STRATEGY CHECKLIST FOR YOUR ELECTRONIC TRADING PLATFORM
For those watching the US Treasury market after Wednesday’s Federal Reserve announcement, the experience of watching volatility in action should serve as a reminder to master the tools of your electronic trading platform and have a “disaster plan” to deal with the potential problems that your financial institution will not take responsibility for. If you bite the bullet and actually read the details of your electronic trading agreement, it is essentially saying to Trade at your own risk!
Here are some strategies and tips to alleviate some of the risks that could add unwanted costs to your trading.
If you have decided to proceed with a self directed account, be sure to confirm with your client service representative that you are receiving the proper commission rate. Find out if this rate is negotiable based on elements such as account size, trading volume, and industry competition. The major difference between broker assisted and self directed trading accounts in this day and age is who takes the error risk in placing the trade. While this may seem contradictory be sure to find out if your firm has live trading assistance from an order execution desk in the event that you cannot access your trading platform. The firm should have 24 hour live service and be willing to execute trades for you at the self directed rate-as long as the client does not abuse the access. Otherwise the firm may seek to raise your commission rate.
Take the time to familiarize yourself with the features and market/trading access that the platform has to offer. A self directed trader needs to have a clear understanding of the following.
• Placing BUY/SELL orders. Traders need to be aware of how the defaults are set with regards to a order request. If the trader is looking to buy an instrument ,will the platform pull up the best offer price (the price that a financial instrument can be purchased immediately) or the current bid price (the price that a financial instrument can be sold for immediately)? The same question should be applied to sell orders. Traders need to know if their platform is always cocked to pull the trigger for order execution and if so must be especially careful to control the price entry field and the execution buttons.
Coming up later this week, I will cover more detailed strategies to create an electronic trading platform “disaster list”.
Please feel free to contact me with any questions or thoughts at firstname.lastname@example.org
Any recommendations or commentaries found in this analysis are strictly of an opinion based nature. Past Performance is not a guarantee of future results. There is a risk of substantial losses when undertaking any type of financial investment and one should consider carefully whether a financial product meet ones risk tolerance. Seek out the guidance of financial professionals to clarify elements of financial products and strategies that you do not fully understand. Any decisions to purchase or sell a financial vehicle will be the full responsibility of the person authorized to make such transactions.