The 5 Biggest Mistakes of Traders
If you have made a mistake in your calculations or forecasts, as a result of which you incurred losses (perhaps even significant ones), this is no reason to be upset. Just read about the 5 biggest mistakes of traders and it may let you feel a little easier.
1. Billions instead of millions
In October 2002, the trader of the bank Bear Stearns, wanted to sell $ 4 million, but mistakenly issued an application for the sale of $ 4 billion. The mistake was made 20 minutes before the close of the exchange, which allowed to prevent a catastrophe. Employees of NYSE were able to cancel most of the transactions. According to representatives of the bank Bear Stearns significant financial losses were avoided.
2. The collapse of the Tokyo Stock Exchange
In 2005, a mistake by a Japanese trader brought record losses to J-Com. Having received an order for the sale of one share of the company for 610,000 yen, he mixed the figures and put out 610,000 shares at a price of 1 yen, thereby sowing chaos on the stock exchange. The damage from the deal amounted to $ 340 million. After 2 weeks, the management of the stock exchange resigned.
3. Serious mistake without consequences
A Russian trader in September 2005 mistakenly sold about 1 billion shares of RAO UES, which account for 2.5% of the total number of shares of the holding and are valued at $ 337 billion. But the mistake did not bring damage to the holding, as the deal was concluded in a negotiated mode in which the parties can not fulfill their obligations unless they notify the exchange about the absence of mutual claims.
4. Error in Japan
This time, another Japanese trader from UBS Warburg mistakenly swapped the number of shares and their price by placing 600,000 shares at a price of 16 yen. Losses amounted to 71 million pounds.
5. Button with a price of 50 million dollars.
In September 2005, a trader at J.P.Morgan Securities mixed the buttons on the keyboard and sold shares from the Topix index instead of the Nikkei 225. After detecting the error, the bank had to buy back its shares at a higher price, resulting in losses of $ 50 million.
P.S. As trading is conducted in lots (1 lot = 100,000 units), in order to make a major mistake it would be enough to enter just one extra zero.