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Hello Guys,
yesterday I read an article in the Financial Times about the suicide of Alex Kearns. He was a 20yo unexperienced trader that recently started trading with RobinHood. After believing he had generated a 730K loss, he committed suicide.
The article suggested that there is a need for more regulation of the sector since now it's easier than ever to open an account with brokers and trading resembles too much video gaming.
Trading is my life, it's my passion and my only source of income, I am quite worried that the regulators might impose restrictions to indipendent trader and prevent us to trade futures, options or any other kind of derivatives.
I know many of you will think that I am being paranoid, but honestly how much do indipendent traders count for the overall financial industry ? to my knowledge we are just a very small part of the game and we contribute so little to the P&L of big trading firms.
Moreover it would be really easy for some politician to capitalize on the death of this guy, to impose regulations that will inevitably benefit the big banks.
What do you think? am I too worried?
Can you help answer these questions from other members on NexusFi?
I wouldn't pretend to know how legitimate your worry is, but maybe a bit of discussion will help put this in perspective. I agree that new regulations could be onerous to those that trade for a living. The bad news is that the lockdown has boosted the numbers of amateur traders significantly. One measure is the number of new Robinhood accounts, there might be other supporting data. The good news is that as long as this kind of incident doesn't get out of hand (another incident or two), there won't be any action. For one thing, politicians are busy running campaigns and smearing each other to give this a lot of time ( I hope). There is no NRA-like organization that would push back on more regulation. The brokers obviously would, but I don't have a sense of how much weight they carry on the Hill.
Anyway, I just wanted to show my support on this issue. Good trading wishes to you!
Very sad news. Early on before I learned to manage risk I experience over-sized losses and know the emotional pain.
I can see why you're concerned about further regulation restricting this industry. One factor to consider is that in the zero-sum game of futures trading, the losses generated by the estimated 95% of retail traders who lose money means gains by the professionals. In other words, retail traders and their losing ways make up an important part of the ecosystem.
I wouldn’t get too worried about more restrictions on the retail trader. That’s where the never ending supply of new money comes from. There may be some minimal CYA moves thrown in the mix but the retail trader brings too much to the game to be chopped off.
Exactly that's also what I try to think to keep positive.... I can't stand all the youtube channels dedicated to trading, most of them made by "fake gurus". All this youtube hype attracts a lot of people to this sector and I believe that trading, for its inner complicacies, should remain a niche sector.
When you try to convert it mainstream it might generate a lot of troubles for the sector as a whole.
When Mark O. Barton shot 12 dead and injured 13 more on july 29 1999 (probably motivated by large financial losses during the previous two months), nothing happened. Times have probably changed but is this Alex Keams event other
than suicide after a gambling loss? So far never a reason to regulate the (online) gambling industry.
Brokers in the industry are always very keen to prevent clients to run into a negative account and if it happens (due
to a black swan event like the swiss franc unpegging disaster in 2015 and recently the crude oil negative futures price disaster), brokers often take the loss).
It's possible that there will be more inquiry into the trading skills of novice traders when applying for a new trading account but I don't see how politicans could monetize on this.
