[Dte]

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]

Originally Posted by Dte »

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]

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]

Originally Posted by nycdweller »

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]

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]

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]

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]

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.