Home > General Topics > Wall St. News > XIV trader: ‘I’ve lost $4 million, 3 years of work and other people’s money’

XIV trader: ‘I’ve lost $4 million, 3 years of work and other people’s money’

  1. By
    Shawn Langlois

    The VelocityShares Daily Inverse VIX Short Term ETN XIV, -92.58% was created to give traders an opportunity to bet against a rise in volatility — the calmer the markets, the more profitable the trade. And it’s been one of the best plays out there amid the bull’s long and steady assault on new highs.

    All that changed, however, when the stock market began to seriously flame out last week. The ultimate gut-shot landed Monday when the Dow Jones Industrial Average DJIA, +2.33% was smacked with a record-setting retreat. The XIV dropped 90% after hours following the selloff, leaving a trail of destruction in its wake.

    Nowhere was the pain more palpable than on Reddit’s “Trade XIV” group, which counts more than 1,800 members. One of them goes by the cyber-handle Lilkanna, and to say he’s had a rough stretch would be a huge understatement.

    “I’ve lost $4 million, 3 years worth of work, and other people’s money,” he wrote in a post that’s garnering lots of attention. “Should I kill myself?”

    First response: Absolutely not. Second: Show proof.

    So Lilkanna posted this screenshot:


    If he’s to be believed, wow. Brutal. How did it happen?

    [​IMG]
    “I started with 50k from my time in the army and a small inheritance, grew it to 4 mill in 3 years of which 1.5 mill was capital I raised from investors who believed in me,” Lilkanna explained, adding that those “investors” were friends and family.

    “The amount of money I was making was ludicrous, could take out my folks and even extended family to nice dinners and stuff,” he wrote. “Was planning to get a nice apartment and car or take my parents on a holiday, but now that’s all gone.”

    Reddit can be an unforgiving place for those sharing tales of woe, but Lilkanna’s epic collapse struck a chord and the feedback, for the most part, was supportive.

    “Hey man, I know others have said it but I’m here for you man,” Passively-Aggressive wrote. “It may seem like the end of the world but tomorrow is a new day.”

    UNoobIPro echoed that sentiment. “Jesus dude, if you were able to turn 36k into 2.5 million (even with raised capital), you can make back all the lost money and then some,” he said. “You just have to learn from the lessons and give it time, you will make it back in no time. It sounds cliche as f**k but you know its true.”

    And Silver5005 commiserated with his awful market experience.

    “If you want to feel better I was short from the election of Trump all the way until 1/26/2018 and I basically ran out of money and liquidated the last of my account,” he wrote. “I sat through the most brutal bull market rally in history just to watch the crash begin a week later.”

    The support seemed to ease the pain.

    “Thanks for your kind words. Its always quite humbling to get shat on by random people,” Lilkanna responded. “It’s also EXTREMELY uplifting to be reassured by other people you don’t even know on the internet.”

    Hopefully, words are enough for now, because a recovery in the XIV doesn’t look too promising at this point. Credit Suisse, the bank behind the security, announced Tuesday that February 20 will be the last day of trading before liquidation.
     
  2. Well, they didn’t have any stop loss in place?

    Guess they were not elite traders. Everyone on this forum uses stop loss, right? ;)
     
  3. Hahahahahahahahahahahahahahah! What an idiot move!
     
  4. I keep reading articles like this and yes I hear they posted a screenshot of the account, but again just another story I can't believe....these stories are most likely 93% fabrication.....
     
  5. I have to believe it. I knew of and heard of many similar stories between 1998-00. Typically newer traders who did the same thing over and over again, day after day and found the right spots in the markets. This time around, absent real significant dd's in those short vol products, for the past 18 months, it is possible that someone went pedal to the metal on this stuff.
     
  6. He claims he traded up $50k to $2.5M in 3 years - that's a 4,900% increase or 1,633% per year he is the best trader of all times, yea right. So now he has $670k left over & based on his big claims of his past performance it should take him only 4 months to be back at $4M.

    This guy probably inherited the $2.5M he lost. He obviously does not believe his own story of his massive gains, otherwise recouping his loses would be a non-event. Gamblers always tell tale tales.
     
  7. Why do people trade such a crap.....?
     
  8. This.

    I'd take it with a grain of salt.

