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She’s the queen of wallstreetbets. I think she’ll hold the yolo record for a long time. I wish we knew what the fateful market play was that sunk her ship. She

She’s the queen of wallstreetbets. I think she’ll hold the yolo record for a long time. I wish we knew what the fateful market play was that sunk her ship. She mentioned she’s not a fan of stop losses, so I wonder if she went to bed with an open market position and woke up to negative three billion. Also I wonder if the entity on the other side of that trade realized they were making someone insolvent. It’ll be interesting to see how long she’s sentenced for. EDIT: Actually, is it possible to see who profited from her trading activity? FTX is in the hands of authorities now, and all the trading took place on it. I wonder if they could claw back some of those lost billions.

potatototoo99 4y ago
There probably wasn't any single one trade.
baobabKoodaa 4y ago
> She mentioned she’s not a fan of stop losses At the volume they were trading, stop losses are no longer practical. The market is not infinitely deep.
- Lapsa 4y ago
  I've never understood how stop losses are supposed to help. Traders read heaps of news, do God knows what technical analysis yet simple "moves bit too much in wrong direction" is supposed to be an acceptable exit strategy.
  - tasuki 4y ago
    Same! When it's $100 I want to buy, but if the price falls to $80 i want to sell. Presumably i bought because I thought it was worth more than $100, it would only make sense for me to sell at $80 for a reason other than the price: fundamentals change, some bad event happening. If the only thing that changed is the price, I want to buy more at $80!
    - googlryas 4y ago
      The price going from 100 to 80 is more information which can help inform your understanding of the value.
  - Gustomaximus 4y ago
    It's about recovery. A loss of 10 percent necessitates an 11 percent gain to recover. Increase that loss to 25 percent and it takes a 33 percent gain to get back to break-even. A 50 percent loss requires a 100 percent gain to recover and an 80 percent loss necessitates 500 percent in gains to get back to where the investment value started.
    - hgsgm 4y ago
      [dead]
    - baobabKoodaa 4y ago
      That doesn't answer the question or relate to the topic at all.
      - Gustomaximus 4y ago
        That doesn't relate to not understanding how stop losses help?
  - hervature 4y ago
    You're missing the bit that "moves bit too much in wrong direction" is a strong signal that your analysis is fundamentally flawed. Maybe catastrophic news came out since you bought in.
    - Lapsa 4y ago
      Those are 2 additional reasons to exit - realization that analysis is bad and catastrophic news. And they ain't automated.
    - hgsgm 4y ago
      [dead]
    - baobabKoodaa 4y ago
      Even if you decide you need to exit, why do you think you will get the best possible price for your exit with a market order? (which is what a stop loss essentially is) There are other ways to exit a position.
  - this_user 4y ago
    Professionals always have an exit strategy before they even enter a trade. That exit strategy contains conditions under which you assume the trade is no longer good, and needs to be exited at a loss. Stop-losses are one mechanism for implementing that, but they are crude, and big players don't actually use them. In that regard, she was correct. For one thing, if you trade size, you don't want to dump everything with a marketable order at once, you have to scale out even if you are wrong. Secondly, some strategies will always perform worse if you add stop loss levels, notably mean reversion. But they can make sense, for instance, for trend following, because there are clear levels at which you can say that a trend has ended. Lastly, high-frequency traders like market-making firms, which Alameda was supposed to be, don't use stop loss orders, because they are not trying to take directional bets, they are just trying to capture the spread while keeping their book balanced.
  - super256 4y ago
    If you trade highly leveraged stuff, you need stop losses; otherwise there is a considerable chance you will go bankrupt. Especially when you take bets on interest rate decisions, take the sweeps at market open and other stuff (you can gain a few hundred points on NQ1! per contract easily during such times). Also, it's a psychological thing: traders think in risk. If they were mistaken with a trade idea, they close the position with a small loss. Easy, just move on to the next! But when a position is already deep in the reds, it becomes increasingly harder to press the "close"-button and realize the loss. I know somebody who lost a few hundred grand just a few weeks ago because he was unable to close the position. He didn't set an initial stop loss, and then started believing in his trade (or the company) too much, although the market was telling him otherwise. He started doing dollar cost averaging and other stupid stuff. Actually, this guy is incredibly smart, but became too attached. I feel genuinely sorry for him. But that's what happens, when you don't have the discipline.
    - nradov 4y ago
      Stop loss orders can work reasonably well for retail investors trading small positions in liquid securities, but they aren't completely reliable. Sometimes prices make a sudden discontinuous drop on bad news and blow past the limit order before it can be executed. Or if trading is halted they become useless. And for institutional investors trading large positions in less liquid markets, stop loss orders barely work at all. They usually employ more sophisticated hedges.
