nick leeson trading strategy

Doubling: Nick Leeson's Trading Strategy (2000). A fantastic look at the Chicago trading pits, and the traders who made their livings there. Nick Leeson, the Rogue Trader, as early as 1992, Leeson was making unauthorized speculative trades, using customer funds. Not thinking in a million years that it would amount to anything, Leeson agreed. One the other hand, simex thought the bogus error account, 88888, was a legitimate customer account rather than a proprietary Barings account. Bank of London made a huge effort to organize a bailout for Barings bank. None of the regulatory bodies of Singapore, Japan on the UK discovered the true use of Leesons error account because firstly, it was visible to them only as a customer account, and simex had also granted an exemption on the number of contracts that Barings. Read the story, and watch the documentary at the end of the article. In this way, Leeson could hide his balances and losses from London but not Singapore. Furthermore, the Bank of London also criticized the process of Leesons funding. In fact, he made up a strategy to earn trading profits on derivatives where he would have to take much riskier positions by buying and selling different amounts of the contracts on the two exchanges or buying and selling contracts of different types.

Nick, leeson s strategy to earn trading profits on derivatives?

nick leeson trading strategy

What went wrong that caused his strategy to fail? This practice was both illegal and highly risky. According to Ron Baker, the Head of Financial Products Group for Barings, There were no clearly laid down reporting lines with regard to Leeson, and in actual fact, there were several people responsible for keeping an eye on Leesons performance, but each one of them.

However, the bogus account was known to simex as a customer account, not as an error account. The Bank of Englands report detailed how the losses occurred, the reason the losses were unnoticed in and out of Barings, and the lessons learnt from the bankruptcy. He then moved onto Morgan Stanley, where he worked for two years, until moving to Barings in 1989. Why did the attempt by the Bank of England to organize a bailout for Barings fail? However, when the far eastern markets plummeted in 1994, his error account had losses of over 208 million (310 million, based on the exchange rate in 1994 which Leeson tried to recover with further speculative trading. He was betting that the Nikkei index would rise, but he was wrong; instead it fell, causing him to lose.39 billion.

Abstract This paper examines the trading strategy attributed. Nicholas Leeson, who was the chief derivatives trader of Barings bank in Singapore. Corresponding author: E-mail address.