my worst mistake...my first real job in my trading career at a new ibank on the Treasury Trading desk (was my 2nd job in a trading seat, but the 1st job i was the junior guy and didn't really take any significant risk, and didn't have a P&L budget to make), so i was making about 100-150k per day (on avg) for about 3 months trading outright clips of 20-30mm 30yr bonds (not from customer flow...all just prop trading...mostly fading the ranges that were pretty stable...occasionally hopping on board a momentum play)...was up about 7mm (my budget...the P&L i was expected to hit for the year was 15mm...so i was half way there in only 3 months...i was overly excited and got overly confident/cocky)....then got real cocky one night and took a large position home overnight (stupid mistake)...traded decent size overnight (clips of 100mm 30yr bonds...ended up with a huge position as i kept fading the move in larger size overnight) by 10am i had lost it all in a selloff where i got caught bigly long and didn't stop myself fast enough...down 7mm...got stopped out by the head of the desk. I was physically frozen...i couldn;t move or make any decisions....just paralyzed with fear, thinking "what have i done?".
Took me a while to get back into risk a taking mentality. One could argue that It was actually good for the long term of my career in that i spent the next year and beyond really learning how to trade (i was very ignorant...hadn't spent enough time really watching markets with the intensity that is required to be a day-trader)....but that day was a serious gut check. I thought my career would be over.
A few months later the head of the desk then told me to put on every good RV position in illiquid off-the-run bonds i could find in my sector of the curve using my model, and to put them on with decent size. The head of the desk then started putting on some of my RV trades himself, in the more liquid products (mostly RV butterfly trades). I was also asked to teach the junior guys how to run my model, and to automate as much of it as possible with the IT group. I did, and then a few months later, the head of the desk fired me (ok, i was laid off along with a group of other people...but that's just semantics).
i traded lunchables with someone in the third grade..he took out the cookie before handing it to me. i was devastated.
How large of a pnl budget is 15mm for that desk? What share of that are you expected to take home?
How large of a pnl budget is 15mm for that desk? What share of that are you expected to take home?
the desk had a budget of 150mm....so i was 10% of the desk budget...and we had 10 traders. at an ibank, you should expect about 5% of your P&L as your bonus...so if i hit my budget of 15mm...i expected to get 750k bonus plus base to make total comp ~ 1mm.
I learn best from mistakes...mine and others.
Any other BB traders willing to share their big trading mistakes?
holy fuck how do i get into trading / your type of desk from M&A iBanking? Would love a detailed explanation on what I need to know and what jobs to aim for / how to pivot my story
Wow
30 year traders. You use to make you year shorting month end extensions and covering in 30 year auctions.
Seems to be working this month but it’s been a while.
i know a guy who did that for years...started doing it around 2007...but then it blew up in 2014/2015..cost him his career (he sized bigger and bigger each month because it ALWAYS worked). Lost a significant chunk of change...enough to get fired and booted out of the business. And then it started working again...
It hasn’t started working again.
I’ve traded it and made a ton. You are off a little on your timing from my recollection. I made a killing first half of 2015 doing that. And same thing traded bigger....this has paid for 18 months straight so roll your profits....gave back 65% of what I made on it.
Now it’s a crapshoot. I think a lot of central banks use 30 year auctions as liquidity events. As stupid as it is the 30 year auction started to mark the top in in bonds for a while. Haha the governments selling a ton shouldn’t the market discount it but no cb or someone’s were buying in the market for that and it was low yields happened for about a year. Now it’s a crapshoot. My logic says you sell when index funds have to buy and sell when the US treasury has to sell, but that whole game has gotten very different.
I usually lean that way cuz the trades so logical but have realized the edge isn’t there. A little small size cuz if that pattern re-emerges it makes sense. Rip offf passive buyers and ripoff passive sellers.
Bought 5000dth/day term, meant to buy 500dth/day term.
