I have a very basic retail account through Webull and only hold 3 stocks but mostly tesla (90%+). I use a simple system where each trading day I hop on, look at the price, then buy a fractional share between $5 – $20 based on the price that day. Today I went to do the same as any other day, but was shocked to look at the filled order realizing I had accidently bought 8 SHARES of stock on margin and not $8 worth…
1) I made the trade within a few minutes of waking up which was a massive mistake because if I had been more alert I would of likely noticed that it hadn't changed from shares to dollar amount when I had tapped on it to change it. (For anyone not familiar with webull when you go to buy, you can select market buy, but the way to change between buying shares or a dollar amount is a single tap button which is not very good design)
2) I rushed through the process quickly as it is something I do nearly every trading day. Any stock purchase nomatter how large or small should always be looked over to ensure the details are correct because once the order is submitted it cannot be undone.
3) this is not a viable solution for me because I like to have very fine control over my portfolio, but for the majority of people, scheduling daily buys instead of doing it manually would be the easiest way to eliminate mistakes like this happening. I had done this in the past and may consider going back to it.
4) for any large purchases I'm thinking that they should only ever be made using a proper PC and not ever from mobile. Too much can go wrong on a touch screen when your life savings is potentially at stake.
5) know your trading platform and look through options to see if you can do things like turn off the ability to have margin, option buying etc if it is not something you reguraly use. If margin buying had been disabled on my account then it would not of let the purchase go through.
Thankfully I own about 30 shares where purchasing 8 on margin isn't a big deal and my MEP is still in the 70%. It may actually end up benefiting me and I am considering maintaining the MEP to around 80% in the future. But I got insanely lucky as only a few days before I purchased $20 of stock and not $8 like I was trying to today. Had I accidently purchased 20 I would of risked having my shares liquidated to cover the costs then also have to pay taxes on gains and it would of basically wiped my portfolio completely out. So use my close call as a friendly reminder to check everything over and make sure something like this DOSN'T happen to you. Happy trading guys!
