The legendary “Boy Plunger” made and lost several fortunes. His final bankruptcy in 1934 and suicide in 1940 came after repeatedly breaking his own rules: over-sizing, refusing to cut losses, and trading on hope during the Great Depression.
Lesson: Even the greatest trader of his era was destroyed by ego, loss aversion, and inability to sit out bad markets. Rules without discipline = zero.
A single rogue trader in Singapore hid mounting losses in a secret “88888” error account. Instead of admitting early mistakes, he doubled and quadrupled bets on Nikkei futures, eventually losing $1.3 billion and bringing down Britain’s oldest merchant bank.
Lesson: Revenge trading + hiding losses = institutional death. One person without oversight and hard risk limits can wipe out centuries of history.
Kerviel built massive hidden directional bets on European indices using forged hedges and fake transactions. When markets moved against him in January 2008, the unwinding cost Société Générale nearly €5 billion — the largest trading loss by a single individual in history at the time.
Lesson: Ego (“I’m smarter than risk controls”) + no position limits + no transparency = catastrophe. Psychology beats controls if the human believes he’s untouchable.
Hunter aggressively bet on hurricane-driven natural gas spreads with extreme leverage. When 2006 turned out to be a mild hurricane season, his positions collapsed in days, wiping out 65% of the $10 billion fund in a single week.
Lesson: Overconfidence after a big winning year + massive concentration + refusal to reduce size during drawdown = fund extinction. One trader, one market, one idea — never again.
A dream team of Nobel laureates and star traders used 30–50× leverage on “risk-free” arbitrage. The Russian debt default triggered a liquidity spiral they believed was mathematically impossible (a 10+ sigma event). Lost $4.6 billion in weeks; required a Fed-orchestrated bailout.
Lesson: Intellectual arrogance + extreme leverage + ignoring tail risk = near collapse of the global financial system. No model replaces humility and proper sizing.
Using total return swaps (hidden leverage), Hwang built concentrated $100+ billion notional exposure in a handful of stocks. When ViacomCBS and others fell in March 2021, forced margin calls triggered fire sales that erased ~$20 billion in days and nearly sank Credit Suisse and Nomura.
Lesson: Hidden leverage + extreme concentration + narrative attachment (“these are my babies”) = modern rogue trading. Transparency and position limits matter more than ever.