      - dragonwriter 4y ago
        Sure, and a helmet and bulletproof vest with trauma plates doesn’t stop you from getting killed by shot in the face. But the lack of complete protection is a pretty bad argument against using the available protection. (There's some things a stop-limit is better for than a regular stop loss, but I'm not convinced that they are generally superior except in the technical sense that any stop loss can be issued as a stop-limit with a $0 limit.)
        KMag 4y ago
  - nullc 4y ago
    Indeed, stop-loss orders are extremely dangerous and shouldn't be offered. A stop-loss-limit is better in that it makes the potential consequence of a stop-loss more clear: You could set a stop loss limit order with a limit of $0 to create a standard stop loss-- making it explicit that you're willing to potentially sell the asset for $0/share: which is what a stop loss is willing to do. (+/- market circuit breakers, which generally don't exist in cryptocurrency markets.) If it's not immediately apparent why stop losses are a hazard: When markets are volitile the supply of standing orders near the spread tends to thin out-- for some assets, like the worthless magic beans FTX and friends specialized in owning, the markets are never particularly thick. What a stop loss order will do is once the market ticks below your threshold it will dump into a market order. Market prices are not continuous. If someone sold at $100 that doesn't mean you can sell at $100-- a market sale might be at $80-- locking in a substantial loss that otherwise would have been a momentary blip and never impacted you. These orders essentially automate one of the worst practices of inexperienced investors that result in loss: panicking at every dip and selling at a loss when nothing fundamental has changed. What joe-sixpack thinks a stop loss will do is guarantee him a floor price. It will not. Joe could buy put contracts to create a guaranteed floor price but they cost money-- that cost is a direct sign of how much stop loss orders do not work. A stop-loss-limit at $100/$100 would do what was expected if it executes but it usually won't execute except when the price dips and then recovers-- the case where you would have preferred to have your stop loss not exist at all. Seldom do people want a "Sell my stuff at $100/share if the price gets under $100 but only when it recovers"-- that would probably only be justifiable to the extent that the drop showed your thesis about the investment was wrong. Fundamentally the guarantee people want here can only be had at a price, and paying that price is a reasonable part of risk management. If you're trading very small amounts of very liquid items on highly surveilled and regulated markets then perhaps you can get away with using them without getting too greatly burned. But at the same time puts for the same assets are usually fairly inexpensive. In the cryptocurrency sphere it's just not that unlikely that 'exchanges' (particularly bucket shops like FTX where the exchange is substantially the counterparty in the activity) has some script that counts up all the users stop loss orders and figures out how much profit they could make causing a momentary blip in the trading price just to trigger them. There are plenty of people in the industry that don't believe it would be unlawful to do so, seeing as how the traded assets aren't securities. (and IIRC long before FTX's collapse there was a lawsuit alleging that they engaged in that kind of manipulation) So mocking the stop loss comment seems a bit misplaced, but it's worth noting that the question was really about risk management and she didn't give a useful answer to the intended question either-- especially since the rubbish they owned was hard to impossible to risk manage and for good reason.
  - bmitc 4y ago
    But the phrase “cutting your losses” has application does not? A stop loss could be set at a threshold that isn’t so tight to lose money on normal variations, low enough if it’s acceptable to take the loss and and capture and deploy the capital elsewhere, and not too low to never be triggered.
    - baobabKoodaa 4y ago
      > But the phrase “cutting your losses” has application does not? A "stop loss" does not mean the same thing as "exiting a position to cut your losses". There are other ways to exit a position. If you have a large position, then exiting via market order (which is what a stop loss does) is going to give the worst possible price for your exit.
- KMag 4y ago
  Not to mention that during events like the flash crash of 2010, even small volume traders with stop losses got screwed. A stop-limit order in some cases works better than a stop loss order, but if there's a rapid crash that's not going to bounce back, a stop-limit order will be worse. There's really no substitute for robust alerting for abnormal market conditions and getting eyeballs on the problem quickly. (I was writing execution algos for a Fortune 500 broker dealer during the 2010 flash crash.) (This is not trading advice. Don't mistake it for trading advice.)
- dragonwriter 4y ago
  Sure, stop losses are a retail-investor tool that subsitutes for not having a 24/7 active (human or algorithmic) dedicated decision-maker deciding when to try to unwind a position, for situations where your position is negligible relative to the market. It's kind of a weird thing to talk down even of you aren't in the segment that uses them (though, I guess not if you are trying to sell people on hands-off investment in an actively managed fund rather than directly trading more fundamental securities themselves.)
jacquesm 4y ago
