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The Top-10 of Biggest Losses in Trading History !
This year the market started out the year with a few truly interesting backdrops. Among them a colossal trading loss that
shook Société Générale to its core.
Did you know that Jerome Kerviel’s was the largest trading loss in history ?
At least so far !
To provide some context about loss, here are the top 10 trading losses ever. Notice how all, except for one, were a result of
trading in derivatives? The only equity loss big enough to make it on the board was $0.8 (by Friedhelm Breuers from WestLB,
Germany) which ties for the last position. The lesson ? Trading derivatives is like juggling running chainsaws which
also happen to be on fire. Unless you know what you are doing, it will get messy.
Sure, these losses look unreal but each and every one of them started out as a small loss. The only reason why they are up
on the board is they were allowed to balloon into grotesque proportions. So it is with the losses of us mere mortals. If we allow
our convictions to overrule our discipline, we are headed towards the same fate.
If anything, such gigantic losses should, for once and for all, put a damper on conspiracy theories of market manipulation.
After all, if someone can’t bully a market with a few billion, then the market is indeed bigger than anyone and everyone !
This year the market started out the year with a few truly interesting backdrops. Among them a colossal trading loss that
shook Société Générale to its core.
Did you know that Jerome Kerviel’s was the largest trading loss in history ?
At least so far !
To provide some context about loss, here are the top 10 trading losses ever. Notice how all, except for one, were a result of
trading in derivatives? The only equity loss big enough to make it on the board was $0.8 (by Friedhelm Breuers from WestLB,
Germany) which ties for the last position. The lesson ? Trading derivatives is like juggling running chainsaws which
also happen to be on fire. Unless you know what you are doing, it will get messy.
Sure, these losses look unreal but each and every one of them started out as a small loss. The only reason why they are up
on the board is they were allowed to balloon into grotesque proportions. So it is with the losses of us mere mortals. If we allow
our convictions to overrule our discipline, we are headed towards the same fate.
If anything, such gigantic losses should, for once and for all, put a damper on conspiracy theories of market manipulation.
After all, if someone can’t bully a market with a few billion, then the market is indeed bigger than anyone and everyone !
| Source : Wikipedia |
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