Gamestop Saga

 Gamestop Saga is an eye opening event in the history of share trading.

Below podcast is worth listening and knowing what happened , what are the repercussions etc.

Source: Jana V

Flash Crash - Takeaways

Flash Crash book by Liam Vaughan. 

The book is worth reading and understanding the world of Trading / Genius of Navinder Singh/World of regulators.

The book is fast paced and worth undertaking journey of Navinder with Liam.

Takeaways from the book:

• One man and One Machine can bring down world financial markets in one hour
• What happens in market real time is unknown to any one including regulators
• Trading is better left to machines as individuals will only lose
• If an independent Trader does it is crime and gets convicted, if an institution does it is a mistake and system need to be rectified
• By nature, futures and options invite speculation amongst traders
• The faster you earn money the more time you should rest
• Let money be earned at a fixed rate the regulators and world does not notice it
• Always keep a hard assets like Gold , Silver or Real estate as an alternative wealth for paper money
• The myth of liquidity provided by HFT was thrown out of window
• Don’t blame SEBI / RBI / Other regulatory bodies in India. Even SEC USA has same problems.
• To learn what not to do:

1. Let not greed overtake as a trader easy money is pocketed
2. Learn to stop take rest and enjoy the easy money pocketed
3. Even if easy money is flowing in you never know how it will backfire

Problem of Governments / Regulatory bodies were rightly presented in the below line

In response to the clamor, the government did what it often does and formed a committee—the Joint CFTC/SEC Advisory Committee on Emerging Regulation—comprising industry leaders, former regulators, and Nobel Prize–winning professors. Its mandate was to consider what, if any, changes should be made to the structure and oversight of the markets in this brave new automated world. It was an illustrious group, but none had any direct experience with high-frequency trading. The youngest member was fifty-five.

A serious problem in Markets

For them, spoofing is a hindrance, and after the introduction of the disruptive trading rules, firms such as Citadel and HTG Capital Partners would go on to work closely with regulators to identify and prosecute parties whose unpredictable trading disrupted the smooth functioning of their moneymaking machines. In a number of cases they appeared as witnesses for the government. “Imagine a system where the biggest, most powerful players get to tell the regulators and the exchanges who to go after based on who is taking money off them,” says one prop trader. “Welcome to the futures market.”