Lost 4.200€ on a Interactive Brokers TWS malfunction.

[horace]

Please forgive my English (it’s not as good as it should).

My intention with this letter is to warn other traders on the problem that I had so that, as far as possible, they can avoid it in the future.

On December 10th, I lost 4.200 euro cause the TWS from (Interactive Brokers) failed to operate correctly.

I’m going to summarize. I had an open position in futures contracts. It was covered with stop loss and profit taking orders. The way it must be. Those orders were linked so that when one executes the others get automatically cancelled. It is a very common way of trading that usually works well.

And I say usually because in this case it didn’t. Somehow (no need to explain the details at this moment) two of the three associated orders (there was also a trailing stop) where entered at the same price. In this case IB didn’t fulfill it’s commitment to cancel all orders when one is filled. So, two of them got filled. leaving and open position on the market. Obviously I was not expecting this type of behavior and, therefore, didn’t realize what was going on until it was far to late. When I closed the position I had already lost 4.200€.

Naturally I entered my complaint and was fighting with IB reps during almost 1 month. I reached the maximum organization level I was allowed to. The person who finally decided on this is called Christopher Cannatello.

Arguing that this functionality is “not guaranteed” he denied any compensation. I’m an IB client since 2004. I can’t tell how many thousands of euros I’ve paid IB since then for commissions. But it seems that they do not take this (or any other) matter into account.

So I really recommend you to closely watch your trades when you work with IB. Don’t rely on the correct operation of the TWS. It works almost always. But when it does not work it is impossible that nobody becomes responsible for it.

 

[shadowninja]

Thanks for the warning; if the platform isn't reliable then it is dangerous. Is there anything in the contract that says it isn't guaranteed? Could be worth taking them to court. 4200 euros is a lot of money.

PS Your english is a lot better than many English people's.

 

[Splitlink]

Please forgive my English (it’s not as good as it should).

My intention with this letter is to warn other traders on the problem that I had so that, as far as possible, they can avoid it in the future.

On December 10th, I lost 4.200 euro cause the TWS from (Interactive Brokers) failed to operate correctly.

I’m going to summarize. I had an open position in futures contracts. It was covered with stop loss and profit taking orders. The way it must be. Those orders were linked so that when one executes the others get automatically cancelled. It is a very common way of trading that usually works well.

And I say usually because in this case it didn’t. Somehow (no need to explain the details at this moment) two of the three associated orders (there was also a trailing stop) where entered at the same price. In this case IB didn’t fulfill it’s commitment to cancel all orders when one is filled. So, two of them got filled. leaving and open position on the market. Obviously I was not expecting this type of behavior and, therefore, didn’t realize what was going on until it was far to late. When I closed the position I had already lost 4.200€.

Naturally I entered my complaint and was fighting with IB reps during almost 1 month. I reached the maximum organization level I was allowed to. The person who finally decided on this is called Christopher Cannatello.

Arguing that this functionality is “not guaranteed” he denied any compensation. I’m an IB client since 2004. I can’t tell how many thousands of euros I’ve paid IB since then for commissions. But it seems that they do not take this (or any other) matter into account.

So I really recommend you to closely watch your trades when you work with IB. Don’t rely on the correct operation of the TWS. It works almost always. But when it does not work it is impossible that nobody becomes responsible for it.

Very sorry for your experience. I have been an active user of IB and must admit to a dislike of their client communication service.

However, I have never had problems with their TWS platform. Trailing Stops are, clearly, not guaranteed by them because the exchange does not accept them. They are a broker service and if their site was to crash then they would not be able to activate the stop. so they accept trailing stops with reservations.

Trailing stops seem such a fantastic idea to lots of traders and they are, as far as you can trust a good broker to activate them. You have to recognise, though, that that one remote possibilty of a failure exists.

Split

 

[dcraig1]

Please forgive my English (it’s not as good as it should).

My intention with this letter is to warn other traders on the problem that I had so that, as far as possible, they can avoid it in the future.

On December 10th, I lost 4.200 euro cause the TWS from (Interactive Brokers) failed to operate correctly.

I’m going to summarize. I had an open position in futures contracts. It was covered with stop loss and profit taking orders. The way it must be. Those orders were linked so that when one executes the others get automatically cancelled. It is a very common way of trading that usually works well.

