Risk management practices to protect against fat finger mistakes

Discussion in 'Risk Management' started by helpme_please, Jan 22, 2018.

  1. I am using Interactive Brokers for stocks and futures. With a margin account, it is possible to make silly fat finger mistakes like;
    - buy instead of sell and vice versa. Happened before quite a number of times.
    - key in extra zero. Happened before but thankfully, I keyed in many more zeros and IB caught the mistake.
    - mistake USD with JPY. So far, not yet happen.
    - accidentally short-sell. Happened before. Took the losses to buy back immediately.
    - mistake number of future contracts with number of shares. Thank god not yet happen.

    The prospect of fat finger mistakes gives me nightmares because it can throw me and my family into poverty.

    We are all humans. Over a multi-decade trading career with relatively high trading frequency, occasional careless mistakes are quite hard to avoid.

    How do elite traders on this forum manage this risk, given that even professional traders can make such mistakes? I am a retail trader/investor.
    Last edited: Jan 22, 2018
    murray t turtle likes this.
  2. Exaclty that happend when i traded cfds with IB. If you trade forex or cfd thats IB hustling you. I closed my account because of that.
  3. Handle123


    Use one DOME for buys with background of Blue and a 2nd for sells background red.

    But sounds you are too stressed out, so reduce lots/shares or better, code system and never have fat finger mistakes.
  4. IMHO: some suggestions
    1) consider the types of errors you have made (and almost made), and develop a process for minimizing them.
    2) reduce the quantity of trades and/or types of trades you make, to reduce the error rate.
    3) Develop a process (automated if possible) to detect errors quickly. Most times, if errors are detected quickly, the loss is minimized.
    4) Consider reducing your trading size, such that trade mistakes cannot possibly "throw your family into poverty". -- (Likely entails reducing size of your account)
    5) Consider professional management for lion's share of your portfolio. Or transition most(?) assets to a more passive portfolio. -- (requires conscious decision to "give up hope" for the big gains!)

    BTW: You are NOT alone!
    murray t turtle likes this.
  5. tommcginnis


    IB's TWS has all sorts of fat-finger protections.
    These are the sorts of things you might've hit with a check-mark to
    "Please never show this to me again..."

    FIND that Global Config area, and un-check all those protective boxes.

    Only re-check them after a season or two of comfort.

    (Lastly, if this be true??
    Dude -- you are playing with the seed corn. DON'T eat your seed corn.)
  6. %%
    Good question.
    Trading with the long term trend/medium term trend helps. BUT much more helpful, i keep a [paper]notebook+ double check it:caution::caution:
    The mistake of mixing # of futures contracts , with stocks could be deadly, wow;
    doing a plan , not during market hours, could help a lot. Good thing derivative charts do not resemble stock chart@ all.........
  7. zdreg


    why place the blame on the brokerage firm for your fat finger error? explain the hustle or I will think that you are talking about a dance.
    Last edited: Jan 22, 2018
  8. tomorton


    Always set a stop-loss for every trade as soon as you open it. Preferably enter a trade vi a n order to take advantage of technical confirmation of your hypothesis and set the SL at the same time as you set the order. This eliminates heat of the moment errors too.

    BTW, if you try to set a SL above entry price on a long trade, its likely whatever platform you're using will reject this when you click to set it. That's your cue to check what you've already done.

    Check your position and overall unrealised profits/losses every evening.
  9. RRY16


    Most order entry has a confirm that will pop up before you send the order so you can double check, if that doesn't suit you let your wife or 2year old take over your order execution.
    murray t turtle likes this.
  10. How fast are needing to make trading decisions and enter orders? How many trades are you making in a day? Are you intraday scalping using short time period analysis or swing trading over days / weeks?

    Knowing your trading style will probably illicit different suggestions.
    #10     Jan 22, 2018