"Rogue" traders who made billions...?

[Pekelo]

Unfortunately only if you're an FT subscriber. Do you mind posting the first paragraph, I think that's allowed under fair use?

Hm, I was able to read it without problem, it is a rather long article with psychology and so on. Try this:

https://www.google.com/search?q=rog...UHMaGmQGr-5PoCw&start=0&sa=N&biw=1093&bih=526

The link is the 7th from the top, when you click on it, it should open up without a paywall. I don't know why but it works...

Edit: This trick worked for the first time only. I don't know why, maybe they let you access the website from the same IP only once...

Edit2: Another way to read it:

1. type into Chrome "rogue traders ebook" hit enter
2. From the list, #7 is the link and it opens without paywall.

 

[IamBlaze]

Trust me, you only become "Rogue" if you lose money. If you bet the whole market cap of your bank and double it, well, for the lack of a better word, you're a hero, a legend.

 

[pinetboltz]

Trust me, you only become "Rogue" if you lose money. If you bet the whole market cap of your bank and double it, well, for the lack of a better word, you're a hero, a legend.

lol, ok point taken -- "rogue" or "legit", am just curious to know if there are any stories of bank traders who made billions by successively betting on 1 single trend (averaging up all the way)?

 

[sle]

Howie Hubler $9bill Loss using CRAP reversion method...

What do you actually know about that trade besides the number?

 

[Pekelo]

lol, ok point taken -- "rogue" or "legit", am just curious to know if there are any stories of bank traders who made billions by successively betting on 1 single trend (averaging up all the way)?

I have tried to find such, but so far no success. If you read the FT article linked earlier, most of these traders started out with a small loss and it went bigger and bigger from there. When you are profitable you don't start to access founds that doesn't belong to you, you only do that out of desperation.

But again, if profitable rogues were discovered they were quickly and quietly stopped, nobody wants to advertise that they don't keep a tight shop...

 

[d08]

The institution would never admit the trades were "rogue" because that would cause massive problems for them. They do their best to hide that fact and celebrate the profits. Traders only become rogue once the bank/institution can't hide losses any longer.

 

[TreeFrogTrader]

Some of the Rouge traders actually started out winning big and then losing it all.

I suspect some rouge traders did leap out to a win and then risk control caught up with them and well; publicity, here, might not be desirable for the firm or the trader.

Many Rouge traders would have done well in pure sales, perhaps even selling ice to Eskimos.

Gotta watch out for those "rouge" traders. Also for the rogue traders. There is a difference.

 

[ironchef]

After they made billions for their bank, the bank removed "Rogue" from their title and called them Chief Investment Officer.

So, you will read about CIO that made billions in the press.

 

[pinetboltz]

any specific stories about cowboy traders who put on 1 great futures trade that worked, kind of like the opposite of what the rogue losing traders did? (not credit derivatives a la housing crisis with $10mm+ upfront premium as minimum entry to play etc, just vanilla futures)

just curious because ppl always say to learn from mistakes/ try to flip the script on losing trades observed, and it seems like if a massive amt can be lost by averaging down on a strong trend within a pretty short period of time, then similarly it should be possible that a considerable amt is made by averaging up on a strong trend

some specific stories would be quite educational

 

[fordewind]

Daniel Kahneman won his Nobel prize for his behavioral economics work with Amos Tversky defining Prospect Theory, which generally shows that humans in practice are risk seeking in losses and risk averse in gains. It essentially means that it's basic human nature to double down on losses but not to double up on gains. So to answer your question, it's hardwired behavior.

BTW, if you're at all interested in behavioral economics I can't recommend Kahneman's books enough. He's one of the most brilliant people on the planet but an average 8th grader could read one of his books and pretty much fully get what he's saying. One of those people whose brilliance is simplifying things. And if you're interested in charts, you're interested in behavioral economics even if you haven't quite realized it yet!

How nice, some guys recieve the Nobel prize, while other guys make billions doubling down.