Well since you want something in writing - show me in writing where IB states they expect you to trade out of any unexpected positions without contacting them first. I won't hold my breath.
Here's what IBj says in his post: What I would do is close it out, then call IB. Worst case scenario, they tell me it's my position for some cockamamie reason, in which case I definitely want out because I don't hold errors and I don't want the market risk of a position I did not get into on purpose. I don't see a broker having a problem with your "managing the risk". According to some reports around ET, sometimes getting ahold of IB is time consuming. You're going to hold a position while you wait for someone to get on the phone? I'm not. OldTrader
No, the worst case scenario is that IB agrees with you that the phantom position did not exist and takes the phantom position out of your account. But, by closing out the phantom position you created a real position in the opposite direction. Since you placed the âclosingâ trade, IB could take the view that the new position is your responsibility. In this case you screwed yourself and take the risk of blowing out your account.
The thread has been useless to me and most likely to anyone else that believes something similar may have happened to them. These people would likely have written it off, let the data go, accepted any explanation by the broker, etc. Too bad, I was hoping to learn more about delayed trade confirms or whatever it was that happened here. Instead I got stuck with a coy asshat trying to publically play a legal hand. Frankly, I hope the broker directs counsel to break his pocketbook to get the money back but closing this thread would suit me fine as well. Thanks for nothing OP.
No it is not. There is only one logical way to control risk right before a news event and that is to get flat. You cannot control the news event. You can control your position. This comes back to zzzap's options. Either he gets flat before the news event or he does not touch the position at all. However, he decides to put limit orders on the buy side at advantageous prices just in case the news goes his way (or at least that is how it looks). If he doesn't put the limit orders out then it is case closed and he gets the 52k back. But putting the limit orders out puts the situation into a whole different playing field in my opinion.
The problem is that these situations will happen occasionally on any system. If I called into IB and got the go ahead to close out a position by a customer service representative, then I would close out that position without hesitation. IB monitors their phone calls so it would be an easy check on their part to know you were given the green light. And then if the position were not real, you would not be liable.
If someone at IB gives you the green light to minimize risk on a position, then I would contend you are no longer liable for what happens if the person giving you that advice was wrong.
Let me get this straight: You believe that if I close a "phantom position", then call IB, that they are then going to "take it out of my account", after I call them, leaving me with a position? LOL. I don't think so. OldTrader
I would imagine that if you close a phantom position. That you can argue legally (i.e. in court) that you were trying to mitigate your risk. Can't see how IB can argue that gee we removed the phantom order, since you traded in the opposite direction, you are stuck with the position because you triggered the order. If you traded the exact opposite position clearly it was prompted by the phantom. I would think they would not have a leg to stand on.
An interesting thread. Thanks to zzzap for posting and allowing IBj to make the conclusions public. Also a side note thanks to QuantPlus and GTS for some very informative and clarifying posts. I have read a lot of back and forth about whether the position should have been closed immediately upon discovery by the OP. I can understand the argument that an "error" position should be closed immediately, however, I think this depends on what type of error potion has been created in the account and if that is even discernable at the time of the error. For instance, what if I log into my TWS one day, check my open positions only to find that at the start of the trading day my account included a net loss position in a stock I have never traded before. I then immediately "close out" the error position to mitigate my losses. I call IB only to find that the error was actually just a display error. Such that no such position actually occurred in my account, TWS just displayed that it had. So by closing the position, I have in fact created an actual position in my account that is net directional opposite the "error trade". In this case, would IB cover any potential losses that could now result from this user submitted correcting trade, were the trade to subsequently have turned back the other direction? The main concern for me is the length of time that it often takes (perhaps it's just me) to get through to IB on the phone. A lot can happen in 5 or 10 minutes, yet I have recently waited longer than that during market hours to get through to IB. This is of course understandable to a degree, IB has very low commissions, and I am sure they are keenly aware of their overhead. So consequently I don't know what sort of solution would adequately reduce the time required to contact IB. Perhaps they could set up a "batline" of sorts An emergency line that you can call for possible errors of this sort. They could fund its overhead and costs with a call fee, in the order of $50 or less hopefully. That way if your call turns out to be for a legitimate problem, they could decide to waive the call fee and hopefully trading emergencies would be dealt with in a much more timely manner. But the fee could be a deterrent for abusively frequent calls. I just wanted to clarify, as I thought this is a situation that others such as GTS have been suggesting. If the above is for some reason impossible then please just ignore my post as I am not really that computer savvy and do not fully understand IB's software.