Hey, friends! As far as I understood rogue trading is something like uncontrolled trading when a trader acts highly risky and it leads to large losses etc. Do you know something about such an occupation, maybe some real situations? And I wonder what ways would prevent to Rogue trading? Thanks in advance
Broker 2nd tier stop loss per trade: trader trade stop loss < broker trade stop loss than allow trade. trader trade stop loss > broker trade stop loss do not allow trade. plus daily stop loss per trader. Many more traders would be successful if they just implemented the above. It's very easy to have a good entry just using simple indicators. The hard part is knowing what to do when your trade starts failing.
there was a trader who put on a risky trade and made almost 7 figures. was fired for breaching risk limits
Traders who are more self conscious find it more difficult to accept losses and are more prone to choking eg Nick Leeson who sank Barrings Bank, Jerome Kerviel who almost sank Societe Generale and Kweku Adoboli who did the same to UBS. There are books on the subject eg "Rogue Traders" by Scott E.D. Skyrm & "Total Risk" by Judith H. Rawnsley.
suicides trades. 95% margin in one trade that 100% of your net worth and you have no insider information or edge making huge bet with no edge. it's called gambling addiction..gambling is 'addicting' and casinos and the market make it's money or 95% from gambling 'addicts. who won't stop gambling.
If you want to make alot of money (and put on risk)...you have to trade your own account. Having the skill though, and internal fortitude to pull it off is another story. Which most traders/gamblers don't have. If I worked for a firm, I would be fired on the first day for being kind of crazy; I'm not interested in peanut/safe/small/conservative banking returns.
"Daniel Coleman, CEO of Knight Holdings, thought it would be wrong to divorce human actors for the market and that the low-volatility environment is nothing new as he cited Nick Leeson. "He pinned the Nikkei futures in 1994, and they didn't move and traded with a three volatility for nine months," he said. "Then the Kobe earthquake happened, volatility blew up, and it took down Barings Bank and a bunch of other people. There is an overarching human element to this: If I can take on risk and be compensated for it and not be penalized, I'm going to keep on doing that until I get hurt." from Traders Magazine