InvestorQ : What are the key risks that I run as a trader in carrying unwieldy positions?
Anjana Aiyar made post

What are the key risks that I run as a trader in carrying unwieldy positions?

Answer
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Khushi Patel answered.
2 years ago


When we talk of unwieldy positions, it is not just about the size and potential loss but also the ability to manage. Barings was a case where the options positions became so huge that even their back office did not understand and just left things to chance. That was the genesis of the problem. Most of us look at the risk of unwieldy positions in terms of the potential loss. But that is not all. When you take unwieldy positions you are losing out on many smaller opportunities that go waste because you do not have the capital or the appetite to take on that risk. Also it detracts your attention from your core focus of trading, which is to be profitable.