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How are they taking on loads of risk? Risk has a particular meaning in investment and "well, a bug can blow up my company" isn't part of that meaning. Simply c
by UncleMeat 3y ago
How are they taking on loads of risk? Risk has a particular meaning in investment and "well, a bug can blow up my company" isn't part of that meaning.
Simply creating risky (in the colloquial meaning) things is not itself a reason to deserve money.
- siftrics 3y agoWhen you make markets you are literally paid the spread to assume the risk of holding the position.
- piyh 3y agoCan you break this down a bit more? I've heard about making markets in relation to FTX but didn't really get the full picture.
- siftrics 3y agoYou can Google it or ask an LLM. It's not magic. This is common knowledge.
- UncleMeat 3y agoOkay. That's largely independent of the maximum damage caused by a bug.
- siftrics 3y agoNo. In this case KCG was doing the opposite of making markets --- they were taking --- they were eating the spread over and over and over again until they ran out of money.
- envsubst 3y ago> Risk has a particular meaning in investment Risk in finance definitely takes on more meaning than the narrow definition in modern portfolio theory (stddev of price).
- pxmpxm 3y ago> How are they taking on loads of risk? This entire story is about a trading firm that lost 400m trying to provide market liquidity. Which part of the loads of risk isn't clear in this context?