Nearly a year ago, I went into the TradeXIV community on reddit and posted this warning. I didn’t know the whole XIV complex would blow up a short time later. I was shouted down by a few folks, as you can read. But here it is… and I should say that it is rare to be really right in this game. Usually, we are mostly right, kinda right, or right but too early, or just wrong. But this time I was perfectly right. I closed out substantial profits and left the casino. Then it burned down. True story.
1 year ago
I just want to say as a reminder if anyone is trading volatility with money they really need–Please stop. Only trade money you can afford to lose! Volatility trading is the most dangerous end of a profession that destroys banks and mocks Nobel prize winning economists. But the Fed isn’t going to bail you out! It isn’t easy or free or sexy. It is simply risk transfer. Someone is paying you to take their risk. Imagine someone paying you to take their risk of cancer or heart-attack. Think of the money you could make! That’s awesome until you cough and your hand comes away bloody. Yes, that’s a dramatic example but it illustrates a truth about risk. You can’t remove risk. But financially, you can transfer it. Taking other people’s risk of ruin is what us volatility guys are being paid the big bucks for. Please remember that.