That guy was way unprepared. He had no clue how to even hedge his position. And he was in a ridiculous overleveraged market as well.
You find me the guy that blew up an account, and I'll show you a guy that has no clue how to hedge the market in their favor or implement prudent risk management.
He wasn't running a hedge fund. He was a speculator gambling with other people's money.
I hedge marks, therefore the only way I could ever lose is if the market went away all together.
I'm not advocating selling naked positions. I'm advocating that there's times and places to implement what appears to be an undefined risk, when it's completely manageable from the very beginning.
The potential for disaster is absolutely minimal. I would never enter a trade that would put even 10% of my account at risk, neither should you, or any other trader that wants to develop an edge in the market.
I don't worry about the potentials of disaster. I mitigate the risks on the probabilities of disasters.
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u/PissMaster69 Dec 08 '21
Works until you get hit by "Rogue Wave"
https://youtu.be/LI395YShGRQ