I think you are assuming way too much here. She's not the queen of anything, she's a fraudster that will spend a long time in jail and that has probably much less understanding of the mechanisms involved than you give her credit for. If she did she wouldn't be in the position she's in. The last thing we really need is for people to start lionizing her.
- ffssffss 4y ago
  Queen of WSB and yolo record are not a good thing... that is a subreddit that mocks bad risk management by ironically celebrating it. They know exactly what she is over there.
  - SpeedilyDamage 4y ago
    Hah maybe at one point was that sub ironic, it's been unironic for years now.
    - deleted 4y ago
      [deleted]
    - ffssffss 4y ago
      Many such cases...
    - richbell 4y ago
      "It's okay babe, I developed a crippling gambling addition and gambled away our life savings ironically."
- qbasic_forever 4y ago
  That ship has long sailed. She's coming out of this with a slap on the wrist because she ratted on SBF. She's a hero of the alt right because her Tumblr is full of creepy eugenics shit. She has a pervo following for being a poly sex fiend (allegedly). She's going to write a book, sell her movie rights, etc. and live a life of luxury as the woman that took down SBF and FTX (who will be remembered as the real fraudster).
pearjuice 4y ago
She's not going to get sentenced to any time whatsoever. She cut a deal (full co-operation, forfeiture of assets and some fines) and is voluntarily pleading guilty to honor the deal.
fredgrott 4y ago
Gee I wonder if Arrow Capital thought it wise to stop hedging via shorting; did Alameda Research fall into the exact same trap? The only sure bet is yes they did!
- Galanwe 4y ago
  The problem with crypto is that you cannot hedge everything. Some tokens, such as exchange tokens (BNB, FTT, etc) are unshortable locally (by construction) and no other exchange proposes futures for them. This creates a very risky lock in to one platform.
ChuckMcM 4y ago
Much of the money Bernie Madoff stole in his ponzi scheme was recovered, however the difference is that his assets were "real" things vs derivatives on made up things (like FTT) so in this case, I'm thinking the losses are lost. That said, there are participants in the crypto-coin market who have alternative resources for recovering losses so if any of them had exposure here it might go poorly for her in prison.
verdenti 4y ago
[dead]
gd1 4y ago
[dead]
AlbertCory 4y ago
They have a CEO with a lifetime worth of experience clawing back ill-gotten gains. I read that on Enron he was able to recover 52% of the money for creditors.
wpietri 4y ago
> the fateful market play was that sunk her ship Having seen a much smaller trading failure up close, my guess is that it wasn't just one thing that sunk them. Instead, a bet or two went bad and then they tried to make up the losses through a series of ever-more-extreme plays.
dan-robertson 4y ago
I think you’re anchoring too much on the stop-loss thing. It’s pretty reasonable for a trading firm to not rely on such mechanisms. One would hope they would have a more sophisticated way to manage risks. I’ve no idea what happened in this case though.
the__alchemist 4y ago
Tangent: How did people hear about FTX? I've been interested in/holding crypto for a few years, and the big player was (and I assumed still is until recently) Coinbase, or Coinbase pro if you wanted better rates. There was bitcoin, Etherium, and some smaller coins like Bitcoin Cash, XRP, and Litecoin. I had a mix of coins, then rebased in ~2019 to a 50/50 Eth/Bitcoin split. As an alternative to Coinbase, you could use a hardware or paper wallet. How many people used FTX over Coinbase and wallets? What was the appeal?
- 55555 4y ago
  No, Coinbase is not the big player for actual crypto to crypto trading pairs. That’s Binance. FTX was #2 on that list. Coinbase is the USA’s #1 fiat on-ramp. Fiat on-ramps are a different category. You are an investor. The people using Binance and FTX are traders. Traders are looking for exotic pairs, more leverage, more derivatives, and lower fees. Whether or not Coinbase is even a tenable business long-term is actually a legitimate question given that there’s no big profits to be made as a fiat on-ramp —- everyone assumes they’ll profit like a major trading platform but they are hindered by being legal.
  - imtringued 4y ago
    It doesn't look like they are being hindered.
    - 55555 4y ago
      https://www.boerse-frankfurt.de/bond/usu19328aa89-coinbase-global-inc-3-375-21-28 https://www.boerse-frankfurt.de/bond/usu19328aa89-coinbase-g...
SanjayMehta 4y ago
This podcast is the source of some of the clips which showcase her thought process. Quite fascinating. https://www.youtube.com/watch?v=Qd2enI4RvXU https://www.youtube.com/watch?v=Qd2enI4RvXU
remote_phone 4y ago
Her comment on stop losses are right on the money. Anyone who trades large amounts of money never enters actual stop losses into the system, they have mental stop losses. Stop losses are actively hunted by algorithms and a quick way to make money by blowing through stop losses and then buying back at the bottom. Having mental stop losses is the real way to trade, as well as the discipline to sell when your mental stop losses are hit. I don’t know if she had the second part, but the first part about not having hard stop losses is correct if you’re a large trader.
- 55555 4y ago
  You don’t know if she had the second part? Lol. I think you do know.
matheusmoreira 4y ago
> She mentioned she’s not a fan of stop losses I don't get it. How can anyone not like stop losses? Limited downside, unlimited upside. I only wish there was a way to set them client side in order to hide information from the exchanges.

