🔥 1. Nick Leeson — collapsed Barings Bank (losses $1.3 billion)
Year: 1995
Who: derivatives trader at Singapore International Monetary Exchange
Essence:
Nick Leeson made huge bets on Nikkei futures, hid losses, averaged down, and increased volumes.
When the market turned against him after the earthquake in Kobe — the strategy was washed away.
Outcome:
• Losses: $1.3 billion
• The oldest bank in Britain went bankrupt.
• Lison — 6.5 years in prison.
⸻
🔥 2. Jérôme Kerviel — Société Générale (-$6.9 billion)
Year: 2008
Who: futures trader on indices
Essence:
Kerviel made huge bets on the rise of the European market, forged documents, bypassed limits.
When the panic of 2008 began — positions collapsed.
Outcome:
• Losses: $6.9 billion
• The biggest loss of a trader in history
• He claimed that management 'felt comfortable turning a blind eye while he was making money.'
⸻
🔥 3. Bill Hwang (Archegos) — lost $20 billion in 2 days
Year: 2021
Who: manager of Archegos Capital, former client of Goldman Sachs
Essence:
Hwang used crazy leverage (total return swaps), making oversized bets on the same stocks (Viacom, Discovery).
When the price started to fall — the margin call unraveled the whole fund.
Outcome:
• Losses: $20 billion in 48 hours
• Lending banks lost another ~$10 billion
• This is the fastest collapse of a private fund in history.
⸻
🔥 4. Brian Hunter — Amaranth Advisors (-$6 billion)
Year: 2006
Who: star gas trader
Essence:
Hunter bet on rising natural gas prices through futures.
Incorrect forecast, followed by market manipulation by competitors → the market went in the opposite direction.
Outcome:
• Losses: $6 billion
• One trader destroyed a hedge fund in a week.
⸻
🔥 5. John Meriwether — LTCM Crash (-$4.6 billion)
Year: 1998
Who: legendary manager, former star of Salomon Brothers
Essence:
The Long-Term Capital Management fund, which employed Nobel laureates, used huge leverage (up to ×100).
Russian default → markets went the wrong way → LTCM collapsed.
Outcome:
• Losses: $4.6 billion
• Almost collapsed the global financial system
• The US Fed gathered banks to save the market.
⸻
🔥 6. Internal traders of UBS — loss $2.3 billion
Year: 2011
Who: Kweku Adoboli
Essence:
Adoboli hid positions, made unreasonable bets on futures and ETFs.
When the market turned around — the bank discovered a hole.
Outcome:
• Losses: $2.3 billion
• UBS barely avoided bankruptcy.
⸻
🔥 7. Victor Niederhoffer — famous Soros trader (-$100 million+)
Year: 1997
Who: one of the best traders of that time
Essence:
Bet too heavily on the Indian market.
Did not calculate liquidity risk. The market fell after a political crisis — positions were liquidated.
Outcome:
• Losses: > $100 million
• Total collapse of the fund and personal capital.
⸻
📌 The common cause in all stories
Almost always losses occurred according to one formula:
Big leverage + lack of a stop + attempt to 'sit through' + confidence that the market must turn around.
This is exactly what kills both beginners and professionals.