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Why have I gotten a little upset over this thread:
I have seen traders, good guys and girls that managed to get behind the 8
ball, ultimately commit criminal acts (embezzlement and fraud)that
effectively ended both their professional and family life in order to cover
up losses long enough to hopefully recoup.
In two cases I have seen professional traders put successful, tenable
business under with their losses. The result, over 120 people unemployed,
some of them long term employees with 20 years or more service.
I had a good friend take his own life. He was an institutional trader, had
many years of experience in trading and doing risk management. He let one
position take him out. He got bigger than the market, refused to stop out,
started hiding trades, diverting funds and hiding confirms and less than 3
months later a wonderful guy was dead.
You have to understand that a whole new set of emotions develop when you
get a bad one going. Decisions that should be easy can become extremely
difficult. Your thinking process can become very erratic. You can
completely lose touch with trading reality. It is a frightening thing to
witness. It is funny (in a sick way) to see how much a person caught in a
really bad trade can change years of successful behaviors almost overnight.
Anyway, most of these situations begin when an account begins to take
unreasonable risk. In almost every case, the trade began as a single trade
that spiraled out of control.
Keep in mind, these are not accounts that churned themselves or were
horrible traders. Each person involved was a market professional with years
of professional trading under his belt. There is something about finding
oneself in an unexpectedly bad position that can render the most even
handed trader frozen in the head lites.
So do I get a bit heated when I see someone advocating what for most people
is very dangerous? Yeah, yeah I do. Avoiding problems and managing the
bad tail is a big deal.
Stewart.
Stewart Taylor
Taylor Fixed Income Outlook
Voice: 501-219-9774
Fax: 501-228-0963
E-Mail: staylor@xxxxxxx
Web Site: http://www.cei.net/~staylor/
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