XIV Trader Loses $4 Million And 3 Years Of Work Overnight: Here Is His Story

The devastating 90% overnight collapse in the now "terminated" XIV Exchange Traded Note (ETN) has had many casualties - from one hedge fund down as much as 65%, to Morgan Stanley's (formerly) $39 million position, to Reddit user /u/Lilkanna who posted "Ive lost 4million USD, 3 years worth of work, and other people's money" in the "TradeXIV" subreddit. 

"1.5 mill was capital I raised from investors who believed in me," Lilkanna wrote. "I had a leveraged position I used DTBP to buy and it was down like 1% and I thought I could hold it knowing that I would get a reg-t call deadline in 2 days."

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As confirmation of his woes, Lilkanna posted a screenshot of his depleted account:

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Close up:

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“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.”

"Sad thing is I was long VIX until a couple of days ago. I was sure there was gonna be a correction but with each passing day my conviction wavered. Stupid. Really fu**ing stupid. I feel like such a fool."

While some Redditors were supportive - emoting empathy, “Hey man, I know others have said it but I’m here for you man,” one user wrote. “It may seem like the end of the world but tomorrow is a new day.”

Another Redditor said “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.”

User /u/asianhere commiserated with Lilkanna, writing "I feel you as I've lost 1/2 of my net worth today T_T prob 5 years on my life"

For what it's worth, Lilkanna is able to take responsibility for his epic fail:

I guess you never expect it until it hits you. You always hear stories about how people get cancer and how people get randomly killed in the street or about how they lose all their money, but sometimes you find it hard to believe that it will happen to you.

I started with 50k and traded all the way to 4 mill over 2.5 years, started using more and more margin, started taking it less less seriously, what could go wrong? Arrogance. Stupidity.

Ah well. Thanks for the kind words though. They are more comforting than you realise.

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Credit Suisse, XIV's issuer, announced this morning that February 20 will be the last day of trading before termination. 

Comments

Ajas Bodhi Tue, 02/06/2018 - 16:00 Permalink

When I first came here, this was all swamp. Everyone said I was daft to build a castle on a swamp, but I built in all the same, just to show them.

It sank into the swamp. So I built a second one. And that one sank into the swamp.

So I built a third. That burned down, fell over, and then sank into the swamp. But the fourth one stayed up. And that’s what you’re going to get, Son, the strongest castle in all of England.

In reply to by Bodhi

overbet rcintc Tue, 02/06/2018 - 17:22 Permalink

Fuck this whiny loser. Go jump off a bridge pussy. Another moron buying hand over fist in a bull market that thinks hes a genius. I know one guy who made a few million a year for 5 years then the market changed and the only change he made was to increase his size and dub dub double down dumbass. Blew out all his earnings and then some. Knew another guy who always added to winners. That was his "secret sauce". He turned 70k into 4 million in less than 2 years. He thought he was a genius too til he lost it all in a day. Seen another guy that had a legit edge and decided to automate it. You know he didnt close a loop in his code and sent orders like a gattling gun. Done before he could pull the patch cable. I seen a lot of guys come and go. You know who makes it? Guys that change. Guys that back off when something that worked stops working. They tweak, reevaluate, try another way or start fresh. The guys that last are obsessed. Cardinal rule: Always leave yourself outs.

 

Dont you love the screen shot begging for sympathy. Oh poor me feel bad for me tell me how unlucky I am. Fuck you. Youre a fool

In reply to by rcintc

dchang0 Dsyno Tue, 02/06/2018 - 17:41 Permalink

Yeah, and the guys who built their castles on bedrock have already built ten castles in the time the swamp-king rebuilt just one castle four times.

 

Ya hear that, New Orleans and the wildfire-prone areas of California? Stop using insurance or taxpayer money to rebuild over and over in the same damn disaster-prone areas!

In reply to by Dsyno

Jackprong overbet Tue, 02/06/2018 - 21:52 Permalink

I could not agree more with this post.  I have been in the stock market for over 38 years.  I was mentored by a former commodity broker who bought his first common shares in 1928 and still owned many issues when he died in 2002.  Unless one owns a real stock, a real bond, a real mutual fund that owns real stocks and/or bonds, playing these dicey indices can only rip one's face off.  It's hard enough knowing underlying businesses and demand in stocks and/or bonds.  Why make it even more dicey by putting money into something that is not real, that has no value?  XIV, VIX, whatever is not real, has no value with whimsical volatility.

In reply to by overbet

aurum4040 RAT005 Tue, 02/06/2018 - 16:24 Permalink

Exactly. Cash in cryptos is what you do. Not that i havent traded 5 times margin w Kraken thousands of times. But...its not smart. Ive gotten burnt. Not badly. But burnt....Most of my trades at this point are cash with more cash on sidelines for days like last night/yesterday...High margin trades are just not smart. Inevitably it will work against you. Just a matter of time. 

In reply to by RAT005

OverTheHedge Endgame Napoleon Wed, 02/07/2018 - 03:03 Permalink

It's been a long, long time since everyone lost, all at once. Most of the people trading won't have had the experience, and the vast majority of those that suddenly get the experience this time, won't be trading for the next one. It's why this mad market system works - there is no institutional memory of failure, so everyone thinks they are a genius, especially the geniuses. And then it all gets taken away, and a fresh team of newbies gets signed up a year after, to start the cycle again. The value of <insert asset name here> may fall as well as plummet.

In reply to by Endgame Napoleon

EddieLomax BullyBearish Wed, 02/07/2018 - 04:42 Permalink

Yep, I'm guessing that when we'll look back this "gifted trader" will actually just be someone who had it "RISK ON" all the way over the cliff.  Kudo's to him at least for admitting it.

I have no doubt he can get back in the game again and recover the money and do it again.  But if the money was just made by trading the pattern, the pattern being the market always goes up, then he's always going to end at this point sooner or later.

This is where I'd love to see fundamentals make a return, but that's just me being nostalgic.

In reply to by BullyBearish

RAT005 Bodhi Tue, 02/06/2018 - 16:01 Permalink

My story was opposite.....loose first, then spend months earning it back.  After the second time I quit.  I feel for him, but when it starts moving against you, it's so hard to function.  I wonder how much is driven by people with access to see the bid ques and know where the trigger points or cliff point is and know just enough when to bail confidently, even at a loss.

In reply to by Bodhi

Joe Trader RAT005 Tue, 02/06/2018 - 16:08 Permalink

Stop loss rules were changed 1-2 years ago. Stop orders aren't supposed to "sit" on the market, so you're not supposed to be able to see them, they only get sent once triggered. Correct me if I'm wrong.

I got stopped out late last week, fortunately price came back up to my stop limit range after gapping below it - then tanked. Seeing price gap below your stop really sucks, my take away was use wider stops.

Do what the pros preach: cut your losses: QUICKLY.

In reply to by RAT005

fellatio is no… Joe Trader Tue, 02/06/2018 - 16:59 Permalink

NEVER use a stop or stoploss order, the market makers look at those and say "FREE MONEY" then they take the security to your stop price, execute it and move the security back up.  How many times have you been stopped out only to see you were the low for the day (or just above it) every time.  I guarantee you anytime you place an order like that you will get stopped out

In reply to by Joe Trader

Joe Trader fellatio is no… Tue, 02/06/2018 - 18:32 Permalink

It depends. Whether a stop order is used or not, if max pain, your exit point comes up...will you actually sell each time? are you fast and attentive enough to do so? I agree that problem exists, but we still have to somehow stick to our systems. There will still be slippage if you sell manually. Price can also bounce back up after you sell manually.

In reply to by fellatio is no…