You Have To Want To Lose $2 billion

Remember the UBS London trader who in early September 2011 hit the news as UBS announced it had lost over $2 billion dollars as a result of unauthorized trading activity?

Well Kweku Adoboli goes on trial this week in London in the case over $2.3 billion in trading losses and if convicted faces a possible 10 year prison sentence.

UBS refer to this even as an ‘unauthorised trading incident’ which is almost comically soft considering the sums involved.

As Michael wrote in his book The Inner Voice of Trading and many others have said, the key to trading well is learning to take consistently small losses. However you look at this UBS situation, there has to have been huge ego trading taking place, and negligence in the risk management department.

Independent traders get carried out in body bags from this business if they leverage up and go all in not adhering to the first cardinal rule of keeping losses small. It seems with OPM (other peoples money) it’s all too often part of the expected culture.

For details on the trial from Reuters take a look at UBS trial against Kweku Adoboli.

Please note: I reserve the right to delete comments that are offensive or off-topic.