$1.3 billion down and still gambling.....

tradesmart

Experienced member
1,286 22
Gambling/Trading, there’s obviously a fine line between them, or no line at all……anything a trader who dropped $1.3 billion on an losing streak has to say may be relevant…..

Nick Leeson tells it his way….

"Every gambler must know this moment: the misguided confidence of a winning streak. The other day I had just such a moment. After cautiously building up £200 in a low-stakes game of internet poker, I decided to join a game where the stakes were 10 times higher. Within minutes my £200 had vanished. Welcome to the world of modern gambling.
It’s a world that is about to experience big change. Last week Tessa Jowell, the culture secretary, announced a shake-up of the gambling laws that will herald, among other things, £1m fruit machines, and a big increase in the number of casinos.
There are now 126 casinos in the UK, but after deregulation there are expected to be double that. American companies are already putting their chips down in anticipation of a boom. MGM Mirage has announced plans to build casinos in Glasgow, Liverpool, Manchester and Salford. Other groups have plans for Newcastle, Sheffield and Olympia, London. Blackpool wants to turn itself into the English Las Vegas by building five super-casinos. According to some experts, gambling in Britain will never be the same again.
If I were you, though, I wouldn’t put my shirt on it.
There is nobody who has had more experience of the exciting ups and the terrifying downs of gambling. In the early 1990s I was working as a futures trader for Barings Bank in Singapore, making a great deal of money for clients by betting on movements in the Nikkei, the Japanese equivalent of the FTSE index. In one year I made £10m for Barings, 10% of the bank’s annual profit.
You know the rest. You might even have seen the film. Gradually, things began to go wrong. In simple terms, I bet $512m that the Nikkei would not fall below 19,000 points. And after a huge earthquake struck the town of Kobe, that’s exactly what it did. By the time one of the betting world’s greatest losing streaks had come to its disastrous end I had lost $1.3 billion.
What happened then was an exaggerated version of what can happen to any problem gambler. Life collapsed around me. My colleagues lost their jobs, I was jailed for five years, my marriage failed, and I contracted a cancer that was almost certainly stress-related.
Why did I do it? It’s the reason you will hear from any problem gambler. Admitting it to yourself and others is the most difficult thing. I could have stopped at any stage, but I could not turn and tell the people who were important to me: I’ve messed up.
It’s nearly 10 years since the collapse of Barings Bank, and it’s taken all that time for me to come to terms with it.
After that experience, you might think that gambling is the last thing I’d be interested in. But the truth is that there is a touch of the gambler in all of us. It’s what makes the economic world go round.
If you buy a house you gamble — sometimes rashly — that prices will not drop. If you set up a fruit and veg stall at the market, you gamble that somebody will come along and be tempted by your apples and pears. Our economy is powered by the gambles of investors on the stock market: they put money into a company in the hope that they will get more back.
We bet on the lottery, football, bingo. We might even buy a raffle ticket at the church fete in the hope of winning a bottle of sherry.
Now American companies are betting on a British gambling boom, and I suspect they will get their fingers burnt.
The number of casinos might well double over the next few years, but that doesn’t necessarily mean double the number of gamblers. If 125 new casinos open in the UK, I suspect that 75 will also close down. This sceptical view of deregulation is shared by David Harding, chief executive of William Hill. “My view is that the UK is a mature gambling market,” he says.
Not convinced? Well, think of it like this. Las Vegas is a fantastic town with a lot going for it, but one of the greatest attractions is the weather. If it’s mid-November and I’m looking for somewhere to gamble, I don’t think Blackpool is going to be top of my list.
I do not find casinos very appealing anyway, because the odds are very much in favour of the house. I don’t bet on the horses and the dogs because I don’t know anything about them. But I do play internet poker, and have such confidence in the growth of this part of the market that I’m connected with an internet poker site, Celebpoker.com.
When you play poker online you are playing against five to 10 other players. You are making the decisions yourself. You are more in control. Whether you’re holding a deck of cards or a trading position on the market you are competing against like-minded people. You are pitting your wits against them and there is an adrenaline rush.
This is where the gambling bill could make its biggest impact. Some rival far-flung sites are unregulated and not policed well. The bill should ensure that only the reputable sites survive.
To gamble in a casino in this country you must first register, then wait 24 hours before playing. There is no such rule on the internet, which is why I think fears of a massive increase in problem gamblers — from 400,000 to 700,000 by 2010, according to one prediction — are misplaced. If somebody wants to gamble, all they need to do is turn on their computer.
Gambling got me into a lot of trouble, but I still enjoy it. I’m more careful these days, though. I only gamble with small amounts that I’m comfortable with, which might be good advice for the US casino giants. By all means stake money on a British gambling boom, but only if you can afford to lose it"
 

