This is honestly one of the most insane true story to date that happened in Singapore back in 1990s.
Basically, Nick was a futures trader. Initially, he lost a tiny sum but was able to recover through gambling on futures. So, this prolly enhanced his self-confidence and made him into a true degen.
Took another big bet again but was unable to recover. Repeated over and over again just to cover the initial mistake. Losses kept piling up and eventually amounted to 1 billion in trading losses. Many have lost their life savings because of 1 man..
Barings bank became insolvent and went bankrupt solely due to this incident. This story really drives home the importance of risk management. If you dont manage your downside, the market will manage it for you.
That’s the thing about trading, many glorify it to be a beautiful art where you can eventually achieve financial freedom and everyone gets to be happy. But truth to be told, every single dollar that you gain came from someone else. It could be their life savings or their child’s education funds.
So, is it really something to be proud of? To put it bluntly, sounds like glorified stealing to me. But, it is what it is, natural selection at its best. I believe that there are still whales out there manipulating the market like Nick. As a retail investor, you’re already at a disadvantage given the knowledge disparity. So, the least you can do to protect yourself is to arm yourself with knowledge. Only then will you be able to discern if this is pure BS or it actually could mean something.
Most importantly!! Manage your downside. Once you manage your downside well, the upside will eventually follow suit.
Due to many of such incidents within the centralized financial industry, many sought to take refuge in a decentralization and this is where crypto comes in.
Unfortunately, Crypto being a new asset class, with many inefficiencies is a recipe for exploitation. This is where many begin looking for loopholes. E.g. hacks (Bridge exploit), scammers (paid group), NFT rugpull, illiquid shit coins and etc.
I was a victim previously too. So trust me when I say I understand how it feels. Invested in illiquid honeypot where you can only buy but not sell and many other failed crypto investment.
But, I believe that everything happens for a reason. Because of these incidents, I have decided to learn how to trade, read charts, understand fundamentals and global outlook.
If these unfortunate incidents never happened, I would never have learnt the valuable lesson of capital protection regardless of size. If you can’t manage a small account then you have no business trying to manage a large one. Start small and slowly build your way up.
For those that have been following my uneventful journey, really appreciate it. Started small, 3-4x my account. Got euphoric. Lost majority of it back to the market. But, will keep learning and hopefully eventually the gains will come.