Archives of “rogue trader” tag

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The Best Wall Street Movies Of All Time

  
  Education
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Rogue Trader (1999)

In a sentence: Faster paced British version of “Wall Street.”

Plot: Based on the real-life story of Barings Bank trader Nick Leeson, Ewan McGregor does a surprisingly awesome job of emulating the British wunderkind down to his addiction to fruit candies. While a relatively unsuccessful movie at the box office, Rogue Trader is entertaining.

Trading Places (1983)

In a sentence: No movie about Wall Street is funnier than the 1983 comedy “Trading Places.”
Plot: Eddie Murphy and Dan Akroyd are at their best as director John Landis tells the tale of how one man’s fall from Wall Street is another man’s blessing. Watching Murphy talk about futures and markets is hilarious and unparalleled in humor.

Wall Street (1987)

In a sentence: The classic Wall Street film.
Plot: Oliver Stone originally set out to depict the greed associated with Wall Street in the 1980s. Little did he know, it would go on to become one of the finest pieces of financial cinema ever created. Traders still go nuts for this movie and everyone loves Michael Douglas’ character Gordan Gekko, who is modeled partly after Michael Milken and Ivan Boesky. (more…)

Rogue Trader Psychology

  
  Education
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Jerome Kerviel. Rogue Trader. As this case unfolds, more and more information is being revealed. He was the quiet guy with a not-so-impressive education background. Many of his peers may have been picked from the prestigious Grandes Ecoles, the Harvards and M.I.T.’s of France, and wielded advanced degrees in math or engineering. Kerviel came to work with a business school background and started work in the bank in the back office. Can we learn a valuable lesson from this case? As personal “professional” traders (as opposed to institutional trading), are we guilty of being rogue traders every once in a while? No compliance department to answer to. No regulator breathing down your back.

Kerviel’s job was arbitrage: the art of exploiting tiny and momentary discrepancies in prices of very similar stockmarket instruments. To make money, the bank has to wager big volumes but the risk is usually small because each transaction is balanced with an equal and opposite one. The bank says he created fictitious accounts to make it look as though his bets that shares would rise had been covered. The bank was open to the risk prices would fall – they did. Kerviel was able to get away with it partly because SocGen’s risk systems do not check up on unregulated over-the-counter contracts straight away if no deposit is required, the bank said. Furthermore, the bank primarily looks at the net exposure to market prices rather than the total outstanding amount wagered. Bank risk experts say this approach is not peculiar to SocGen. To keep the checks at bay and continue trading, the dealer falsified documents and misappropriated passwords, SocGen said.

Rogue Trader Trading Psychology

Most would-be traders operating from home are either self-taught or taught from education package bought from a trading education company. We are very much like the rogue trader: we don’t have top class education, we have access to both the trading and the back office side of the business and we have the same psychological vulnerabilities. We are only human. It is easy to be seduced by money as much as Kerviel had been. It has been reported that he was attracted by the prospect of a 300,000 euro (US$503,778) performance bonus, but did not personally profit from any of the financial deals. He wanted that bonus. He may also wanted to keep up appearances with his peers.

Rogue trader psychology is one of delusion and illusions. The delusion of self in believing that taking on ridiculous levels of risk to “fix” a trade. Kerviel had taken a US$83 billion losing bet on European share prices. The illusions of a rogue trader include the belief that everything will go their way – the market will turn their way but when the time comes, the opportunity that they saw didn’t come into fruition – the mirage in the distance.

Back Office Rogue Trader

The problem was, rogue traders have access or knowledge about back office operations. It was the case with Nick Leeson in 1995 and also the case for Jerome Kerviel in 2008. Rogue trader’s can further their delusion by flexing the system to suit their reality. It was a total breakdown of the system.

Professional non-institutional traders don’t have the luxury of a compliance system. No compliance department to answer to. No regulator breathing down your back. No limits. They have 100% control over their own risk, their own compliance.

Lessons of Rogue Trader Psychology

Professional non-institutional traders aka traders operating from home; have to institute their own control systems. They must operate with their own trading rules taking into consideration what level of risks they are able to make. They must also consider how they will mitigate their own risks by creating a money and risk management system including stop losses and a buffer. Be wary when you do start flexing your own rules regarding risk. You may turn yourself into a rogue trader.

Leeson: Rogue trader culture is more rife than ever

  
Economy, Education
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Nick Leeson, the original rogue trader whose actions led to the collapse of the venerable Barings Bank and to a six-year prison sentence, yesterday warned that the culture of the City has spun out of control.

With banks reeling from numerous scandals and the London financial district under intense pressure to reform itself, Mr Leeson said that unless punishments are increased traders will continue to run amok.

“Rogue trading is on the increase. The latest scandals are just a sign that the culture is running riot without any checks in place.

“Every day you wake up and see something different,” he told The Independent. (more…)

Top Selling Stock Market Movies

  
Education, Life
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If you are looking for some recreational movies relating to the stock market and Wall Street, which you can watch on DVD or Blu-ray, you should check out the following;

Wall Street

Boiler Room

Wolves of Wall Street

Rogue Trader

Barbarians at the Gate

Enron: The Smartest Guys in the Room

Other People’s Money

Wall Street Cowboy starring Roy Rogers

Madoff and the Scamming of America

How Leeson broke the bank -Must read

  
  Education
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It was the 1980s. Traders were young and greed was good. Nick Leeson, a working class lad from Watford, the son of a plasterer, was chuffed to land a job in the purportedly-glamorous world of the City of London in 1982.It was a relatively low-grade job, but he quickly made a name for himself. He worked his way up, becoming a whiz-kid in the hardworking atmosphere of the far eastern currency markets.
Soon, he was Barings Bank’s star Singapore trader, bringing substantial profits from the Singapore International Monetary Exchange. By 1993, a year after his arrival in Asia, Leeson had made more than £10m – about 10% of Barings’s total profit for that year.In his autobiography Rogue Trader, Leeson said the ethos at Barings was simple: “We were all driven to make profits, profits, and more profits … I was the rising star.”He and his wife Lisa enjoyed a life of luxury that the money brought.
He earned a bonus of £130,000 on his salary of £50,000
Nickleeson
Nicholas Leesson ,the trader who brought down the Barings Bankbarings_bank_logo in Februrary ,1995 ,is a made to order example of the business of not facing up to a loss ad getting out.He’s also a perfect example of the dangers of adding to a losing postioin in hopes of digging your way out.The Barings Bank was the bank that lent the United States the money to make the Louisiana Purchase.When Nicholas Lesson finished his trading for the bank ,Barings was sold for the equivalent of $ 1.40. (more…)

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