When internet connection or power is lost?

Beginner Questions
1

What usually happens if your computer temporarily loses its internet connection, or if there is a power outage? Such things are not uncommon. I’ve heard conflicting reports over what exactly happens.

For instance, would your [B]open positions[/B] (already fulfilled trades) automatically CLOSE at whatever the current market value was, or would they stay as open positions until you logged back in? I don’t really understand why open [B]positions[/B] would reverse, because haven’t they already been fulfilled in the market, regardless of what happens on the client side?

What about [B]open orders[/B]? For instance, if you’ve set stop or limit orders that haven’t been fulfilled yet … would these be erased if you lost your connection or power?

It just seems very weird to me that open [B]positions[/B] would simply “exit” or “close” if you were to lose your connection. For one thing, wouldn’t that mean that you would need your lots re-bought or re-sold first? Why in the world would it automatically exit out of the trade? I can understand a margin call, but …

Secondly, what about people who are position traders and have open positions that last weeks or months? Do these people keep their software, computer, and internet connections going without [B]any interruption[/B] the entire time? Brief interruptions in service or a power outage are not uncommon in our world. Really don’t understand it at all.

Specifically, I’m using MB Trading’s Navigator, but what tripped me is that they said “trailing stops are server-sided and protected from disconnects,” which to me implies that other types of entry orders are client-sided and are [B]not[/B] protected from disconnects?

I really hope I’m misinterpreting something.

The thing is, if I end up with a margin call because my connection or power was out too long, then that is one thing. But an open trade automatically exiting out into a closed trade simply because you lost connection or power briefly makes absolutely no sense to me. I don’t understand why a fulfilled trade would even do that.

2

You are making a lot of assumptions first off, and then you are getting angry about your own assumptions! Stop assuming and you will be fine. :wink:

Without connection or power, the only thing that happens is that you are unable to place orders (and remember placing orders is what allows you to exit or enter trades). But there is little worry because any good broker will have a phone number where you can call to place orders, but without charts the most you can do is damage control at that point.

and oh, all orders already placed will be executed as expected, whether you and your computer are connected or not. Forums and learning are great, but without a little experience you will be doomed to frustrating situations like this in the future

3

Thank you, that is quite a relief to hear.

So hypothetically, if you were to open an actual trade (live), then shut down your computer and turn it back on the next day, the open position will not have exited or closed automatically?

This kind of situation doesn’t make any sense to me to begin with; the reason I was concerned is because I had read reports from other people on the web who claimed that their open positions had been closed after they lost their connection.

Also, I now think the reason why MB Trading indicates that “[I]trailing stops move your stop price with the price of the stock and are server-sided, protecting you in the event you lose internet connection[/I]” in their user manual for the Navigator platform is because most brokers offering MT4 don’t have server-sided trailing stops. But I guess this isn’t meant to imply that their other order entry types are client-sided.

So I am correct to assume then that any stops, limits, or TTOs that you set for your trade would be executed accordingly even if you’re not connected to the net?

4

All your orders, along with their SL and TP levels are stored on your broker’s computer, not yours. You can turn your computer off and nothing happens to your orders.

On MT4 trailing stops and Expert Advisors are a different story though. Your computer must be on, and MT4 must be running with an active internet connection for these two things to work.

5

Thank you, I just wanted to confirm that.

Even if your internet connection was out for an extended period of time, you could still monitor all of your trades and close them by using a public forum with internet access (like Starbucks or something).

But needing to keep everything open and connected for the duration of your open positions would be unacceptable.

6

Yep, and I’ve actually had to do this before! The electricity went out and I drove to McDonald’s to close my trades. :slight_smile:

7

Why would a position exit or close when power or connection is lost to server?

If that ever happened to me I would be refunded losses immediately.

First of all, that doesn’t happen, unless you have a really bad broker with bad software and there is a setting that says; when I power off, or lose connection, close all open positions at underlying market price; and that setting is turned on. (Totally making this up)

Well then your **** out of luck. But nothing like that exists.

When power goes off, or you lose connection, or your computer crashes and you have to reboot and your in the middle of a trade and you can’t get immediate access to your platform the best thing to do would be first of all, use a stop loss, ALWAYS. And use a TP, ALWAYS. It’s called risk to reward, alright, if you don;t place a stop and use a mental because your afraid of getting stopped out, well, you shouldn’t be trading.

In case of power disaster, have an extra connection, have an extra computer that you can log in to your platform with and monitor your trades.