And I say usually because in this case it didn’t. Somehow (no need to explain the details at this moment) two of the three associated orders (there was also a trailing stop) where entered at the same price. In this case IB didn’t fulfill it’s commitment to cancel all orders when one is filled. So, two of them got filled. leaving and open position on the market. Obviously I was not expecting this type of behavior and, therefore, didn’t realize what was going on until it was far to late. When I closed the position I had already lost 4.200€.

Naturally I entered my complaint and was fighting with IB reps during almost 1 month. I reached the maximum organization level I was allowed to. The person who finally decided on this is called Christopher Cannatello.

Arguing that this functionality is “not guaranteed” he denied any compensation. I’m an IB client since 2004. I can’t tell how many thousands of euros I’ve paid IB since then for commissions. But it seems that they do not take this (or any other) matter into account.

So I really recommend you to closely watch your trades when you work with IB. Don’t rely on the correct operation of the TWS. It works almost always. But when it does not work it is impossible that nobody becomes responsible for it.

As far as I understand what you were doing, you imply that you had a stop and a trailing stop (in an OCA group together with a limit order) both triggering at the same price, thereby yielding an unwanted position.

If that is the case, then it's "just the way it works" and not a problem with TWS.

If that is not the case could you please supply the exact sequence of orders, cancellations and executions.

To other posters, I suggest that making assumptions about TWS reliability is unjustified without exact details of the issue at hand.

 

[tomorton]

Hi horace -

I don't necessarily agree you have been treated wrongly. The spreadbetting firm I use has a facility which allows me to place 2 opposing orders in the same market, e.g. Buy Dow at 12,600, Sell Dow at 12,000. If I have a long position open on the Dow, this allows me to have a take-profits order at 12,600 and a stop-loss at 12,300, so far, same as your position - whichever of these orders is triggered first, the other is automatically cancelled. But the point is that only one order is cancelled. If I had a third order on the Dow, this would remain valid and would be triggered when reached. Maybe your platform is the same?

 

[Splitlink]

As I understand it, every order is placed at the exchange, with the exception of the trailing stop, so the broker does not have to guarantee anything, except the placing of them. I read, when I opened my account, that trailing stops are not guaranteed. If a trailing stop was involved in any of the sequences described by Horace, then that could be the reason that IB refused responsibility.

Re: dcraig1's comment

To other posters, I suggest that making assumptions about TWS reliability is unjustified without exact details of the issue at hand.

I would add

Because it is unfair.

Split

 

[grantx]

Horace,

"Arguing that this functionality is “not guaranteed” he denied any compensation."

Just dump the bstards. Also, you must complain to the CFTC and NFA (and SEC if applicable, but I doubt it) in the US. But don't tell IB what you are doing - maybe they'll get a shock.

I would argue the terms of the contract are potentially misleading - offer the facility but not guaranteed. In other words, it provides a false reassurance which is worthless and therefore deceptive. It's what we call a red-herring, or a form of entrapment or "baiting".

Grant.

 

[dcraig1]

Hi horace -

I don't necessarily agree you have been treated wrongly. The spreadbetting firm I use has a facility which allows me to place 2 opposing orders in the same market, e.g. Buy Dow at 12,600, Sell Dow at 12,000. If I have a long position open on the Dow, this allows me to have a take-profits order at 12,600 and a stop-loss at 12,300, so far, same as your position - whichever of these orders is triggered first, the other is automatically cancelled. But the point is that only one order is cancelled. If I had a third order on the Dow, this would remain valid and would be triggered when reached. Maybe your platform is the same?

With IB OCA order groups, you can place any number of orders (and as far as I know orders of any type) in an OCA group. When one of the orders is filled, then all others are cancelled.

But if you have two stops (one ordinary stop and one trailing stop) triggered at the same price, is is very possible that the hard stop (I assume resting at the exchange in the case of Eurex) has been filled, but the confirmation not received by IB before the trailing stop held at IB would have triggered. Hence, the stop and reverse behavior, that it seems may have occurred.

It is a "race condition" in software terms, and there is no "right" way to handle it.

 

[tomorton]

Thanks dcraig1 - my SB facility only allows OCO - One Cancels the Other for opposing orders in a market, but I see how this situation might have arisen. Just bad luck horace, keep it simpler next week.

 

[horace]

The issue here is not whether the trailing stop was guaranteed or not. The issue is the OCA function is nos guaranteed.

I undestand (you can be sure) that the implementation of this functionality can fail when two orders are placed at the same price cause the speed of execution/acknowledgment/cancelation is nos fast enough. I completly understand this issue.

