Tom Dante

Tom Dante



The greatest wtf moment in my career A Thread

I like to retell this story from time to time because it was the day, I truly learnt you're sometimes just one trade away from losing everything and there is an element of luck in this business.

It was Jan 15, 2015. Some of you already know where this is going.

I was trading from home. I had bought 1.2009 in EURCHF with a stop at 1.2001. I had been doing a similar trade for a long time and making money.

Then, one morning, the SNB announced they were dropping the peg. The move lower was brutal. This is a daily chart for scale.

I was literally shaking as I looked at my trading account. Somehow (and I do not know how to this day) I had been stopped out without even suffering a single pip slippage. I even went so far as to ring my broker and get them to confirm it, then and there, in an email.

I had a close friend who happened to be in the same trade with another broker. He suffered horrendous slippage. In the email below, they write to tell him that after already being slipped 1,002 pips, the correct slippage should have been 1,400 with "Sorry for the inconvenience"

This poor trader had originally thought he had 10 pips of risk. After losing 1,400 in seconds, he was down 140R. Not only was his account blown but he ended up being pursued by the broker for an extra £9,765.

Consider on a move like this, had his risk even been just 1% risk of account on the trade, the slippage would STILL have resulted in him blowing his account and owing a broker.

This is why I tweet and talk a lot about risk. These moves happen. If you trade long enough, you will almost certainly encounter one. There are a few takeaways from this.

1. Lots of people love tight stops but they are a double edged sword. Consider if the trade above had still risked 1% but with a 20 pip stop rather than 10, he would have lost around 70% of his account. It would have been awful but not as bad as losing it AND owing more on top.

2. Rug pulls are everywhere. A healthy level of distrust towards everyone is absolutely key. My failure, I later realised, was that I had been unable to anticipate the SNB could brazenly do what they did.

3. There is an arbitrary nature to this business. You have to embrace it.

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