potatototoo99 4y ago

There probably wasn't any single one trade.

baobabKoodaa 4y ago

> She mentioned she’s not a fan of stop losses At the volume they were trading, stop losses are no longer practical. The market is not infinitely deep.

Lapsa 4y ago
I've never understood how stop losses are supposed to help. Traders read heaps of news, do God knows what technical analysis yet simple "moves bit too much in wrong direction" is supposed to be an acceptable exit strategy.
- tasuki 4y ago
  Same! When it's $100 I want to buy, but if the price falls to $80 i want to sell. Presumably i bought because I thought it was worth more than $100, it would only make sense for me to sell at $80 for a reason other than the price: fundamentals change, some bad event happening. If the only thing that changed is the price, I want to buy more at $80!
  - googlryas 4y ago
    The price going from 100 to 80 is more information which can help inform your understanding of the value.
- Gustomaximus 4y ago
  It's about recovery. A loss of 10 percent necessitates an 11 percent gain to recover. Increase that loss to 25 percent and it takes a 33 percent gain to get back to break-even. A 50 percent loss requires a 100 percent gain to recover and an 80 percent loss necessitates 500 percent in gains to get back to where the investment value started.
  - hgsgm 4y ago
    [dead]
  - baobabKoodaa 4y ago
    That doesn't answer the question or relate to the topic at all.
    - Gustomaximus 4y ago
      That doesn't relate to not understanding how stop losses help?
- hervature 4y ago
  You're missing the bit that "moves bit too much in wrong direction" is a strong signal that your analysis is fundamentally flawed. Maybe catastrophic news came out since you bought in.
  - Lapsa 4y ago
    Those are 2 additional reasons to exit - realization that analysis is bad and catastrophic news. And they ain't automated.
  - hgsgm 4y ago
    [dead]
  - baobabKoodaa 4y ago
    Even if you decide you need to exit, why do you think you will get the best possible price for your exit with a market order? (which is what a stop loss essentially is) There are other ways to exit a position.
- this_user 4y ago
  Professionals always have an exit strategy before they even enter a trade. That exit strategy contains conditions under which you assume the trade is no longer good, and needs to be exited at a loss. Stop-losses are one mechanism for implementing that, but they are crude, and big players don't actually use them. In that regard, she was correct. For one thing, if you trade size, you don't want to dump everything with a marketable order at once, you have to scale out even if you are wrong. Secondly, some strategies will always perform worse if you add stop loss levels, notably mean reversion. But they can make sense, for instance, for trend following, because there are clear levels at which you can say that a trend has ended. Lastly, high-frequency traders like market-making firms, which Alameda was supposed to be, don't use stop loss orders, because they are not trying to take directional bets, they are just trying to capture the spread while keeping their book balanced.
- super256 4y ago
  If you trade highly leveraged stuff, you need stop losses; otherwise there is a considerable chance you will go bankrupt. Especially when you take bets on interest rate decisions, take the sweeps at market open and other stuff (you can gain a few hundred points on NQ1! per contract easily during such times). Also, it's a psychological thing: traders think in risk. If they were mistaken with a trade idea, they close the position with a small loss. Easy, just move on to the next! But when a position is already deep in the reds, it becomes increasingly harder to press the "close"-button and realize the loss. I know somebody who lost a few hundred grand just a few weeks ago because he was unable to close the position. He didn't set an initial stop loss, and then started believing in his trade (or the company) too much, although the market was telling him otherwise. He started doing dollar cost averaging and other stupid stuff. Actually, this guy is incredibly smart, but became too attached. I feel genuinely sorry for him. But that's what happens, when you don't have the discipline.
  - nradov 4y ago
    Stop loss orders can work reasonably well for retail investors trading small positions in liquid securities, but they aren't completely reliable. Sometimes prices make a sudden discontinuous drop on bad news and blow past the limit order before it can be executed. Or if trading is halted they become useless. And for institutional investors trading large positions in less liquid markets, stop loss orders barely work at all. They usually employ more sophisticated hedges.
    - dragonwriter 4y ago
      Sure, and a helmet and bulletproof vest with trauma plates doesn’t stop you from getting killed by shot in the face. But the lack of complete protection is a pretty bad argument against using the available protection. (There's some things a stop-limit is better for than a regular stop loss, but I'm not convinced that they are generally superior except in the technical sense that any stop loss can be issued as a stop-limit with a $0 limit.)
