Brokers and Disaster Safeguards

Discussions about brokerage firms for futures, stocks and other tradeable instruments.
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cymond
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Brokers and Disaster Safeguards

Post by cymond » Fri Jul 15, 2011 7:03 pm

Whilst reading the threads on disaster recovery options, one issue that comes to mind(especially as a sole operator without human back-up), is physical incapacity (for any reason). And of course this is just as likely as technology failure.

Technology failure is arguably easier to recover from than human failure, since with the former you are at least still available to issue instructions to go flat until the technology issue is resolved. With the latter, there is the nightmare scenario of being stuck in open positions whilst unable to get in contact to issue instructions.

I'm curious about how to implement safeguards with a broker (especially the online discount variety) to assume the 'all is not well with the client' condition - and automatically close positions until contact is resumed.

The only indicator I can think of, at least for my own trading, is a failure to log on to my account for a specific number of days in a row - but perhaps, for others, there are more tell-tale signs that could be used as indicators.

What schemes do others use?

Moto moto
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Post by Moto moto » Sun Jul 17, 2011 8:58 pm

I have a trading friend who I have known for years that can get access to my account if need be with simple instructions......exit all positions, go to cash, and then after that let the executor of my estate and accountants (in a worst cash scenario) handle it from there. I would not believe that a broker will adequately look after such an issue and so never really investigated it further.

rhc
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Post by rhc » Mon Jul 18, 2011 1:49 am

. . . . . . physical incapacity (for any reason). . . . . . . . . . . there is the nightmare scenario of being stuck in open positions whilst unable to get in contact to issue instructions.

One way to minimise this risk is to have fixed stops that are IN the market on all open positions.
Another, is to trade futures that are cash settled rather than settled via physical delivery.
Most (all?) futures traded online through IB are cash settled.

In this way if you are hit by a falling Durian ,at least your positions will be exited at some stage via your stop and you won’t have 40,000 lbs of Pork Bellies(*) arriving unannounced at your front door.

Yet another way is to write out a step by step guide with passwords & account numbers that you can give to someone you Trust that can close out your online positions if disaster strikes.
Yes, that was Trust with a capital ‘T’



Sidenote:
(*) Fans of the movie “Trading placesâ€

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