Computer froze, lost $2800

[Dte 10]

A friend and I are newbies, he was trading Friday and his computer froze. He franticly called the broker, by the time they got him out he was down $2800. They said there is nothing they can do. Does he have any outs.

[MC 10]

A friend and I are newbies, he was trading Friday and his computer froze. He franticly called the broker, by the time they got him out he was down $2800. They said there is nothing they can do. Does he have any outs.

 

Nope, that's the risk we all take. Don't forget the added $20 most brokers charge to phone in an order.

 

Who is his broker? Most brokers keep the order serverside and if your connection or platform goes down they still execute assuming a hard stop was in place (IMO serverside with at least a worst case scenario hard stop in place is a great idea). Now if the broker has an outage or worse yet the exchange freezes, well then you MUST be prepared to hedge on another vehicle or a backup broker to offset any move against you. This should be part of any sound trading plan, how to hedge in an outage.

[nycdweller 10]

Dte, I'm interested in knowing who your friend's broker is and what market was being traded? I didn't hear about any exchange outages on Friday so I'm really surprised something like this could happen. If it was neglect on the part of your broker, take your money elsewhere.

 

Mcichocki, can you please talk a little about how to hedge in the event of an outage? Thanks.

[MC 10]

Dte, I'm interested in knowing who your friend's broker is and what market was being traded? I didn't hear about any exchange outages on Friday so I'm really surprised something like this could happen. If it was neglect on the part of your broker, take your money elsewhere.

 

Mcichocki, can you please talk a little about how to hedge in the event of an outage? Thanks.

 

What I've been taught was to hedge the YM (which is what I trade) with the ES in the event of an ecbot outage. Overall consensus seems to say for every 10 YM points the ES moves roughly 1 point so it's an easy conversion with a 1 to 1 contract ratio. Granted the YM is $5 per point and the ES is $50 per point so it is potentially more per tick being risked if the 1:10 point ratio gets out of wack.

 

BUT anywhoo...what you would do is this...

 

Should you be in a YM position and the ecbot goes down and locks you into a position you would put the opposite order on the ES at your YM stop loss so that if the YM goes against you while trapped the ES trade fades and hedges your losses on the YM.

[The Shadow 10]

How many contracts were you trading? That was a big loss. If you are a newbie you should only be trading 1 contract. Also, you should place a hard stop at the same time you place your order. NinjaTrader will automatically do that for you.

[BlowFish 10]

Really it should take a few seconds once you have the broker. My guess is that this is not where the delay occurred?

 

It's worth mentally rehearsing (and knowing all the pertinent information of course) how to manually close a position.

 

Sorry for your friends loss but on the positive side there's a lot of valuable lessons there.

[MC 10]

IMO I think you should ALWAYS have some kind of hard stop in, even if it's below your mental stop just as a worst case scenario should your connection or computer crash so your brokers server will have you covered. (Be sure your broker offers serverside orders)

 

And rehearse and plan what you will do should the eCBOT freeze and execute.

I've never had to so I dunno how I will handle this when it pops up but I know what I "should" do.

 

This is what will separate the retail and the more professional trader, and who blew out an account or who just had another day in the market.

 

I'm with The Shadow, that was a helluva drawdown and am curious how leveraged and what trade was put on?

 

Sorry for the loss as well.

[brownsfan019 17]

This can EASILY be avoided by choosing a broker that responds to your phone call in SECONDS. Your friend learned this lesson the hard way.

 

Make no mistake, you need to have a Plan B in place for the unexpected, esp. with computer outages, internet outages, etc.

 

As for any recourse, your friend is stuck. If you read the paperwork you sign when you open a futures account, you'll find the wording basically says 'you are subject to computer malfunctions - on your end AND ours - deal with it.'

 

Part of the business; HOWEVER this should NOT be a major problem.

 

I've never had an issue getting to Open ECry's 24 hour trade desk when need be. I have a poster on my dry erase board that has their 800#, local phone number and phone numbers to the main guy at OEC and my account rep. I have their personal cell phone #'s and direct business lines. I've NEVER had to use these backup options as the 24 hour trade desk is there when I need it.

 

Let this thread be a lesson to any trading futures, whether 1 contract or 100.

[brownsfan019 17]

There is also an EASY way to prevent this on YOUR end -

 

When you get filled on an order, place a protective stop immediately!! Most platforms you can set it up so that the stop automatically fires when your trade is filled. This is critical.

 

Next, you need to find a broker where your stop is held at the exchange and/or your broker's server side. In other words, if your connection goes out, your protective stop is maintained.

In summary, you and your friend need to:

 

1) Place protective stop IMMEDIATELY after entering a trade, preferably have your platform set up so that the stop fires as soon as you are filled so you don't have to do anything.

 

2) Find a broker that holds your stops @ the exchange and/or server side. Stops that are held ONLY on YOUR computer are subject too many, many risks as this thread has illustrated.

[emini 10]

I have had that happen too.

[SunTrader 10]

Hedging ES with YM or the other way around might not be possible if YM gravitates over to Globex.