      - KMag 4y ago
- nullc 4y ago
  Indeed, stop-loss orders are extremely dangerous and shouldn't be offered. A stop-loss-limit is better in that it makes the potential consequence of a stop-loss more clear: You could set a stop loss limit order with a limit of $0 to create a standard stop loss-- making it explicit that you're willing to potentially sell the asset for $0/share: which is what a stop loss is willing to do. (+/- market circuit breakers, which generally don't exist in cryptocurrency markets.) If it's not immediately apparent why stop losses are a hazard: When markets are volitile the supply of standing orders near the spread tends to thin out-- for some assets, like the worthless magic beans FTX and friends specialized in owning, the markets are never particularly thick. What a stop loss order will do is once the market ticks below your threshold it will dump into a market order. Market prices are not continuous. If someone sold at $100 that doesn't mean you can sell at $100-- a market sale might be at $80-- locking in a substantial loss that otherwise would have been a momentary blip and never impacted you. These orders essentially automate one of the worst practices of inexperienced investors that result in loss: panicking at every dip and selling at a loss when nothing fundamental has changed. What joe-sixpack thinks a stop loss will do is guarantee him a floor price. It will not. Joe could buy put contracts to create a guaranteed floor price but they cost money-- that cost is a direct sign of how much stop loss orders do not work. A stop-loss-limit at $100/$100 would do what was expected if it executes but it usually won't execute except when the price dips and then recovers-- the case where you would have preferred to have your stop loss not exist at all. Seldom do people want a "Sell my stuff at $100/share if the price gets under $100 but only when it recovers"-- that would probably only be justifiable to the extent that the drop showed your thesis about the investment was wrong. Fundamentally the guarantee people want here can only be had at a price, and paying that price is a reasonable part of risk management. If you're trading very small amounts of very liquid items on highly surveilled and regulated markets then perhaps you can get away with using them without getting too greatly burned. But at the same time puts for the same assets are usually fairly inexpensive. In the cryptocurrency sphere it's just not that unlikely that 'exchanges' (particularly bucket shops like FTX where the exchange is substantially the counterparty in the activity) has some script that counts up all the users stop loss orders and figures out how much profit they could make causing a momentary blip in the trading price just to trigger them. There are plenty of people in the industry that don't believe it would be unlawful to do so, seeing as how the traded assets aren't securities. (and IIRC long before FTX's collapse there was a lawsuit alleging that they engaged in that kind of manipulation) So mocking the stop loss comment seems a bit misplaced, but it's worth noting that the question was really about risk management and she didn't give a useful answer to the intended question either-- especially since the rubbish they owned was hard to impossible to risk manage and for good reason.
- bmitc 4y ago
  But the phrase “cutting your losses” has application does not? A stop loss could be set at a threshold that isn’t so tight to lose money on normal variations, low enough if it’s acceptable to take the loss and and capture and deploy the capital elsewhere, and not too low to never be triggered.
  - baobabKoodaa 4y ago
    > But the phrase “cutting your losses” has application does not? A "stop loss" does not mean the same thing as "exiting a position to cut your losses". There are other ways to exit a position. If you have a large position, then exiting via market order (which is what a stop loss does) is going to give the worst possible price for your exit.
KMag 4y ago
Not to mention that during events like the flash crash of 2010, even small volume traders with stop losses got screwed. A stop-limit order in some cases works better than a stop loss order, but if there's a rapid crash that's not going to bounce back, a stop-limit order will be worse. There's really no substitute for robust alerting for abnormal market conditions and getting eyeballs on the problem quickly. (I was writing execution algos for a Fortune 500 broker dealer during the 2010 flash crash.) (This is not trading advice. Don't mistake it for trading advice.)
dragonwriter 4y ago
Sure, stop losses are a retail-investor tool that subsitutes for not having a 24/7 active (human or algorithmic) dedicated decision-maker deciding when to try to unwind a position, for situations where your position is negligible relative to the market. It's kind of a weird thing to talk down even of you aren't in the segment that uses them (though, I guess not if you are trying to sell people on hands-off investment in an actively managed fund rather than directly trading more fundamental securities themselves.)

