Rumor: Bright Trader blows up and loses millions

[DonKee]

Quote from baggerlord:

you guys have got to understand the poker player mentality. We get such good returns on our poker money because of the nature of the game, that 50% bankroll drawdowns aren't really a big deal. Doubling a bankroll several times is pretty easy, and the risk of ruin is really quite low if you step down when necessary.

Biggest problem for new traders is that when they are given the opportunity to leverage 10-1 or more, they take it and only think about the upside.

This Brandon trader was way over leveraged. There is a big difference between going "all-in" with all of your money on the table and going "all-in" x 10 with money you don't have. I don't know anything about this trade, so I don't know if he was hedged with options, etc, but I do agree that there is a big difference between blowing out $100,000 and trying to recover vs blowing out upper 7 figures and trying to recover.

The real danger comes when that person feels the need to recover losses in a short period of time. Hopefully all gets worked out, but it does demonstrate that even if the owner of the firm is adamant about limiting risk, you as a trader never really know the exposure of the firm you are trading with.

 

[yobo]

Interesting thread for many reason. Not because a Bright trader lost big money, but the lesson many traders need to learn.

Trading is not a horse race and a quick hit game. Its a marathon which means traders need to learn to pace themselves. If you have a lot of volitility in your trading routine you are doing something wrong.

Big volitility means several things. Position size is to big and you are not properly diversified or hedged.

This guy brandon obviously wasn't managing his risk and got caught holding a position that was too big and not properly hedged.

It would be interesting to get the details on exactly what this guy Brandon was doing? What his positions were, and what he was thinking or not thinking.

 

[gwac]

IMHO he was doing what he had been doing since the beginning, a fat tail caught up with him....

Quote from yobo:



Interesting thread for many reason. Not because a Bright trader lost big money, but the lesson many traders need to learn.

Trading is not a horse race and a quick hit game. Its a marathon which means traders need to learn to pace themselves. If you have a lot of volitility in your trading routine you are doing something wrong.

Big volitility means several things. Position size is to big and you are not properly diversified or hedged.

This guy brandon obviously wasn't managing his risk and got caught holding a position that was too big and not properly hedged.

It would be interesting to get the details on exactly what this guy Brandon was doing? What his positions were, and what he was thinking or not thinking.

 

[kinggyppo]

Lots of arm chair quarterbacking. Maybe this guy is a big swinging dick and is destined for greatness. Anyway did he blow up? I am simply saying that if he knew what the risks were and lost why does everyone else feel the need to give him advice. Don they can say what they want about you, you are a savvy businessman. I am glad I can trade my account the way I want to. Everyone is responsible for their OWN trades.

 

[Pa(b)st Prime]

Quote from gwac:

IMHO he was doing what he had been doing since the beginning, a fat tail caught up with him....

Exactly. Nothing "wrong" with that. It's a matter of style. I made well over 1 mil my second year trading (off a 10k account) and lost half of it in a few weeks. The moral: I was better off doing what I did then trying to carefully make a good return on the original 10. This is a game where you'll never consistantly beat the table for outsized returns. (better than 100% in a year) so you'd might as well pick a trade and go all in. And of course add. Even Jim Plunkett won a Super Bowl because he could throw the bomb.

OTH to this day I'm still chasing that first dragon.......

 

[baggerlord]

Quote from Pa(b)st Prime:

Exactly. Nothing "wrong" with that. It's a matter of style. I made well over 1 mil my second year trading (off a 10k account) and lost half of it in a few weeks. The moral: I was better off doing what I did then trying to carefully make a good return on the original 10. This is a game where you'll never consistantly beat the table for outsized returns. (better than 100% in a year) so you'd might as well pick a trade and go all in. And of course add. Even Jim Plunkett won a Super Bowl because he could throw the bomb.

OTH to this day I'm still chasing that first dragon.......

you are my hero. This is the approach i am taking. 15% risk free returns a year won't even pay my bills much less make me a millionare.

 

[GGSAE]

Quote from gwac:

Has nothing to do with hyenas. It should never happen, if you are up millions and especially if you are working for someone else, a trader should never have control of that much stock that could wipe him out. That is what controls are for.

Sure it does, these 'traders' are all over these threads at the sight of a firm/individual losing money; don't kid yourself, their motives are not informational. I know the man that trades Bob Bright's corporate account (which is a lot more money than any of these clowns will see in ten lifetimes), but they wouldn't want to hear about his success.

 

[gwac]

This is a % game, the more trades you take, the quicker the fat tails will bite you in the ass...


Fat tails have to be managed...

 

[eagle]

Overconfident is the true reason for the mistake and it could happen to every trader. As Don said Brandon made millions in a short time frame, and then I guess he got overconfident.

 

[trader_arb]

Quote from gwac:

This is a % game, the more trades you take, the quicker the fat tails will bite you in the ass...


Fat tails have to be managed...

Not sure how you manage fat tails. OTM puts?

The only way to do this is through some form of hedging, which will usually wipe out a high percentage of the gains you would have had over time.

Gains come from risks, if you try to protect yourself from any and all risk you will be back to earning the RISK FREE RATE...or no returns at all after commissions/taxes. (unless you can find an arb)