South Korean College Student's 5x Leveraged Stock Trading Profit Soared to 15x at One Point, but Plunged to Losses as Stock Market Retraced

BlockBeats News, July 21st - According to Reuters, 24-year-old South Korean university student Lee Seung-ho used 5x leverage on a trading app to grow his savings from his military service of 20 million Korean won to nearly 300 million Korean won at one point, about 15x his initial investment. However, after a sharp market downturn in May, his brokerage triggered a series of margin calls, causing his entire gains to evaporate within 4 weeks, and his account balance ultimately fell below his initial investment. Lee stated that the pressure he faced made him feel like he "really couldn't breathe," but he still plans to continue margin trading after rebuilding his capital.

Lee mentioned that his goal is to purchase a home in Seoul. The average price of an apartment in Seoul is equivalent to about 14 years of wages, leading some Korean youths to view high-leverage stock trading as a way to catch up with asset prices. He explained that with stocks surging, 5x leverage can accelerate wealth growth by 5 times, but he also acknowledged that continuously going all-in can ultimately lead to losses.

Data from the Korea Financial Investment Association shows that the margin loan balance in the Korean stock market reached a record high of 38.63 trillion Korean won on June 24th and remained at 34.37 trillion Korean won as of July 15th. The Bank of Korea's broader statistics indicate that total investor debt, including other forms of borrowing, exceeded 60 trillion Korean won for the first time at the end of May. Meanwhile, the KOSPI index had surged over 100% in a six-month period, but then experienced multiple drops of over 10% in the following weeks.

South Korean regulators have announced a pause on the introduction of new leveraged ETFs linked to individual stocks, with such products only being allowed to launch around two months ago. Exness strategist Inki Cho stated that this move is a policy correction by regulators following their hasty approval of these products; in highly volatile markets, leveraged products can amplify losses at a much faster rate than they can generate wealth on the upside.