    It's possible it's real. But its possible it's a prank. Sort of a backhanded insult to the real players who lost money in the name by pretending to be a huge loser themselves. Poe's law.

    Remember the guy on reddit who claims to have lost money shorting AAPL on earnings that gapped up? People called him out as a fake, and eventually it was proven to be a fake paper account. Just good old fashioned trolling.
     
  9. It's possible for people to make bad trades or have bad timing. All it takes is one bad trade and bad position sizing to ruin years of gains. And yeah, it won't be the first time people were wiped out.

    The question is more whether this person is simply trolling or not. Unfortunately there is no way to tell whether his story is just that.
     
  10. Why is it that SVXY survived but XIV didn't? Any idea?
     
  11. I hear ya. I've seen that sort of thing happen over and over again with all the booms and busts the past 20 years. These markets seem to always have a sort of hyped gimmick trade that people latch onto for a long enough stretch to produce some wild gains before giving it all back.

    You guys could be right that it's all a hoax. No idea.
     
  12. And he is long SUNEQ too?!?
     
  13. Another story of not knowing how to trade, making it on one nuance, no diversification, and no stop loss, he never make it back cause he won't learn how to trade thinking it is just a simple lean back and let it accumulate, the black swan returns for a little while. Everyone always thinks the bad won't happen to them, and it does not have to be bad but you have to have the answer before it happens. And all the clowns saying he will make it back is as lazy as he is, perhaps I am cynical, but you have to work damn hard to get good and stay the years of being profitable. To be dumb not to have a plan of "what if" and trade other people's money and lose theirs as well, forget getting a Valentine's day card that is nice.
     
  14. He didn't say he traded $50k to $2.5M. He said he traded $50k + $1.5M to $4M... big difference.
     
  15. From the original post:
    “I started with 50k from my time in the army and a small inheritance, grew it to 4 mill in 3 years of which 1.5 mill was capital I raised from investors"

    It's hard to tell from the wording when the $1.5M came into play. But yea, I agree that taking $1.5M and his $50k + inheritance up to $4M is much more realistic. I stand corrected.

    People without a solid proven track record have no business trying to trade other peoples $, and those investors of his had a lesson to learn as well.
     
  16. He took 50k + 1.5m + "small inheritance", wonder how "small" it really was.
     
  17. This sort of sob story reminds me of what we get here on ET, first time noob poster with some BS story how they lost a gazillion overnight, "please ET, help me, boo hoo, just please fuckin' help me..."
    After 20 pages of ET replies later, the one time noob poster never replies, and never heard from again.
    He is laughinging his britches off at gullible ET'er who believe anything. :)
     
  18. A smaller scale of Karen, the tastytrade super trader.
     
  19. Yep, the guy who sold the AAPL naked calls before an ER beat and gap up. Turned out to be a fake with a paper account.

    Just trolling. It's a form of mockery of those real people who actually traded those products and lost their shirts. Borat/Sasha Baron Cohen style of mockery.
     
  20. History has been littered with people who lost everything in the stock market. Won't be the first and won't be the last. But especially now with current culture, a lot of people like to troll online. One of the ways to troll could be to mock those who they believe to be dumb retail investors trading VIX products they don't understand. Or people who trade bitcoin and lose. Or people trading weed stocks right now. One way to mock them is to pull a Borat (Sasha Baron Cohen). Pretend you're like them and be outrageous but believable. Poe's law. They go to online forums and proclaim stuff like "Oh I lost $5M and family's retirement fund and have to go live in a homeless shelter, here's my story. Please upvote." Or, "hey guys I'm going short this stock" and then it gaps up with perfect timing.

    On the flip side, what they are telling you could very well be true and they are simply venting. And if so, we certainly understand the pain of that. But I'm gonna take these stories with a grain of salt. It's why most of these sorts of discussions are useless IMO. Actionable information/discussion is better when it comes to trading stuff. What price. What time. When to enter/exit. All this philosophical stuff about "gotta have balls", "gotta have a system (without discussing the system)", etc - are useless chatter. They're like the entertainment news. Who gives a shyt? Tell me about local and world news only.
     
  21. Great points beefcaketrade.
     
  22. How is this guy trading in American markets when he lives in singapore? I would argue this guy is one of the people responsible for the market crash and should be investigated for fraud.
     
