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Any short position can lose infinite money, so this argument is equivalent to saying short positions should not exist. Saying short positions should not exist
by kasey_junk 5y ago
Any short position can lose infinite money, so this argument is equivalent to saying short positions should not exist.
Saying short positions should not exist is equivalent to saying commodities producers should not be able to hedge production risk.
That has wild implications for commodity prices and availability around the world. If that’s your position you should probably state it more directly.
- jamesrom 5y agoYou can hedge short positions. Ekaros is saying that traders shouldn't rely on things like circuit breakers or rollbacks to save them when they make a bet with too much on the line.
- kasey_junk 5y agoIn this case the hedge was going the other way. They hedged their real long position with short futures. The market broke and they were in a position where they were losing money as the price of their real asset was sky rocketing. This is because of the natural limits of hedging short positions. Circuit breakers aren’t designed to protect traders from betting too much, they are designed to prevent the market itself from breaking in unforeseen ways.
- Ekaros 5y agoYou can gamble, but it is up to you and party that provides the bet to cover the losses.