‘Captain Condor’ Wipeout Offers Harsh Lesson in Managing Risk
“This was just a trade that was so large and the timing of it poorly chosen.”
Source: gece33/iStockphoto/Getty Images
It wasn’t some YOLO trade that took down a successful options trader over Christmas, but a centuries-old gambling strategy popular with amateur blackjack players.
David Chau, a 32-year-old day trader, and his followers lost tens of millions on Christmas Eve in a blowup that exposed the perils of the Martingale strategy, which appears in the memoirs of notorious Venetian romantic Giacomo Casanova. The money was his own, capital entrusted to his hedge fund SPX MGMT, and that of a band of small-time investors paying $5,500 a year to have access to his trading plans.