The technology may have advanced to HFT Trading, algorithmic trading but the rogue inside the human will always overpower the technology.
Let’s try to understand the case of Navinder Singh Sarao , Has he became the scapegoat ?
According to the justice department Mr Sarao and his firm is guilty of Nav Sarao Futures, made £26m ($40m) illegally over five years.
He has been accused of using an “automated trading program” to manipulate markets, and contributing to the flash crash of 6 May 2010. On that day, the Dow Jones index lost 700 points in a matter of minutes – wiping about $800bn off the value of US shares – before recovering just as quickly. Continue reading “The case of Flash Crash Trader”
Recently attended a town-hall on the operational risk, the topics shared by the host was not new but it was all about awareness in the organisation. Lot of people asked why rogue traders still exist. But, that seems as if it’s an easy one to answer. Fool-proof risk management doesn’t exist and never will. At, least it won’t while the rogue traders are being covered by rogue managers.
You see, the definitions at the beginning had one thing wrong. They are definitions of solitary, lone-wolves. But, even lone-wolves belong to a group. They just prefer to avoid the assistance of others in certain matters. The rogue trader’s pack is the howling, fierce management for which he works. Lone-wolves always have alpha members they take orders from, don’t they? Lone-wolves are sometimes excluded from the pack to protect that alpha-male, thus preventing ‘in-breeding’ in the pack. It’s exactly the same in the trading world of finance. Continue reading “The Famous Rogue Traders”