Continuing the examination of problems with Electronic Trading Platforms, one of the most prevalent and costly problems I have experienced in managing electronic trading desks comes from clients and order brokers that duplicate the entry of and order. The primary rationale for “duping” these orders is that the order confirmation does not appear on the screen in the expected time.
A trader natural inclination may often be to just reenter the order, assuming that the order simply did not take. There are a number of points along the communication line between the trader’s computer terminal and the institutions server where a breakdown or slowdown can occur. The slowdowns can be particularly prevalent during periods of high volume, such as right after the release of economic data that surprises the market and spikes trading activity.
If your order fails to confirm, I suggest implementing the following action checklist;
• Be Calm!
• Check your internet connection to see if connectivity has been lost. Your router may need to be reset or the platform may need to be exited & signed back into.
• Check the other windows on your platform to see if the order has been routed there. An order that was supposed to be entered as a limit order may be routed to the order fill window if the price was entered incorrectly or entered as the wrong type of order (stop order vs. limit order, etc)
• Call your broker or customer service provider to have them check on their platform or server if the order is currently working. If they are unable to confirm the orders status, have them contact the exchange where the product trades (CME GLOBEX, ICE exchange for most US futures products as an example).
• After completing these steps, if the order can be confirmed not working then consider reentering the order into the system. Be sensitive to continuing problems with order entry. If they continue, it may be a computer problem that requires service. Consider using the Customer Service Desk to exit, modify, or enter orders until the computer can be checked over.
• BE CALM!
The trading and investing environment is challenging enough without providing additional “donations” of your capital through avoidable execution mistakes. Remember your trading agreement essentially absolves the financial firm from any responsibility (trade at your own risk!). It is vital that traders make as serious a commitment to developing their order execution strategies as they do their market analysis and capital risk management.
To review other elements of trading execution, please review my recent articles posted in foamcage.com
If you would like a powerpoint of some of the order execution guidelines reviewed in these articles, please email me and I will be happy to send to you.