How can power of people teach the lesson to game makers?
Yesterday, 29/01/2021, my Japanese Wife, has finally come across the story of the GameStop, and we have had an interesting conversation of what actually has happened and how it is possible.
In my hobby time, I do get into trades, although would not say myself as an amid professional trader but have made some money and have lost some money, I have had an extensive Fundamental and Technical Trading teachings, I have traded anything from commodity, forex, binary, shares, options, futures, you name it I’ve tried it…
This is just to give you a bit of an understanding or a background story that what my view on this whole situation is about.
Back in my days when I worked in the bank, we’ve once caught one of the banks shorting 12 billion with no stop loss, this would have been a disaster if some of the other financial institution have caught it, the bank would have suffered 100s of billions within days.
But what the actual problem is, this game is played by “big players” they have their kahoots mingled with other kahoots and can easily drop and short any sort of business by 2-20-200 billion knowing that no one will actually challenge it and at the end the market will readjust and all of the players will get their piece of meat.
What has happened here? an avid lovers of their business have decided to take a stance against the $2 billion short, and it is not an easy task to upheld on your own against such a monster while other monsters wont touch it.
People showed the people power and taught an “invaluable” lesson to those that bully others and I personally salute them that this is an empowering story, probably the beginning of the financial revolution where the power of the ants can devour an elephant.
So, going back to the conversation about what I had yesterday, her interest was, how did they actually come across this? and the little secret lies within Level 2 in trading, it actually shows the potential exposure of who is having where and the market makers are the worst in this game, as the moment you get the interest going where the market makers can just jump in and put a massive short sale wall in front of you.
Now the second point that she was wondering how does this snowflake turned into a snowball effect, and its pretty simple, any day traders would have specific alerts set for a specific interests that they may have to show them what the volatility is going to look like for their Risk and Interest. In this case, if I was trading that day I would have seen the beginning of the wave and usually on this trades you just want to catch a small wave of getting in and getting out.
Imagine now, that whatever the amount of people putting at whatever the small amounts that they would have had which created an echo that was picked up by all of the traders at that moment, the day traders only goal is make money on that day they don’t care about the consequences.
Now, the wall street is calling for the SEC to get involved and investigate and the major brokerage firms put the halts on a few option trading’s, which is a bit funny, when everything goes well and they make the money its ok, the moment the person makes the money, want to cry out loud…
But this is just the beginning, pride have tasted the blood and we should see more trades like that prevailing over the lonely wolves that roamed the jungle for far too long….