[AustinDev]

Wow... I thought this was satire. (when talking about trading) 'We don't tend to have stop losses, we don't see those as very good risk management tools' No wonder they're bankrupt...

SBF loaned her company 10 billion to trade without basic risk management for trading.

[vgatherps]

She’s not wrong, stop losses are pretty pointless if you’re running a high volume market maker that is in theory constantly doing tons of volume and reacting to updates.

They’re also super dangerous if you have gigantic positions

Anyways they wouldn’t save you from collateralizing your loans with shitcoins, taking leveraged bets with money that isn’t yours, having super high exposure to UST and/or Luna, exposed to hackable defi products. Harder things that “having a good sense for risk” usually entails thinking about.

The real red flags are claiming she doesn’t use math and that she’s never lost a lot of money on a trade despite doing largely human informed trading for size…

[AustinDev]

Fair enough. I'm not familiar with that kind of trading I'm only familiar with basic day trading such as momentum and swing trading which stops have been very helpful for me personally. I imagine when you're making a market and are moving massive volume the rules are different and as you mentioned would require a lot of math like maybe trying to be delta neutral.

[vgatherps]

For a bit more color, as stop makes sense for you since you’re not there 24/7 making decisions.

But if you are, there’s no reason to just auto trade a position away. The decision of “what to do when price hits X” is a function of many things instead of price, and you’re better off dynamically deciding.

Consider that you could already implement a stop as a 24/7 trading firm anyways

[SV_BubbleTime]

>The real red flags are claiming she doesn’t use math and that she’s never lost a lot of money on a trade despite doing largely human informed trading for size…

For the peak crypto years it was almost impossible to lose money AS AN EXCHANGE. These clowns really thought they were on fire, and not just in position that random moves could be winning strategies.

[baobabKoodaa]

> For the peak crypto years it was almost impossible to lose money AS AN EXCHANGE.

She wasn't running an exchange. You're confusing Alameda, the trading outfit, with FTX, the exchange. She was the CEO of Alameda. She was not the CEO of FTX.

[SV_BubbleTime]

My bad. But, just as bad.

It was really tough to lose money, which we all knew was unsustainable.

[MrMan]

top comment thanks

[nullc]

Prices are not continuous. Stop loss orders are suicide pacts, especially in illiquid markets. They have little to no role in a coherent risk management strategy.

They're primarily marketed to unsophisticated retail traders as providing protection that they can't provide-- something equivalent to a free put.

In fact, some time back their firm was sued for IIRC essentially manipulating markets to trigger traders stop loss orders in order to swallow up trades at unreasonable prices.

Tiny traders in the largest of markets can potentially get away with using stop losses and not get burned too badly too often, but none of the cryptocurrency markets really qualify as that.