Have your account information close by, have your brokers phone close by, you can call them when it happens and adjust your stop if you need to.

The only way an open position closes is by liquidation, so, either you close it by taking profit or a loss or break even, or you get a margin call.

Your trade doesn’t close simply because you closed your platform, come on now.

Make sure your protected.

8

This is a beautiful answer!! :slight_smile: :slight_smile:

In fact the whole of [B]akeakamai’s [/B]post is spot on!!

The phone access is probably the cheapest remedy at this point until you can get your computer going again.

It is for this very reason that I always advocate a [U]PCI stop loss.[/U]

PCI = power, computer, internet.

Any of these can fail.
A power failure can be catered for with a power back up.
Of course, a laptop is a great solution to this.

A computer failure requires a second computer.

2 laptops will stop the power/computer failures.
However, the 3rd problem, the internet, is not so easily solved.
You can have 2 ISP’s but I have known the server from the broker to fail.
Then you can do nothing but use the phone.

In my case, my mobile and landline phones are on hotline standby to my broker dealing desk, should anything break down.

[U]During a severe thunderstorm[/U], the best solution would be not to trade and disconnect power and internet lines from a desktop system.
Laptops with wireless internet, could of course, keep going.

[U]An expensive ultimate solution[/U] would be to use 2 laptops (one on standby), both with wireless internet to 2 different ISP’s.
A PCI stop loss is on all your trades.
A mobile phone is on hotline standby to the dealing desk if the whole show packs in.

[B]In summary [/B]then, use a PCI stop loss on your trades to protect them from a margin call.
If the system breaks down, you then have peace, and can use the telephone in the meantime until you get things up and running again.

9

I just have to ask, did you pick up a big mac while you were there? hahaha:D

10

All great points.

But personally, I don’t like stop losses (TTOs), because you don’t know exactly how the market is moving when it happens to hit that price.

Trailing stops might be the best way to go, especially if MB Trading’s are server-sided. However, I would prefer to be able to set the trailing stop later on, [B]after[/B] the price rises by a profitable amount, or to set a trailing stop that doesn’t “activate” until a certain price (similar to an upper TTO) is hit.

That way, you wouldn’t set yourself up for a potential loss right after opening a position. Don’t know if you can configure such a complex entry order with Navigator.

11

In that case I would start to prepare myself mentally for a devastating experience in regards to your trading capital.

I can assure you the next black swan event and/or parabolic move in the markets will take care ot that.

The only question…When will it happen…? But it sure will.

There are a great many traders who have seen their trading capital destroyed by such an event because they didn’t use stop losses.

Sorry for the dose of reality.

12

“Hi, I’d like a MacStopLoss please with a medium sized Cable on the side.”

“Will that be all?”

“Yes.”

“All right, that’ll be a 20 pip spread then please.”

13

Actually, what has just happened with the EUR/USD pair these last couple of days is a great example. If I had been trading for real, I would have gone SHORT when the price hit around 1.4330, based on the behavior of the market these last couple of weeks, and I would have been pretty damn screwed.

Because on Tuesday, instead of moving back down as expected, EUR/USD started shooting up and is still moving upwards … it just hit 1.4600 not too long ago if I’m not mistaken.

This is the [B]first time[/B] since I’ve been monitoring EUR/USD (since July) that something like this has happened, where the price not only broke through but [B]shattered[/B] established support or resistance points.

So it seems to me that such unexpected events will happen; they are just quite [B]rare[/B]. It’s been at least two months (the time that I’ve spent monitoring this pair) since anything like this has happened. Possibly longer, for all I know.

The problem is, if you don’t protect yourself at all, you’ll end up losing your entire usable margin, and for me personally, that would set me back a good month’s worth of trading.

On the other hand, pulling out just when the price starts to turn around in your favor again would put you at the largest disadvantage.

So therein lies the rub.

The only consolation is, these unexpected occurances are rare … so as long as you protect yourself somewhat, you can lessen the blow when it DOES happen. Of course, there’s always a 50% chance that the market could actually be moving in your favor when it starts shooting upwards or downwards, which is why I would always prefer exiting out of a trade [B]manually[/B] rather than using TTOs/TPs when it is profitable. Keep riding the trend until it hits its resistance.

A trailing stop could be very useful for this purpose. It’s too bad you can’t program it to activate/trigger only after a profitable price has been reached.

14

Of course!