  23. I don't know if this story is true or not. But assuming it is:

    1. He made few thousand percent gain in 3 years. Did he really think he found a holy grail, a license to print money? The only way he could make those returns is using options and excessive leverage. With the risks he took, it was just matter of time till he blows his account.
    2. To respond to someone who asked about stop losses - if you use options, you cannot trade after hours. And all the action happened after hours.
    XIV behave exactly as designed. If you don't fully understand the instrument, don't trade it.
     
  24. I use OCO orders with a trailing stop limit and a trailing market stop way behind the trailing stop limit (in case the trailing stop limit doesn't fill in crazy times). Not sure how smart this is, but it would protect me if shit goes real bad.
     
  25. I've heard from a couple others and would like to confirm here if possible that in this xiv acceleration event, a stop limit would not have kicked and saved an account during the AH drop? Especially if you are with a broker that does not trade after hours.

    True or bologna?
     
  26. Stop loss wouldn't help in this case.

    The only way to control risk in this case would be proper position sizing. Or hedging.

    Doing something like this - The Incredible Winning Trade In SVXY
     
  27. I don't see why it wouldn't kick in. It may not fill, but should kick in, unless the broker screws something up. never had to deal with a drop like this yet.
     
  28. Is this supposed to be sarcasm? I don't get it. You are aware that US markets are not limited to US residents, correct?
     
  29. Obviously. Why ever entertain obvious trolls?

    Next he might start a thread telling us he lost $5M on XIV.
     
  30. He made a shit load of money probably shorting leveraged vol in a bull market and ketp leveraigng up each step along the way. Basically a martingale on profits until the losing trade comes in and wipes you out. Hard to feel so sorry for people who gain and lose money this way.
     
  31. I think the more important number for me to see is how much money he injected into the stock market, ever. Not how much he lost from the peak or from the day prior. That means nothing. Everybody knows gains aren't real until you close a position. In fact, the earnings arn't yours till you're retired and no longer in the game risking anything mark-to-market. Just ask Jesse Livermore - made, loss, made, loss. Earnings arn't yours until you're out.

    In the case of this trader, if his story is true, then his total injected according to him is $1.5M from investors + an insignificant portion from himself. So his real loss is $1.5M and change, minus what he still has left. Ignoring real inflation, risk free rate, etc.

    So yeah, if someone injected say $500K total over his lifetime into the stock market, and through those astronomical gains of a stock in years prior turned that into $2M portfolio before dropping to zero, that's more like a $500K loss to the market than $2M loss.
     

  32. I understand that point that he did not lose $ 4 million if most of that was accumulated profits from a stupid martingale like trade but he lost all HIS money and the money of others, whatever amount that was, when he had enough money to take most out and simply go in small again to build it up. For him and those that trusted him like he was a genius after a few lucky leveraged trades it is pretty serious but I still cannot feel sorry (except that he should not do anything drastic) for t his kind of lack of respect for the market or money. He is still wiped out and I am sure he is not looking for semantics to feel better in my humble opinion.

    I bet he would give anything to go back and get out with only a $1 million profit. People never learn...

    Plenty of ways this could have been played intelligently even with the drawdown.

    P.S. Look closely at this P/L snapshot from ToS. His loss on the products was not the full $4 million. He was already $1.6 million in the hole before the XIV losses are counted. So he was already taking serious heat and decided to ride it out and pray (that always works right?)
     
  33. Agreed. My point is that paper gains are not real until they turn to realized gain by closing a position. And in fact, a trader doesn't really own their gains accumulated from the market until they are out of the game. If you continue to risk money, you continue to have potential to lose it.

    Agreed. People confuse luck with skill. And when you're making money you look like a genius. The thing is, people will have no issue about making all that money in the days prior. Probably felt like a hot shot and that they were really smart. So, when they later lose it all, do you need to feel sorry for them? Well, yes and no to a degree. But I bet many of them felt like real hot shots the day prior to the plunge, and felt like a fool after. It's natural selection.

    He should have traded these products like he had a smaller account, by the time he essentially more than doubled his money. From 1.5M -> 4M, he should have taken profits and started over and traded as if he still had only 1.5M to play, trying to get to 4M again. But he got greedy utilizing maximum buying power/leverage hoping for compounding those gains. Then he got bit.