jacquesm 4y ago

I think you are assuming way too much here. She's not the queen of anything, she's a fraudster that will spend a long time in jail and that has probably much less understanding of the mechanisms involved than you give her credit for. If she did she wouldn't be in the position she's in. The last thing we really need is for people to start lionizing her.

ffssffss 4y ago
Queen of WSB and yolo record are not a good thing... that is a subreddit that mocks bad risk management by ironically celebrating it. They know exactly what she is over there.
- SpeedilyDamage 4y ago
  Hah maybe at one point was that sub ironic, it's been unironic for years now.
  - deleted 4y ago
    [deleted]
  - ffssffss 4y ago
    Many such cases...
  - richbell 4y ago
    "It's okay babe, I developed a crippling gambling addition and gambled away our life savings ironically."
qbasic_forever 4y ago
That ship has long sailed. She's coming out of this with a slap on the wrist because she ratted on SBF. She's a hero of the alt right because her Tumblr is full of creepy eugenics shit. She has a pervo following for being a poly sex fiend (allegedly). She's going to write a book, sell her movie rights, etc. and live a life of luxury as the woman that took down SBF and FTX (who will be remembered as the real fraudster).

pearjuice 4y ago

She's not going to get sentenced to any time whatsoever. She cut a deal (full co-operation, forfeiture of assets and some fines) and is voluntarily pleading guilty to honor the deal.

fredgrott 4y ago

Gee I wonder if Arrow Capital thought it wise to stop hedging via shorting; did Alameda Research fall into the exact same trap? The only sure bet is yes they did!