Not sure which takes #1 in monetary terms, but every single time I go balls deep into a perfect pair trade and decide that "I know better" by switching to directional mode. No need to clarify that every single time I have done it, I got stopped out and watched the mean reversion occur from the sidelines.
too soon, junior
no other BB traders out there?
Even I don't have the correct idea as I was just about to know these things
anybody else??
Alleged algo trading error this morning (Originally Posted: 08/01/2012)
This morning there was an absolutely gigantic volume traded as the markets opened which left many people up in arms. Is it worth examining the exact execution of these trades to get an idea of what the firm responsible was planning to do in the market? It feels like probably not since, if it was an algo error, it was obviously not the planned course of action. These goons on CNBC are saying that it was probably the company's planned trades for the next month, but they clearly have no idea what they are talking about. What do you guys think? Worth looking into? Maybe no valuable data in terms of the firm's strategy, but something interesting nonetheless?
Started yesterday at 15:59:57 when a 60,000 order of E-Minis was sold off (thats about $4bn notional value). NYSE reviewing trades in 148 different stocks. Algos are getting dangerous is all I'm going to say....
They're an innately dangerous way of trading. Obviously algorithms are prone to human error, and the errors that can occur have the potential to be huge considering the fact that a computer is executing the commands given to it by a programmer. That means that the programmer's mistake can't be stopped during execution which causes the error to be so big.
Bring back the good old days.
By the way, in case anyone missed it, Knight Capital said there was an error with their software that caused the high volatility in the markets.
interesting premarket video (via zerohedge) on the scale of this morning's algo mishap: http://www.zerohedge.com/news/broken-market-chronicles-algos-gone-autos…
Watched this unfold in the first few minutes realized something was wrong. Wonder if KNIGHT survives this mess.
all trades cancelled.... Didn't know they could do that
Heard that the software they had executed a trade order over 5 minutes when it was supposed to be executed over 5 days...
That's from this article http://www.cnbc.com/id/48458289. That article also mentions the 6 stocks that had trades cancelled. Think about it, why would any firm have trades lined up for 5 days in the future? Also if you look at what the algo was executing, it was buying or selling (depending on the stock) at any ask/bid that came in with no discretion.
Another Delta One Trading Scandal: UBS loses $2B (Originally Posted: 09/16/2011)
http://www.thesun.co.uk/sol/homepage/news/money/3817652/UBS-trader-Kwek…
What's with Delta One causing this? Unusually lax risk controls there?
Just watched the video that's part of the link... Is that MetaTrader? Why would UBS use MetaTrader 4 as a currency charting software?
Billion dollar loss in credit trading @ DB (Originally Posted: 12/12/2008)
A rough one for the prop desk....
good lord
link: http://business.timesonline.co.uk/tol/business/industry_sectors/banking…
that's rough....
Man I met Boaz and the guy is a genius. It seems the future of convertible arbitrage and capital structure arbitrage is pretty bleak right now.
Rookie Trader + Messing up his trading = Moose Hat rest of the day on the floor (Originally Posted: 10/15/2010)
Voila.
http://sphotos.ak.fbcdn.net/hphotos-ak-ash2/hs444.ash2/71778_8285761646…
Wonderful! Got any other details?
of what exactly :P his name? undergrad? lol
No just how he messed up.
was trading google post earnings this morning for too much size
do you know how much a new trader at FNY can lose before getting stopped out? 25k? 50k?
prop shop?
indubitably
Haha! Wonder what happens if he loses money? Aside from getting fired of course...
lol just that he has to wear the hat in the group that hes in... it goes around from trader to trader
Just imagine Blankfein wearing that after GS significantly misses analyst estimates...
JP Morgan looses $ 2 Billion $ in trading error (Originally Posted: 05/11/2012)
Question of the week : What is the lesson learned from JP Mogran $ 2 Billion mistake. What you think could have avoided this error.
http://www.bloomberg.com/news/2012-05-11/jpmorgan-loses-2-billion-as-mi…
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