Rio Trade
Categories: Trading
Trader Tad thought he was so smart. Smarter than the market. Trader Tad did some trading, but it didn’t pan out as planned. Trader Tad put all the money he had on the line, because he was just so sure of himself. Now all the creditors and regulators are after him. Time for Trader Tad to hop on a plane to Rio de Janeiro.
No joke, that’s how the term “Rio Trade” came to be. No, Trader Tad was not a real dude, but the idea of trading getting you so deep in the hole that you’d want to skip town (or the country) is how “Rio Trade” got its name.
A Rio Trade is a last-ditch effort trade—one made in dire times by a desperate trader who wasn’t able to recoup their losses. Dire times call for dire investments, as in: risk. When the risky shot is the only one you have left (in this country, anyway), you’ll probably do it.
If making money off of trading was easy, everyone would be doing it. Think about it: traders are trading with each other too, and if both trading parties on one transaction think they’re getting away with the better deal, the hard, cold fact is that one of them...isn’t. Either both of them break even, or one person profits off of the other’s losses. This is common in especially risk-prone markets, like speculative markets. Get out your crystal ball.
You might make one speculative play, hoping for the best...only for the worst to happen. Great losses. What do you do? You have to get that money back. Ah, another, even riskier play...maybe that’ll work.
There’s speculation that Rio Trades are often driven by too much testosterone, as the majority of speculative traders are male. Get it together, guys.
