Crisis Control

[Soultrader 12]

Would like to dedicate this thread to crisis control measures that traders take in case of emergencies. This includes exchange technical issues, broker issues, trade problems, etc... What contracts or markets can you hedge against? What sort of backup plans do you have?

 

Some thoughts;

 

1. Always have more than one brokerage account.

2. Always have a direct number to your broker. I maintain a good relationship with my broker so if anything goes wrong I can always reach him and manage my position. In fact, brokers that call you out of concern are worth keeping.

3. Have more than one internet connection. Also do not use a wireless connection.

4. Use at least 2 PC's. I personally use one for charts and one for order execution but with software installed on both pc's.

5. Have an extra mouse and keyboard ready. Do not use wireless battery types.

6. Know which market to hedge against in case of an emergency; ex: YM and ES, Nikkei and TOPIX, Nikkei and JGB, Futures and options, etc...

7. Do not be cheap when buying a pc. Trading platforms can be quite cpu intensive and the last thing you want is your pc to freeze up in a fast market.

8. Have a drawdown limit set by your broker within their risk control system. I do this primarily to control my own destructive behavior such as revenge trading, over trading, etc.. It also works to protect yourself from any signficant losses.

9. Lastly, deal with a reputable broker. I have seen far too many fraudelent businesses especially here in Japan where commodities are an unregulated market.

[Tams 20]

2. Always have a direct number to your broker.

 

 

not just have the number... but write it down on a piece of paper and tape it to the wall in front of you.

 

People always say: I can look up the broker's number on the internet, or I have it in my email...

 

Well, not when the internet is down, or your computer crashed.

[Kiwi 16]

1. Only have one broker (trying to figure out if your position is open/closed/bracketed and then adjusting for that with another broker is a NIGHTMARE).

 

2. Tape the phone number up and keep a copy in your car. No backup computers. Not even a phone (we are now 100% internet with cable only). If, as happens once a year the pc or internet goes down and I don't know whats going on I call IB and get them to cancel everything thats not long term and protected.

 

3. I do keep backup pc images though and can restore operation in 30 minutes on my main or one of my children's pcs.

 

 

If PC reliability was a problem or the internet or power were unreliable I'd do something different but I've had 1 pc failure, 1 power failure, and about 4 internet failures over 10 minutes in the last 5 years. One of the internet failures was a flood which killed the suburb for all providers for 3 days. Also had IB's servers go down once in that period and had to shut down once for a Typhoon in HK (so the exchange was closed).

 

So, if your PC, power, and internet are reliable ... backup is a cellphone with your brokers number on hotkey

[Soultrader 12]

I believe Tokyo Stock Exchange allows you to modify orders from multiple ISV vendors. So if you had a trade on using for example, TT you can cancel or close this out using another ISV platform connected to TSE.

[diablo272 10]

I believe Tokyo Stock Exchange allows you to modify orders from multiple ISV vendors. So if you had a trade on using for example, TT you can cancel or close this out using another ISV platform connected to TSE.

 

What does ISV stand for? Also one thing that I can add is: if you do open another account, don't only fund it with the minimum margin requirements. What I mean is, if your broker requires $500/contract and you trade 10 contracts usually, don't fund the backup account with only $5000. If the trade goes against you, the broker can liquidate the position, which would defeat the purpose of having the backup broker altogether.

[Head2k 10]

Thanks James, this is an interesting topic. If things go well I am planning to go live in Autumn and safety measures are also one of the things I need to solve.

 

So far I have:

Two computers. One desktop PC and one notebook. That should protect me from electricity blackouts (which are not so uncommon here, especially during summer rainstorms) and from PC failures (though my PC's are stable).

Two internet connections. DSL and a wireless connection. I can also set up a connection via my cell phone in 20 minutes or so, if things go really bad.

I have a land line and a cell phone to reach my broker.

 

What I am thinking of is whether I need two brokers. So far I have only one, IB. So I'd like to ask more experienced traders whore are with IB how often IB have problems. Kiwi said once in 5 years.

 

Also had IB's servers go down once in that period...

 

How long did it take to restore the severs? Minutes? hours? days? And were they able to close your position while their servers were down? (Assuming you had a position and called them.)

 

Also I'd like to ask NQ traders how often there are exchange problems and if and how they hedge in those cases.

[BlowFish 10]

Place an 'emergency stop' when entering the market. This is not based on money management or market structure it's the 'oh crap the PC is broken' stop.

 

It's a shame that more brokers wont hold OCO orders for stop and target that are contingent on your entry stop/limit order being filled. If your broker does provide this use it...if not pester them to implement it. A failure between broker and exchange is less likely than one between you and the broker. If you enter on stop consider placing the order as late as possible. Problems can occur when you have a resting order at the exchange that is elected whilst your PC/Internet/Phone is broken. This is less practical for limit orders as you will be further back in the queue.

[Soultrader 12]

What does ISV stand for? Also one thing that I can add is: if you do open another account, don't only fund it with the minimum margin requirements. What I mean is, if your broker requires $500/contract and you trade 10 contracts usually, don't fund the backup account with only $5000. If the trade goes against you, the broker can liquidate the position, which would defeat the purpose of having the backup broker altogether.

 

ISV stands for Independent Service Vendor. These are firms like TT, CQG, Pats, GL Trade that provide stand alone trading platforms that are not developed by the brokerage firm. These firms are more widely used amongst institutions as they have different needs that certain ISV's can provide.

 

Some ISV's provide order types not supported by the exchange. For example, if exchange ABC does not support stops an ISV may allow it to be held on their server and when hit will send a market to the exchange.