Post: #1

In case you wonder if the trading market is regulated for more safety.



https://www.marketwatch.com/story/day-tr...2018-06-21

Quote:Day trader tries out ‘demo’ platform, ends up with actual $5 billion position

This day trader also scored a $12 million profit — and is suing a brokerage in a bid to get his hands on it

Day traders can do the darndest things.

This week has provided the tale of a huge demo-trading platform mixup, and it’s on par with the story of the guy who launched a GoFundMe drive after a short bet went horribly wrong.

Harouna Traoré was making trades with Valbury Capital last summer — on a try-out version of the British brokerage’s platform, he thought. But the French day trader discovered that in fact, he had been placing actual orders worth 1 billion euros ($1.2 billion), according to a Financial Times report.

Traoré, who opened an account with $23,000, found himself in the hole by more than $1 million. But he managed to turn that real loss into an actual profit of more than €10 million ($12 million), as he built up a $5 billion position in U.S. stock futures, the FT report on Thursday said.

Yet Traoré is not necessarily on easy street after his successful bets. Instead, he is locked in a legal battle with Valbury over the roughly $12 million gain — an amount about equal to the U.K.-based brokerage’s entire annual revenue.

Valbury told him it had treated the trades as an error because Traoré had thought he was using a demo platform. The brokerage also told him that he had exceeded his trading limits, according to court filings that the FT examined.

Post: #2

I don’t think he’s going to get it. If it was a technical malfunction and the guy was trading it under the assumption that it was a demo account, he’s probably shit out of luck. Maybe they will give him all his money back and a settlement of some sort.

Post: #3

Correct - he is not going to get it.

Seems like he opened up a real account with 23.000$. They usually offer virtual accounts to test drive the system and your skills. This is a very useful tool frankly.

But something seemed to have gone wrong. His virtual account turned real, but they allowed him to go 1 mio. $ into the red. If he had traded with his 23.000$, then he would be broke or even owing the house 30-100.000$ (some positions can move fast against you even if you sell the fastest way possible). Seems like he leveraged the position 1 to 100 which explains their mention of him moving billions. He did not - he was likely trading some CFDs, futures or options.

Then after they let the 1 mio. $ loss go, he leveraged again and one lucky trade can net you a 13 mio. $ from his low. This is nothing special.

The crux of the matter is that if the account was 100%, then he would be broke or owing them. You cannot give on the losses while keeping the gains.

Occasionally you have some trading errors which can make you rich. One Japanese trader got lucky and bought an instrument for 1% of the value due to an error of an employee. He bought as much as possible and multiplied his account by 100. That was legal and all legit - he got to keep the cash of course. But this is something else.

Also I might add - they likely did not notice much, because most CFDs are not even backed up on the real market, they know that most will lose anyway. If someone starts winning, then most brokers are doing one or both of those things:
1) They either follow your trades
2) They make life difficult for you on their end until you leave because the platform does not behave properly

But 99%+ are losing, so they are not concerned about the few who make great gains.

Post: #4

I've seen this story elsewhere and the guy is a fucking moron - once he realized he was up $12 mil he should have taken the money out - instead he contacted the brokerage and told him there was an error.