repair these trades with BULL turn BEAR strategy by converting my naked SELL CALL into SELL PUT contracts. However, I did not have enough funds in my account to sell Cash Secured PUTS, i.e. have enough cash in my account to buy all Nvidia shares if the contracts get exercised. So, I was relying on my margins account to complete the trade, which meant that in the event the SELL PUT contracts were assigned, I had to borrow money from the brokerage to buy those newly assigned shares. That strategy worked quite a while when the market kept going higher, but when the market started to correct, my excess liquidity dropped.

Read more: Nvidia Timebomb Defused! | How I Fix My Broken Naked Nvidia CALL Options Trades | How To Repair Naked CALL Option

Mistake No 6: Not Understanding The Risk Of My Options Contract And Allowing An Early Assignment To Create A Domino Effect That Caused The Liquidation Of My Entire Portfolio (-$540,000)

It seemed that the previous mistakes that I have made (No. 4 & No. 5) were leading to the mother of all mistakes, which totally decimated my entire portfolio.

It started with me buying some Tesla CALL options in early 2025, wanting to capitalise on Tesla’s rise due to Tesla’s CEO, Elon Musk’s affiliation with incoming US President, Donald Trump.

That trade did not work out when Tesla’s share price started to correct in mid-December. In an attempt to buy more time, I converted those CALL options into BULL PUT Spread contracts that were In-The-Money (ITM). I had thought that they would not get assigned as I did not choose the most extreme end of the available strike prices. I thought I was safe but I was wrong, and I got an assignment on the SELL PUT leg, which caused a deficit in my margins account (excess liquidity turned negative). I missed out on the emails that IBKR sent, and they proceeded to liquidate all my positions when the market opened on 12 Feb 25, resulting in $540k of paper losses from the Covered CALL contracts being realised.

Further Read:
I Was Margin Called, IBKR Liquidated ALL My Positions & Realised S$540k (USD400k) Worth Of Losses

Lessons Learnt

Looking back at these mistakes, I started to see some similarities among them, and it boils down to a few unwise trading principles:

● Not exiting and cutting losses when there is still a chance to do so

● Being too extreme on the market directions (bullish in 2022 and bearish in 2023) and getting crushed when the market decided to turn out the other way.

● Not having a hedge to manage the risk of events not going my way, e.g. I could have some put contract to hedge against my LEAPS CALL in 2022 or have some CALL positions to hedge against my naked CC contracts in 2023.

● Taking on too much risk with heavy positions in options contracts, such as building a $400k portfolio, which eventually became nothing, going naked on Nvidia SELL CALL contracts and selling PUTS without the capital to support the trade. These heavy positions meant the losses were greater if the trades did not turn out well.

● Not understanding the maximum risk for my margins account and thus was not caught off guard when the worst case happened. I should have paid attention to my net liquidation value more, on top of the SMA and excess liquidity that I was monitoring all along.

Concluding Thoughts

When I started my investing journey in 2012, I was quite a conservative investor. I read quite a number of books on how to value companies before I bought my first share in the Singapore stock market. My mum told me all the horror stories about people losing everything in the stock market and I stayed out of the US market for 9 years because I was concerned about the volatility.

The same thing happened when I started options trading back in 2021. I took 3 months to learn the basics before opening my first options contract, which was to sell a PUT contract on Apple at strike price of US126. You can also see that options trading strategies that I used were the simple selling Cash Secured PUT (CSP), selling Covered CALL, or doing the Wheel strategy.

However, as I started winning and grew more confident, and the influence from the investing/ finance community grew stronger, I started to throw caution into the wind and raised the stakes higher. FOMO, greed, total optimism got into my head and I lost that conservative side of me, which led to my eventual downfall.

In spite of everything that had happened and the whopping $1M loss, I am grateful to be able to share out my experience to help someone, be it someone who is new to investing and options trading, or someone who has lost a lot of money and needs to hear that he/she is not alone.

For the folks who are chasing the dream of earning passive/ sideline income through investing/ options trading, I hope my experience gave you a balanced perspective on the downside risk. I am not against options trading in any ways. In fact, I think it is a great tool. But a knife is a great tool as well, and it really depends on which side you hold it, to determine if you will benefit or get hurt by it.

Feel free to get in touch if you have further queries or need any form of support from me. I wish you all the best in your investing/ trading journey!

Some reads that you may find useful:

I Know Why Some People Become Depressed Or Suicidal When They Lose A Lot Of Money

If You Are Feeling Depressed From Losing Lots Of Money In The Stock Market, Here’s An Article For You

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