Quote from GDAX: "We will establish a process to credit customer accounts which experienced a margin call or stop loss order executed on the GDAX ETH-USD order book as a direct result of the rapid price movement at 12.30pm PT on June 21, 2017."
Personally I feel this is just a bail-out for investors that didn't know how margin trading worked and were being way too risky... I don't really agree with this bail-out.
What are the communities thoughts on this?
Very interesting - I feel that if the losses were the result of a bug in the GDAX software, then people should be compensated. However, if the system was working as it should, and people lost their money because they made risky margin orders, then they should have to live with their losses.
I only ever buy or sell what I have. If you pay with borrowed money, then you assume the risk of multiplying your losses. If there was no error in the trading platform, and GDAX is refunding people for their bad decisions, then what precedent is that setting? Will they refund me if I make risky margin trades and lose money? Should I keep complaining until they refund me, knowing that they will eventually give in?
In their first update they stated that it was not due to a bug in the system so they are just bailing out people as a PR move and to retain customers. I get it from a business perspective but I agree that it sets a dangerous precedent.
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thanks for info
If you look at how modern equities markets handle a flash crash, there are now "circuit breaker" mechanisms that get triggered in response to a price decrease of over 10% during a five-minute window. Since a significant portion of trading in many markets today is algorithmic, without any safeguards in place, drastic movements can be quickly magnified even further.
That's not to say that I think magnified losses due to margin trades should be compensated for, but I feel like this is an attempt at apologizing for not having a formal enough policy for handling situations like this. Hopefully all other cryptocurrency exchanges take this event as a cue to develop formal policies for handling similar events in the future.
I'm curious what this will cost them...