Galanwe 4y ago
The problem with crypto is that you cannot hedge everything. Some tokens, such as exchange tokens (BNB, FTT, etc) are unshortable locally (by construction) and no other exchange proposes futures for them. This creates a very risky lock in to one platform.

ChuckMcM 4y ago

Much of the money Bernie Madoff stole in his ponzi scheme was recovered, however the difference is that his assets were "real" things vs derivatives on made up things (like FTT) so in this case, I'm thinking the losses are lost. That said, there are participants in the crypto-coin market who have alternative resources for recovering losses so if any of them had exposure here it might go poorly for her in prison.

verdenti 4y ago

[dead]

gd1 4y ago

[dead]

AlbertCory 4y ago

They have a CEO with a lifetime worth of experience clawing back ill-gotten gains. I read that on Enron he was able to recover 52% of the money for creditors.

wpietri 4y ago

> the fateful market play was that sunk her ship Having seen a much smaller trading failure up close, my guess is that it wasn't just one thing that sunk them. Instead, a bet or two went bad and then they tried to make up the losses through a series of ever-more-extreme plays.

dan-robertson 4y ago

I think you’re anchoring too much on the stop-loss thing. It’s pretty reasonable for a trading firm to not rely on such mechanisms. One would hope they would have a more sophisticated way to manage risks. I’ve no idea what happened in this case though.

the__alchemist 4y ago

Tangent: How did people hear about FTX? I've been interested in/holding crypto for a few years, and the big player was (and I assumed still is until recently) Coinbase, or Coinbase pro if you wanted better rates. There was bitcoin, Etherium, and some smaller coins like Bitcoin Cash, XRP, and Litecoin. I had a mix of coins, then rebased in ~2019 to a 50/50 Eth/Bitcoin split. As an alternative to Coinbase, you could use a hardware or paper wallet. How many people used FTX over Coinbase and wallets? What was the appeal?

55555 4y ago
No, Coinbase is not the big player for actual crypto to crypto trading pairs. That’s Binance. FTX was #2 on that list. Coinbase is the USA’s #1 fiat on-ramp. Fiat on-ramps are a different category. You are an investor. The people using Binance and FTX are traders. Traders are looking for exotic pairs, more leverage, more derivatives, and lower fees. Whether or not Coinbase is even a tenable business long-term is actually a legitimate question given that there’s no big profits to be made as a fiat on-ramp —- everyone assumes they’ll profit like a major trading platform but they are hindered by being legal.
- imtringued 4y ago
  It doesn't look like they are being hindered.
  - 55555 4y ago
    https://www.boerse-frankfurt.de/bond/usu19328aa89-coinbase-global-inc-3-375-21-28 https://www.boerse-frankfurt.de/bond/usu19328aa89-coinbase-g...

SanjayMehta 4y ago

This podcast is the source of some of the clips which showcase her thought process. Quite fascinating. https://www.youtube.com/watch?v=Qd2enI4RvXU https://www.youtube.com/watch?v=Qd2enI4RvXU

remote_phone 4y ago

Her comment on stop losses are right on the money. Anyone who trades large amounts of money never enters actual stop losses into the system, they have mental stop losses. Stop losses are actively hunted by algorithms and a quick way to make money by blowing through stop losses and then buying back at the bottom. Having mental stop losses is the real way to trade, as well as the discipline to sell when your mental stop losses are hit. I don’t know if she had the second part, but the first part about not having hard stop losses is correct if you’re a large trader.

55555 4y ago
You don’t know if she had the second part? Lol. I think you do know.

matheusmoreira 4y ago

> She mentioned she’s not a fan of stop losses I don't get it. How can anyone not like stop losses? Limited downside, unlimited upside. I only wish there was a way to set them client side in order to hide information from the exchanges.