Horror Stories

Does anyone have interesting horror stories of on-line trading problems, and whether any redress could be obtained from their broker (apologies if this subject is old hat - I’m new here).

I guess everyone must have their own tale - software crashes and inadequate backup happen to us all. However my own worst experience was a broker glitch that indicated a short sell in three index futures after I placed a buy order in just one contract. An hour of phoning established that the execution had been a buy, but filled three times. Needless to say the market had dropped 1 per cent and I swallowed the loss. The broker blamed a software bug at the exchange and cited the no warranty clause in the on-line trading contract.

Another recent scare was a power cut that took down all my systems, but fortunately no positions were open at the time.

These experiences certainly leave me nervous to trade in size on line. Does anyone else have similar stories to tell?

 

My only real "horror" story was about a year ago. I was trading with CyberTrader 3.0.

I was short INTU (I believe) and the position moved against me. I decided to get out using Cyber's "intelligent order routing". As it turned out the "intelligent order routing", also called CyberXChange, continued to put out orders way outside the market that would never get filled. While the system continued to attempt at prices that would never execute, the stock moved several points against me.

After a bit of "discussion" with cyberCorp they agreed that their systems had indeed not behaved correctly, and they refunded me the loss caused by their system.

While I was very frazzled about the incident at the time, I have to commend CyberTrader for accepting the responsibility and eating the loss their system created.

 

I suggest you look into battery backups for your trading system. Especially if you occasionally take large positions for brief moves. I know mine have easily paid for themselves. I have my systems (PC, monitors, cable modem and router) on battery backup that gives me 15-25 minutes to exit positions when my house loses power.

Decent ones run $150 each and up and it may take several to keep your whole system up and running (depending on the size and number of monitors). Several times a year mine kick in while I'm trading and I smile knowing that my return on that investment is several hundred %.

Its kind of funny when it happens because my TV and lights shut off while 2 of my 3 PC's and multiple monitors just keep humming along without missing a beat. I have left one of my PC's unprotected because I do not run anything on it thats directly related to trading.

 

I wouldn't trade without my APCs. They are incredibly cheap insurance. I keep my cable modem and router on the backup as well and have actually had times when the power outage was localized enough that my broadband remained live. On another occasion I had to switch over to pots.

I also won't trade without a cell phone next to me charged up and ready to go with all emergency broker numbers on speed dial. It is my last line of defense. I've never yet had to use it.

JB

 

I've had a trade cancelled a few weeks ago, when the dax future dropped 800 points because of a mistake. I had a short position in an eurostoxx50 future, and closed my position immediately. After the market closed, they cancelled the trade, which left me with an open position overnight. About a month ago i tried to close a position, but the TWS didn't accept my order. I could not get out, and i lost some money. But in the 2 years i'm using TWS these were the only 'horrifying things'.

Observer

 

Not really horrifying, but it is really easy to buy instead of sell when you are first getting used to IB's order entry system. It is a little counter-intuitive until you get used to it.

Best to try to avoid the horror stories if you can. As an internet or broker's system outage can happen at any time I enter a "drop-dead" stop exit on any position as soon as it is confirmed. It may not be the one I actually use if all goes well, but there is nothing like the feeling of being helpless as the market moves against you.

 

I had a nightmare with Datek that essentially ended my trading relationship with them. Their browser based order entry screen didn't have seperate buttons for "sell" and "sell short" like every other broker I had ever seen. Considering that their interface is slow to respond to order entries, this is a recipe for diaster. I tried to close a long and hit the "sell" button but saw no response. I waited about 10 more seconds and decided to hit the "sell" button again since it seemed that it did not receive my orignal entry. Much to my suprise, not only did it close my long, but it also took me short. I didn't discover this until 10 minutes later when I noticed that I had a losing short position. Unsuprisingly, customer service blamed it entirely on me ..... and that was the last time I traded with Datek.

 

Just FYI, if you have a cable modem and a UPS, and the power goes out in your neighborhood, your Internet connection may go down too (depends where the cable co's router is), even if your computer stays running. So make sure you have a 56K modem and ISP ready to go.

 

I had 400sh of a stock on Tuesday. My sell limit order didn't trigger (and it should have) so after a minute I cancelled it and got out quickly with a market order. Fortunately, while I was nervously waiting for my darn limit order to trigger the price went up and I ended up making an additional $93. I KNOW that my broker would have corrected it if I'd lost money because of the order not triggering. They're one of the large discount brokers so they have excellent trade tracking software and a reputation to keep.