The Man Who Broke Britain

jtrader said:
Hi

I watched the program and (selflessly) was trying to figure out how such an event/combination of events might affect me as an intraday spot or futures forex, indices futures, or spreadbetting (all financial derivatives) trader. Besides a few spikes within the market action around the time of such a news event and a market that gaps - resulting in difficulty in exiting open trades - are there any other effects or consequences that I should be aware of or worry about?

Cheers

jtrader.
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The lingering thought that crossed my mind is how might your broker be effected by some degree of financial meltdown like this. While one can cogitate and speculate about what stocks you may be in or not and how you could get out etc, if your broker was to go down it would all be a moot point. :cry:
 
This has reminded me that there was a Hollywood film made sometime in the 80s or early 90s which was about global financial meltdown. I don't remember the details, I only caught the end of it and have been trying to find it since. Does anyone have any idea what film this might be?

I haven't watched last night's program yet, but if it's anything like 'The Day Britain Stopped’ (same team) I'm sure it's compelling but somewhat manipulative viewing.

KenN
 
jtrader "are there any other effects or consequences that I should be aware of or worry about?"

Not being able to get one's hands on ones money. Time to open that Swiss bank account and buy a few bars of Gold? We may well need them one day! It's all happenned before it'll happen again. I remember reading about one such rush on the Bank of England. They used to employ people to join the queue (wanting their money) who just used to go round and round to slow the process down. It's all about confidence (or a confidence trick depending on how you look at it).
 
As for Crude plays.
I hear that OTM puts in crude might be a good sale right now.
This is not investment advice incidentally, just heard a few people had this already done yesterday.
 
roguetrader -
The lingering thought that crossed my mind is how might your broker be effected by some degree of financial meltdown like this. While one can cogitate and speculate about what stocks you may be in or not and how you could get out etc, if your broker was to go down it would all be a moot point.
Click to expand...

This is my worry....
A) not being able to close positions - due to the system going down etc...........But maybe this would not happen immediately following an event.
B) Not being able to withdraw funds.

A brokerage account (such as Oanda, RJOFX etc. I think) that guarantees that your account balance will not fall below zero is a good starting point.

It was interesting how the program showed the domino effect of chaos caused - to the point where customers were queueing outside banks to withdraw their savings - due to a total loss of confidence in the financial system/s.
 
Did anyone watch this program, and spot something, which perhaps they hadn't thought of, or were unaware of before, which made them think - perhaps trading for a living is too risky for me!

I didn't think this - my main concerns as mentioned were -

A) not being able to close positions - due to the system going down etc...........But maybe this would not happen immediately following an event.
B) Not being able to withdraw funds.

Cheers

jtrader.
 
from jtrader:
Did anyone watch this program, and spot something, which perhaps they hadn't thought of, or were unaware of before, which made them think - perhaps trading for a living is too risky for me!
Click to expand...

I think this depends on your time frame.

A daytrader might even be able to capitalise on the fall if they're quick enough, or at least losses shouldn't be too bad if they've got a stop-loss in place.

People holding overnight positions (who are long) would be stuffed though.

The scenario depicted in the programme shouldn't put people off.

Is they're a mechanism to halt bourses if they fall too much anyway?
 
not being able to close positions - due to the system going down
Click to expand...

This is not uncommon with direct exchange connections, usually due telco problems. It generally leads to a desperate call to the exchange to yank all orders or to a broker to try and get the hell out. If entire exchange goes down due some catastrophe then better just think of good hedge somewhere still open or about disappearing.
 
Thought the program gave derivatives an unfair bad press.
It always seems that the media regard them as the financial instruments of satan.

Don't see anyone talking about supposedly nice safe government bonds crashing the system
but I think the US debt is a far more realistic source of potential meltdown.
 
This is not uncommon with direct exchange connections, usually due telco problems. It generally leads to a desperate call to the exchange to yank all orders or to a broker to try and get the hell out. If entire exchange goes down due some catastrophe then better just think of good hedge somewhere still open or about disappearing.
Click to expand...

