Disaster Planning

This is a discussion on Disaster Planning within the Trading Systems forums, part of the Methods category; Salty, A native stop is one held at the exchange. A simulated stop is held by the broker and then ...

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Old Jan 15, 2005, 7:05pm   #9
 
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Salty,

A native stop is one held at the exchange. A simulated stop is held by the broker and then transmitted, usually as a market or limit order, when triggered. Native stops will be triggered even if the IB servers go down because they're already in the exchange order book. An example of a native stop is a stop-limit order on Globex. Not many exchanges seem to support native stops unfortunately.

Native orders also tend to be filled faster than simulated ones because they're already ahead of them in the 'queue' and there is a slight time delay while IB converts a simulated stop into a market order and then transmits it.

I don't trade US stocks but as far as I can see from IB's website stop orders are not native on AMEX, ARCA, BTRADE, BRUT, INET, NASDAQ SuperSoes/Montage or NYSE but Bramble, T333 or Mr Charts may know better.

Sudden stock suspension is a risk and one of the reasons I no longer trade them. I'm sorry I can't help you there.

I hope IB have failsafes like UPS and mirror servers or a lot of our orders could fail to be sent to the exchange in the event of a power outage.
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Old Jan 15, 2005, 7:27pm   #10
 
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Trading halts appear to be more common than trading suspensions.

Look at histories of both here :-

http://www.sec.gov/litigation/suspensions.shtml

http://nasdaqtrader.com/asp/TradeHaltHistIndex.asp


Would anyone like to put odds of being caught up in one of these over a 10 year day-trading period where you are in and out of trades during the day ( trading in Nasdaq 100 stocks only )and never carry overnight positions ?

Odds of 2-1, 3-1, 5-1, 10-1, 100-1 ...........??


Anybody got any thoughts on this ?

Last edited by Salty Gibbon; Jan 15, 2005 at 8:39pm.
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Old Jan 15, 2005, 8:36pm   #11
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Good idea for a thread Mr Bramble.

Furgi said "I'm not convinced that an intraday trader who never holds overnight has too much to worry about from a catastrophe, as long as (s)he always has a native stop in the market."

This statement assumes all catastrophe's happen overnight. Should we not ask what will happen to ones risk control is the market ceases to trade for what ever reason when it's open (and I'm assuming any stops can't be activated). 9/11 occured when main US market were closed. I assume they would have had to have closed if they were open and would have then re-openned over 7% down a week later.
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Old Jan 15, 2005, 8:43pm   #12
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Disaster Planning:

Hospitalisation: What if you can't close your positions down. Can someone else and do they know how to? (or even sudden death; are your dependents going to know what to do re your positions).

Fire at your trading station: Off site or fireproof storage of key documents/PC files/contacts/postitions etc.

Ditto flooding, power outage etc.
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Old Jan 15, 2005, 9:00pm   #13
 
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I didn't mean catastrophes only happen overnight, Tuffty.

I was assuming, very possibly wrongly, that the market cannot be halted/closed, or lose all its bids and offers, in so short a time that one couldn't exit first. We are talking a few seconds here at most.

For instance, the FTSE reaction to 9/11 was much slower than I would have imagined it to be given the gravity of the situation.

I'm trying to find an intraday FTSE or Dax chart of the day but haven't managed to yet.

The other hazards you mention are good reasons, imho, to always have a stop in place. My worry is not that the market I trade will close or fall millions of points before it is filled, but that the stop will never reach the market because of a failure by my broker.
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Old Jan 15, 2005, 9:07pm   #14
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frugi, But you are assuming you'll be able to get out. Depending on the disaster you may not! I don't know enough about the various exchanges disaster planning to fully understand what assumptions are correct or not.
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Old Jan 15, 2005, 9:14pm   #15
 
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I admit I am making a foolhardy assumption.

A direct attack on the exchange's infrastructure that somehow instantaneously erases all resting orders in the market and prohibits any further trades taking place, for example, would certainly be deeply unpleasant.Now I think about it, the same could happen to any account where one held money. Nasty.
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Old Jan 15, 2005, 9:34pm   #16
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Frugi, The S&P Futures on 9/11 were around 1102 falling to 1095 after the first plane strike then falling to 1070 after the second after which they stabilised at around 1075 to 1080.

If one was not able to get out the spread betters would still hopefully be up and running and one may be able to hedge. I'm not sure if they continued a 'grey' market in US indecies on/after 9/11.
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