The Cost We Don’t Price In

The Cost We Don’t Price In

The Headlines

October 10th, 2025, will be remembered not just for the headlines, but for the damage endured by some.

Or will it?  Have we bounced back and is all forgotten?  Have we learned?

Late that day, across markets, we saw sudden reversals and steep declines forcing liquidations to ripple through the system. In crypto alone, more than $19 billion in leveraged positions were wiped out in hours.
For some, it was a rough day.
For others, it was catastrophic.

I am not a fan of sensationalised news. If anything, I veer in the opposite direction to anything that might resemble it. Please forgive me, therefore, for highlighting the case of an individual who paid the ultimate price. I do so out of a sense of duty to continue to speak about the topic that so few do in trading: the psychological fragility that can accompany extreme exposure, pressure and isolation in the markets.

The person I speak of was a rising star in the crypto arena. His name was Konstantin Galich, also known as Kostya Kudo. He was young, just 32. Friday took its toll on him as he allegedly lost over €30 million during the crash and was subsequently and tragically found dead in his car shortly after. Authorities described it as a suspected suicide.

In all honesty, I had never come across Konstantin before. From what I’ve since read, he had reportedly expressed feelings of depression and financial distress before his death. With this in mind, I’m dedicating this month’s newsletter to him as a way of bringing light to the subject and in the hope that others out there seek help should they need it.

When I read the details of that day, I didn’t think of charts or systems. I thought of how quietly a person can unravel while still appearing to maintain a public persona. When we talk about risk in the markets, this is an area that we rarely consider.  The impact on us as financial professionals. 

The Shock

Anyone who has traded long enough knows the pattern.
It begins with disbelief, the screen looks wrong.
Then panic: “What can I do?”  Followed by action - an urge to “Do Something!” - to undo what is unfolding. Then silence: Stunned. Messages go unanswered, decisions freeze, self-worth implodes.  Then begins the insidious silent contagion: shame and isolation.

It’s what happens when the story shifts from I took a loss to I am the loser.

That identity splinter can be unbearable.

From Systemic to Personal Risk

We often talk about systemic risk in abstract terms: leverage, liquidity, correlation.
But psychological risk is systemic too.

The trader who hides stress is a risk to the entire operation as well as to themselves.
Distress distorts judgment. It narrows perception. It increases risk-taking under the illusion of repair.
And when those with influence or capital lack containment - when their only coping mechanism is “fix it fast” - they’re exposed.

What happened on October 10th is but one extreme example, the mechanics are familiar. Whether managing crypto, equities or other financial assets, the sequence is almost universal. The system cracks: first in the mind, then in the body (sometimes we notice it, sometimes we don’t) and then in our reactions to what we see on the screens.

October 10th wasn’t just a momentary stress test of markets.
It was a stress test of the human nervous system that powers them.

The Anatomy of Collapse

There’s a sequence worth studying here:

Shock: Models fail, liquidity evaporates. The map no longer matches the territory.
Overdrive: The survival brain takes over by cutting losses, chasing recovery, avoiding pain.
Contraction: Energy collapses. Thinking narrows. Sleep disappears. The body stops regulating.
Identity crisis: Competence equals worth. Performance equals belonging. When one fails, the other collapses too.
Isolation: Fear of exposure leads to silence. Pride hides pain. The human connection (the thing that could prevent tragedy) is severed.  

It’s rarely one day that breaks someone.

The roots can go all the way back to childhood.

Then there’s a lead-up that creates a tinderbox.

It then just takes a spark.

What This Means for Professionals

For asset managers, traders and anyone responsible for other people’s money or other people’s performance this is a moment to pause.

Questions worth asking:

• What are the early signs that pressure is becoming unsustainable?

• How can we make room for conversations that don’t undermine credibility?

• Where are the structural gaps (in supervision, in psychological safety, in leadership tone) that allow people to suffer silently?  How do we bridge, alleviate and mend those gaps?

• How do we train self management and self regulation as seriously as we train technical skill?

Without considering questions such as these, the more we hurtle towards technological advancement, the more sophisticated our systems become… the further we move from recognising that we are human.  As such - our primitive response reactions continue to underlie and dominate in moments of threat and stress. 

A Framework for Recovery

Kosta’s story serves as a stark reminder to us to ensure we take the mind-body connection seriously.  It is not ‘woo’.  The impact on us, our communities and the businesses we operate in is indeed connected. 

I offer the following steps for your consideration as ways to restore and recover after the shock.

1. Ground the body.
   Remember biology first.  Breath, sleep and movement come before analysis. You cannot think your way out of nervous system overload.

2. Separate signal from story.
   Write down the facts.  Then write down what this means.  Examine the meaning you’re taking from the situation.  What it means about you.  Facts and interpretation are not the same thing.  The latter can be skewed by emotion.  Get perspective.

3. Rebuild rhythm.
   Trade small.  Go back to basics if you need to.  Make decisions at human speed. Consistency rebuilds confidence.  Get in the reps.

4. Stay connected.
   Silence is not strength. Talk to trusted peers, mentors, coaches.
   Perspective returns in dialogue, not solitude.

5. Reframe identity.
   The loss is data - not a definition of self worth. 

Why This Matters

Every market cycle produces both winners and casualties.
But when a professional loses their life over a market event, it’s more than a tragedy.
It’s a signal that our industry still treats mental collapse as an acceptable cost of doing business and that should not be the case. 

This is a reminder that mental risk is market risk. Emotions are a signal.  We must learn to pay attention to what they’re saying, find the root cause before or suffer the risk of being uprooted.

Closing Thought

Recovery, both financial and human, always starts in the same place:

Connection.  Remembering that we are Human. 

Take care of each other.
Take care of yourselves.
Behind every position is a person.
Traders are people too.