stevet

Established member
917 5
possibly interesting for those seeking to learn to trade - that Mr Leeson had all the support anyone could ever need - financially and technically - and he still did not make it as a trader -

and at the time he was feted as THE Nikkei trader, but in hindsight the 10M he says he made, (dont know if that was a cash P&L based on his real trading position), can now just be seen as the lucky side of playing a 50/50 chance - and unfortunatly the unlucky side on his 50/50 bets were a bit more catastrophic
 

dc2000

Veteren member
4,766 129
Given all the support anyone could ever need, would that include having to hire jobbers that didn't know how to trade and having to handle settlements office aswell. I would suggest that it was Barrings greed that allowed the situation to spiral out of control.
 

stevet

Established member
917 5
barings arrogant greed - yes - and it cost them the bank - but the only reason the losses accrued was due to Mr Lesson. He was meant to be a broker, and also to arb between the two exchanges, and he had all the support and more that he needed for that - but he decided he was a trader and that there was money in just taking one side of the trade, either directly with futures or indirectly with options

had Mr Leeson been a trader - he could have used this once in a lifetime opportunity to make a bucket load of money for himself and everyone else involved
 
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JJL3142

Active member
174 0
I spent some time research Leeson and Barings - there were a lot of obvious mistakes but I dont believe that the full weight of the collapse should on his shoulders -

0) Baring had almost gone into bankruptcy in the 1800's in argentina when it was bailed out.
i) The senior management (including ops) knew he was borrowing substantial amounts (£50m+) to meet margin calls but they allowed it - due to their ignorance and greed
ii) Auditors (internal and external) were blamed due to their non-existant approach to monitoring of leesons situation

P

p.s. I would hardly call blowing £200 on poker a serious concern
 

stevet

Established member
917 5
the full weight of the trading losses are 100% on Mr Leeson's shoulders and the collapse was caused by the trading losses

it is real difficult for any company, even now, to control derviatives exposure, so trust has to be with the skill and integrity of the traders

there are still quite a few ticking bombs out there
 

sidinuk

Established member
624 5
Successful trading is about finding and exploiting an edge which places the probabilities in your favour over time. This is what a casino does, they are not gambling they are running a business. Gambling is playing a game of chance where the odds are not in your favour and the probability of failure long term is 100%, ie the punters in the casino. Leeson was a gambler not a trader.
 

TWI

Senior member
2,535 254
Somebody explained to me a few weeks ago how much money these online poker sites make. It is incredible, as they take a slice of each pot. Some of them have games going on 24hrs/day and have an average of over 100 players. If you do the figures you will see it is an absolute goldmine. Mr Leeson has realised this and taken an interest in one of the sites, that is a good investment if not a good trade IMO.
 

stevet

Established member
917 5
i would have thought they have just done a deal with Mr Leeson for marketing - cant quite see the logic of that one though! but Caprice doing the marketing - now thats a whole nother story - and she would undoubtably make a better trader than Mr Leeson

is internet poker honest - i am sure it is as there is no reason to rip people off, if the company is getting a cut of each game anyway - but how do you know that the game is honest and that you are really trading against other playes - anyone got any experience of these sites ?
 

minx

Well-known member
328 10
stevet said:
is internet poker honest - i am sure it is as there is no reason to rip people off, if the company is getting a cut of each game anyway - but how do you know that the game is honest and that you are really trading against other playes - anyone got any experience of these sites ?

I play on a particularly good site, the company takes the rake at the beginning of the game and the rest is upto you, it has games starting every minute I think so they're definately making good money from it, also there are tournaments where upto 1200 people play nad the company gets their cut from that too!!! Usually they take 10% of what you go n with- ie If I play on a $5 table they take 50cents. Worth it I think.
 

Strategic Trader

Active member
100 2
minx

but if you were playing for say a K or more a game - if you lose - do you really know that you lost fairly - how can you tell someone is not just at the other end taking your bucks
 

minx

Well-known member
328 10
Strategic Trader said:
but if you were playing for say a K or more a game - if you lose - do you really know that you lost fairly - how can you tell someone is not just at the other end taking your bucks

True, guess you have to go to a reputable site and trust them...... my housemate and I have played on the same tables b4 and have won/lost to eachother over time so some money is flowing round....... my only worry would be if 5 people are sat round their livingroom table with their laptops playing on the same table as me and they're colluding...... they could then win every game/table as they know odds of whats coming way better than me and then just split the winnings...........
 

Strategic Trader

Active member
100 2
minx

yep - i dont gamble anyway - but suspect i wont be starting with that game!

thx for the answer though

i guess i should have known that if Mr Leeson feels it is good - they was bound to be a catch!!!
 
 
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