 

Might have to consider ER2 on ICE although they don't match up as well.

[MC 10]

Hedging ES with YM or the other way around might not be possible if YM gravitates over to Globex.

 

Might have to consider ER2 on ICE although they don't match up as well.

 

Good point, is that a confirmed move?

I know I've heard of the talk about it.

Also is Globex redundant at all or does it also freeze from time to time?

 

Thanks

[The Bear 10]

What I've been taught was to hedge the YM (which is what I trade) with the ES in the event of an ecbot outage. Overall consensus seems to say for every 10 YM points the ES moves roughly 1 point so it's an easy conversion with a 1 to 1 contract ratio. Granted the YM is $5 per point and the ES is $50 per point so it is potentially more per tick being risked if the 1:10 point ratio gets out of wack.

 

BUT anywhoo...what you would do is this...

 

Should you be in a YM position and the ecbot goes down and locks you into a position you would put the opposite order on the ES at your YM stop loss so that if the YM goes against you while trapped the ES trade fades and hedges your losses on the YM.

 

This frantic hedging could be dangerous too, since its difficult to know in some scenarios if your stop order is standing in the system or not, and what the spike will be like when it re-opens, and what kind of slippage you'll get.

 

But it's probably better than nothing.

[brownsfan019 17]

Good point, is that a confirmed move?

I know I've heard of the talk about it.

Also is Globex redundant at all or does it also freeze from time to time?

 

Thanks

 

So far MC, Globex is light years ahead of the ecbot and rarely freezes.

 

As for the move, it already happened - you can trade the Russell 2000 at ICE AND the CME for now. CME loses the license next year. From what I have read and heard, the CME plans to push a S&P Midcap type contract hard to replace the ER2 and keep traders there. Guess we'll see.

[MC 10]

This frantic hedging could be dangerous too, since its difficult to know in some scenarios if your stop order is standing in the system or not, and what the spike will be like when it re-opens, and what kind of slippage you'll get.

 

But it's probably better than nothing.

 

The whole point is drastic issues call for drastic measures though right?

 

So the key is the hedge should offset most if not all of of a move that went against you. Does anyone else have any other ideas or thoughts on how to hedge?

[MC 10]

So far MC, Globex is light years ahead of the ecbot and rarely freezes.

 

As for the move, it already happened - you can trade the Russell 2000 at ICE AND the CME for now. CME loses the license next year. From what I have read and heard, the CME plans to push a S&P Midcap type contract hard to replace the ER2 and keep traders there. Guess we'll see.

 

Nice...reliability is a great asset for a network carrying billion of dollars.

[SunTrader 10]

So far MC, Globex is light years ahead of the ecbot and rarely freezes.

 

As for the move, it already happened - you can trade the Russell 2000 at ICE AND the CME for now. CME loses the license next year. From what I have read and heard, the CME plans to push a S&P Midcap type contract hard to replace the ER2 and keep traders there. Guess we'll see.

The move that hasn't happened yet is the YM to Globex. ER2 is a whole other situation.

[brownsfan019 17]

The whole point is drastic issues call for drastic measures though right?

 

So the key is the hedge should offset most if not all of of a move that went against you. Does anyone else have any other ideas or thoughts on how to hedge?

 

MC - the BEST and EASIEST way to 'hedge' is to find a platform and broker that work in situations like this.

 

The next step is to have a backup stock/options online account where you can quickly and easily buy/sell the corresponding index ETF or ETF option.

 

Now, the time that it takes to log into your online account, find what you need and place the trade will take longer than just calling your futures broker and telling them to flatten your position if you have a broker that answers the phone quickly.

 

So my suggestion is to not waste time having a 'oh sh*t' plan and find a broker(s) that are reliable and accessible.

[MC 10]

MC - the BEST and EASIEST way to 'hedge' is to find a platform and broker that work in situations like this.

 

The next step is to have a backup stock/options online account where you can quickly and easily buy/sell the corresponding index ETF or ETF option.

 

Now, the time that it takes to log into your online account, find what you need and place the trade will take longer than just calling your futures broker and telling them to flatten your position if you have a broker that answers the phone quickly.

 

So my suggestion is to not waste time having a 'oh sh*t' plan and find a broker(s) that are reliable and accessible.

 

Well if you're in a YM position and the eCBOT freezes your can call your broker all day, they can't do anything either correct? Tradestation will answer the phone very fast, but if the exchange is down how could they flatten me?

 

And if you have limited funds and can't open a few spare offshore accounts there has to be a backup or "oh $hit" plan. To not have any hedging plan when trading leveraged is a blowout waiting to happen. And to hedge on an ETF isn't that bad an idea IF you have enough in your spare account to throw at it to effectively hedge the leveraged position. I don't have enough for a 2nd account at this point so I'll stick to my disaster plan till I can afford to get a backup account (I do intend to do this ASAP).

[brownsfan019 17]

Well if you're in a YM position and the eCBOT freezes your can call your broker all day, they can't do anything either correct? Tradestation will answer the phone very fast, but if the exchange is down how could they flatten me?

