Disaster avoidance


Friday afternoon was a frustrating afternoon, one that happens every so often and which has to be planned for. I was keen, my laptop was working, the connection to the outside world was ’excellent’, but could I get into the ’web’?- not a chance!. Everything was jammed up, whether it was just me or everybody I don’t know. So, I couldn’t update pipsblog, not the end of the world , but frustrating. Luckily I did not have any positions. But if I had, the market had gone against me and I couldn’t trade online - the forex market doesn’t take excuses. You must have a back-up. Technology melt-down can happen at any time. Whether it is local, like spilling a coffee with 16 sugars in all over your laptop, or a gang of jolly workmen digging a hole in the road ‘accidentally’ chopping through cables, or worldwide virus infection . You must at all times protect yourself from ’Financial meltdown’. Either you must have the discipline of always putting a stop loss order for every open position that you have, or you must have some mechanism for limiting your losses. Some brokers will take ‘overall account’ stop losses , so that they will close out all your positions if you go below a certain level, but even then brokers will not be ’held’ to this as many will only trigger this at the end of the day , by which time its too late. If you are dealing online with a broker, always have stored somewhere other than on your computer a phone number for that broker and if possible an alternative. You should always ideally have two accounts / brokers, or at least have the facility to trade at two, and again ideally they should be placed in two different geographical locations. In the industry they call it ‘disaster recovery’, try and make it ‘disaster avoidance’. By the same token it is never a bad idea to at least have a ’windfall profit’ order in on the profit side. That is an order that is way beyond the expected range for the day, “but you never know , in case it gets volatile” type order. The sort of order you need on trading days of a full moon - but that is the subject of another piece.