Hi twalker

just a few questions spring to mind.............

under what circumstances would/have direct exchange connections go/have gone - down?

What is a direct exchange connection? is it simply the link to an exchange that any Direct market access trader would have?

by telco problems - do you mean Internet connection problems?

Why would an entire exchange go down to some catastrophe? and when has this happened previously? Would this automatically result in any open trades becoming non-exitable?

Cheers

jtrader.
 
The global economy must have missed my activities today - didn't even cause a tremour in my small change :(

Just watch the markets tremble on Monday though :devilish:

Good trading

jon
 
under what circumstances would/have direct exchange connections go/have gone - down?
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Exchange connections fail all the time often due to incompetence. Usually this is due to something in the exchange server room that does not have adequate redundant backup but LIFFE went down for more than a day in 2003 due to a major computer failure. It is important to have the ability to trade a similar product on a different exchange so you can hedge your position if you cannot get out.
 
jmreeve -
It is important to have the ability to trade a similar product on a different exchange so you can hedge your position if you cannot get out.
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Hi jmreeve

so say I have a long open trade in 2 CME ES contracts, the exchange goes down, and the price drops by 10 points - before I can access the exchange again. Will I have lost the 10 points?..............If the exchange does go down, surely it must come back on at the same price as it went down at - as if no trader can access the exchange - how could the exchange come back up at a different price?

Cheers

jtrader.
 
so say I have a long open trade in 2 CME ES contracts, the exchange goes down, and the price drops by 10 points - before I can access the exchange again. Will I have lost the 10 points?..............If the exchange does go down, surely it must come back on at the same price as it went down at - as if no trader can access the exchange - how could the exchange come back up at a different price?
Click to expand...

The exchange will come back on at the price the market dictates. If events mean that a different price is appropriate at the time the exchange comes back up then this is where it will start trading. If the exchange were to fail you could hedge your ES contracts by selling mini DOWs on CBOT. In addition to failures there are also a set of rules for conditions where the exchange can halt trading so you should also be aware of these.
 
Thanks Guys

on the point of exchanges going down - in order to get a better idea of frequency of occurrence, does anyone know how often there have been exchange failures at LIFFE, CME, CBOT, NYSE or LSE - say in the last 3 years?

If it is common - do exchanges usually come back on in minutes, rather than hours or days?

I know that there are rules on some exchanges that are there to limit the daily range of movement in the futures market. If this limit is breached, does the exchange then go down for the rest of the day? if so, how often does this tend to happen on any exchange that you are familiar with?


Cheers

jtrader.
 
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jmreeve -
The exchange will come back on at the price the market dictates. If events mean that a different price is appropriate at the time the exchange comes back up then this is where it will start trading. If the exchange were to fail you could hedge your ES contracts by selling mini DOWs on CBOT. In addition to failures there are also a set of rules for conditions where the exchange can halt trading so you should also be aware of these.
Click to expand...

Hi

if you were to say - hedge a long CME instrument position with a short CBOT instrument position, suppose there is a danger that your hedge position could lose more than your original position makes. Or, your hedge position may not make as much profit as your original position (on the exchange that is down) loses....................Given that you would not know at what price the exchange may come back online, or how far the hedge trade may move within that time frame - how can a trader try to ensure that their hedge position neatly cancels out the first trade (more or less), rather than adds to the loss of the first trade? (hope that all makes sense)

Thanks again

jtrader.
 
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GammaJammer -
In the example you gave, when the market re-opens, it's very unlikely to be at the same price, as I am for the purpose of this thread assuming that whatever caused the exchange to go down in the first place has some price relevance (financial crisis etc). So new info has entered the equation when it reopens, and the price moves to a new equilibrium point.
Click to expand...

Hi

have any of you known an exchange to go down due to some major news/event? If so, when and for how long?

Cheers

jtrader.
 
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