 

And if you have limited funds and can't open a few spare offshore accounts there has to be a backup or "oh $hit" plan. To not have any hedging plan when trading leveraged is a blowout waiting to happen. And to hedge on an ETF isn't that bad an idea IF you have enough in your spare account to throw at it to effectively hedge the leveraged position. I don't have enough for a 2nd account at this point so I'll stick to my disaster plan till I can afford to get a backup account (I do intend to do this ASAP).

 

MC - the OP's initial post was about HIS PERSONAL computer freezing, not the exchange. The exchange freezing is a different story.

 

Regardless, if you are too leveraged and can't afford a 2nd account backup, there's no hedging or oh sh*t options available at all. In order to hedge a position you need a 2nd account with funds sitting there waiting.

 

That's it. No way to hedge w/o more money. I'm not sure what you plan to have as your backup if no additional funds are available for this purpose. To hedge takes money and quite a bit of it if hedging with an ETF at a share-to-contract ratio.

 

If you are that worried about the leverage you are using, I would suggest scaling back the leverage and/or wait until your trading account is larger. You have a valid concern, but that is a real risk when trading a small account and/or trading with high leverage.

[MC 10]

MC - the OP's initial post was about HIS PERSONAL computer freezing, not the exchange. The exchange freezing is a different story.

 

Regardless, if you are too leveraged and can't afford a 2nd account backup, there's no hedging or oh sh*t options available at all. In order to hedge a position you need a 2nd account with funds sitting there waiting.

 

That's it. No way to hedge w/o more money. I'm not sure what you plan to have as your backup if no additional funds are available for this purpose. To hedge takes money and quite a bit of it if hedging with an ETF at a share-to-contract ratio.

 

If you are that worried about the leverage you are using, I would suggest scaling back the leverage and/or wait until your trading account is larger. You have a valid concern, but that is a real risk when trading a small account and/or trading with high leverage.

 

I have enough in my Tradestation account should the eCBOT freeze that I can grab 1 ES contract to offset each 1 YM contract. ES will work ok since they are on a different exchange and move in decent harmony to the YM.

 

I know the OP was saying his computer froze. My point was so will the exchanges sometimes and there has to be a disaster plan otherwise you can go a$$ up real quick. If it's your computer call your broker ASAP and get flat.

If it's the exchange you MUST have a hedge or risk a blowout.

 

I'm not picking a fight, I respect your knowledge but this thread was a good chance for me to bring up hedging regardless of what froze up. Cause if YOU freeze up when there is an issue it's curtains for ya. :o

 

Ya dig? I'll see you in chat in a lil bit...thanks for the input.

[SunTrader 10]

MC - the BEST and EASIEST way to 'hedge' is to find a platform and broker that work in situations like this.

 

The next step is to have a backup stock/options online account where you can quickly and easily buy/sell the corresponding index ETF or ETF option.

 

Now, the time that it takes to log into your online account, find what you need and place the trade will take longer than just calling your futures broker and telling them to flatten your position if you have a broker that answers the phone quickly.

 

So my suggestion is to not waste time having a 'oh sh*t' plan and find a broker(s) that are reliable and accessible.

Do you trade futures at all?

[brownsfan019 17]

Do you trade futures at all?

 

Are you asking me Sun?

 

If so, feel free to stop in the TL chat room to see for yourself.

[brownsfan019 17]

I have enough in my Tradestation account should the eCBOT freeze that I can grab 1 ES contract to offset each 1 YM contract. ES will work ok since they are on a different exchange and move in decent harmony to the YM.

 

I know the OP was saying his computer froze. My point was so will the exchanges sometimes and there has to be a disaster plan otherwise you can go a$$ up real quick. If it's your computer call your broker ASAP and get flat.

If it's the exchange you MUST have a hedge or risk a blowout.

 

I'm not picking a fight, I respect your knowledge but this thread was a good chance for me to bring up hedging regardless of what froze up. Cause if YOU freeze up when there is an issue it's curtains for ya. :o

 

Ya dig? I'll see you in chat in a lil bit...thanks for the input.

 

MC - I gotcha now. Using the ES to offset is fine, until the YM is on Globex. Then it's all the same.

 

So the plan will work assuming you still have margin in your account available to trade the ES. Keep in mind, if you are in a YM position your margin will be used there so you will need additional margin to trade the ES. With margins at $500 though, should not be a big issue.

 

I just wanted to make sure you understood what was involved with hedging if using the actual ETF and/or options.

[SunTrader 10]

Are you asking me Sun?

 

If so, feel free to stop in the TL chat room to see for yourself.

No thanks done the trading room too many times and look at it just another distraction. Fine for others I know.

 

My question was related to your above answer to get a better broker when the discussion centered on ecbot going down. Globex has not been immune to such problems either although not to the same extent as ecbot.

 

An equity account to use ETF's would be the same situation as having additional funds in a futures account to hedge YM/ES.

 

Whatever the backup plan, one is needed.