First big lesson was 1997 commodity trading, after industrial attachment, before I took on an office boy temp job at Nippon Steel. Historical high prices in copper, soybeans etc. To cover my margin, I dumped all of my family’s savings (about 50k) into the margin account. Then I realized only money I keep OUT of that account is safe from market swings and gigantic jumps, which I have no knowledge whatsoever. Any sense of confidence and insight about that market was all illusion.

I realized that with margin trading, I needed to define a max “affordable” loss.

2nd experience was my 2013 FX option writing. To avoid commissions, I wrote twelve U$50k short calls. Total notional $600k. I thought all positions were deep OTM but many became close to the money or ITM. From that experience, I learnt to use smaller contracts each time, even deeper OTM, long-dated, and reduce total exposure. Still, I was unprepared for ….

3rd experience – when USDSGD strengthens to 1.34, my margin utilization shot up to 80%. Exposure was around U$200k, including $140k deep OTM – sounds safe but I underestimated the FXO margin calculator. Either the delta margin or (more likely) the vega margin was many times higher than I thought. I had no idea about that margin calc. All guestimates. Now I guess (again, no evidence) to earn $500 premium, we may need $10k of capital reserve.