Protect Yourself

BarroMetrics Views: Protect Yourself

Yesterday the routines I have for self-protection came to the fore. Let me stress that I did not need to resort to their use; my current broker immediately offered to reverse the trade….but I am jumping ahead of my self.

Here’s what happened, but first, let me tell you about my routines.

Processes

I use Snagit to create a screen capture before and after I place an order; in the process, I capture my open positions and open equity. What is important here is this: in the event of a dispute, I have a proven history of a recorded process to support my case. (BTW, Windows has a free screen capture tool called ‘Snipping’).

Event

Yesterday, as is my practice,  I checked my Open Positions around 14:00 HK in preparation for the London open. After the analysis, I took a short nap. When I awoke, I found that the platform had logged me out. I had considerable difficulty logging back in, and, when I finally did so, I found that my open short positions in the AUDUSD had been reduced by 77%!

I soon found out why.

Between the time I checked the Open Positions, and re-logging in, an order had been executed to buy at .9598. That is an order that I had not placed.

So:

  1. I immediately reinstated the position at . 9633. 
  2. Then, I called the manager to give him a ‘heads up’ on what had happened i.e. the fact that there had been an ‘unauthorised buy’ executed on my account. He immediately offered to reverse the trade. Given that I just received a windfall of 35 pips per lot, I said I’d keep the trade. (natch). 

Now, compare this response with that of Interactive Brokers – see  “Pot Pourri” March 20, 2008 – what a world of difference. The response is just what traders want in an excellent broker.

And the name of the broker?……

……..CMC  Singapore

And the name of the manager …Matt Lewis.

That said, what if the matter had gone to arbitration?

My experience is a trader will be given the benefit of the doubt IF he can show that he approaches his trading with care and has the records to prove it. Show you do have a set of routines and habits to guard against a Black Swan, and you will go a long way to establishing the balance of probabilities on your side.

So, do you keep screen captures of all your activities or are you relying on the platform? If the latter, in a Black Swan, how will you show the platform made a mistake?

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