But this, gentlemen, is not my problem. I'm no broker, I'm a trader. And if they need to workaround this potencial speed issue go ahead. Do it. There are plenty of ways to solve this.

Besides, you need to dig deep into the TWS manual to be able to read the corresponding disclaimer. And, on the other end, nobody states nowhere that the TWS manual has to be read before trading.


So, IMOO, IB acted unfairly and not in a good faith basis. Money, money, money....

Regards,

Horace

P.S: TWS is an excellent platform. Probably the best. Pretty reliable. Except when it isn't.

 

[tomorton]

Hi horace -

I know you feel bad that you lost money on what was actually a good trade but don't you think you created some of this risk yourself? By having two orders in the same direction. Its annoying but if things go wrong (and they do) its going to hurt, fair or not.

That's why most traders who wish to manage risk have more than one account - sometimes one might be inaccessible but at least you can open an opposing position on the other.

Better luck next time I hope. But better to make your own luck.

 

[nine]

Commiserations on the loss Horace. So, it seems that the issue is that if you get 3 OCO orders (target, stop, trailing stop) and 2 of them are at one price then you can end up with an open position.

If as I assume, it was the two identical orders that got hit, then this actually makes sense because that's how all brokers work. If the OCO orders are too close together there is NO WAY that they can cancel them. I used to get warned by my full service brokers that if the OCO orders were at all close then there was a possibility they couldn't be cancelled.

Its not IBs fault. It wouldn't be another brokers fault either.

The takeaway message is: if your OCO orders get close enough that they can both be hit before your/your brokers system shuts the second one down you WILL have an outstanding position. Be careful people. If you trade like this while away from your machine you might want to set up a secondary system to monitor for outstanding positions.

 

[peto]

You might consider using a front-end. ButtonTrader would allow for the order combination you are using, but would only permit one closing order to be sent. If by some curious event you continued to run a position after 'closing' then it would be immediately obvious on BT .

 

[donaldduke]

I think the IB API has ability to avoid this problem, not sure if its available through TWS, but the previous poster says ButtonTrader might make it available.

When creating an OCA order with the IB API you can specify "with block":

"If you use a value "with block"gives your order
has overfill protection. This means that only one
order in the group will be routed at a time to
remove the possibility of an overfill."


Personally i dont use this flag, as it gives worse overall fills. I would rather take the small risk of an overfill and manually close out overfills myself.

 

[gamma]

Very sorry to hear about your loss.
my broker sends me a confirmation email of every order, trade,stop loss,trailing stop,oca, basically every instruction I put through.
This can later be used to backup any issues that might arise on either side.
Does I.B not do this?

 

[nine]

You get it live in real time gamma. No wait. Its there in front of your eyes if you want.

The issue is almost certainly as I put it ... two orders too close together can not be cancelled. Or given the OPs 3 orders apparently in simultaneous operation some variation on that theme. Donaldduke is also correct in that there is, for many of us, value in taking this risk. But like everything else in trading it is a RISK and thus requires that the TRADER manage it.

Good trading all

 

[horace]

You get it live in real time gamma. No wait. Its there in front of your eyes if you want.

The issue is almost certainly as I put it ... two orders too close together can not be cancelled. Or given the OPs 3 orders apparently in simultaneous operation some variation on that theme. Donaldduke is also correct in that there is, for many of us, value in taking this risk. But like everything else in trading it is a RISK and thus requires that the TRADER manage it.

Good trading all

Of course a trader mus manage risks, that is our business. The issue is those risk are to be known. I you don't know about them, how can you manage.

And OF COURSE two orders even at the same price can be managed to prevent an overfill. It's as simple as holding all but the first automatically when you detect the condition. Not dificult to think about, not difficult to implement.

Mut this, I'm afraid, is not the problem. The problem is the broker says OCA orders work one way and, under certain cirumstances, the do not. And they fail to admit this is, in part, hiding the risk you are talking about.

Regards....

 

[horace]

I think the IB API has ability to avoid this problem, not sure if its available through TWS, but the previous poster says ButtonTrader might make it available.

When creating an OCA order with the IB API you can specify "with block":

"If you use a value "with block"gives your order
has overfill protection. This means that only one
order in the group will be routed at a time to
remove the possibility of an overfill."


Personally i dont use this flag, as it gives worse overall fills. I would rather take the small risk of an overfill and manually close out overfills myself.

That is, for example, one way to work around the technical problem.