Futures Trading: You Need a Backup
There is more to day trading than making money on high-probability setups. As a trader, you have to be prepared to handle several situations that occur unexpectedly and without warning. Your data and your ability to transmit data are two of the most important and often overlooked aspects of trading. What would you do if you lost your internet connection and were in the middle of a trade? What would you do if you had a hard drive crash? These are two questions you need to have answered before you begin serious futures trading.
I was trading last July and my broadband connection failed during an emini trade. I was long 5 contracts and everything just went silent, no data feed. The market was very volatile last summer and I needed to talk action fast.
What would you do?
I think the safest bet is to simply call your broker immediately, which is what I did. I also have a back-up dial-up connection set up, so that was another option. The point is a simple one, though, and that point is that I had thought about this eventuality, and was prepared to deal with the problem. I even have my broker’s number on my speed dial. I was lucky and managed to get out of the trade with a small profit, but can you imagine the range of consequences had I not given this problem proper consideration?
I’m not sure there is any right preparation for losing your broadband connection while trading futures contracts. The right answer is one that works and you are confident in it’s execution. Cell phones, land lines, and alternate internet connections are all viable options, but the important part to remember is that you need to plan ahead for problems. I had thought about this problem several times and thought one of the real dangers of trading online is how vulnerable you are to potential problems. I had read several articles describing the horror of sitting at your computer, powerless to rectify or manage your trade because your data feed went dead. I think it is important that you have a back-up plan to manage an emergency, and test your plan to make sure it works.
What if you computer stops working?
I have a laptop hooked up along with my desktop computer anytime I am trading. If the problem is my computer, I can rely on my laptop to complete the trade. Of course, I can still give my broker a call instead of using my laptop, but I feel more comfortable with two computers. Again, the point is a simple one, and that is to have a plan in mind before a problem occurs. Give it some serious thought. If you live in the country, make sure your cell phone does not have any potential reception issues. If you are using a cable connection for both your internet and land line, chances are your phone will not work if your data feed stops, so a cell phone is imperative. Just make you sure have a workable plan.
One of the most precious commodities is my past trading experience which I have documented on a very large Excel spreadsheet. I download each days chart too. Three times every week I download all of my information onto an external hard drive.
Aside from hard disk failure, there is also the possibility of hackers, viruses and a host of malware that threaten your computer. I run a very specialized firewall and have a number of anti-virus and malware programs running to protect myself in the event of any of these threats. You should, too. Your data is important for your progression as a trader, it’s the laboratory from which I continue to test my trading skills by reviewing past trading days. Securing your data from harm is an important function, so it is important to use some sort of data backup system to prevent data loss. External hard drives work well, but there are online backup alternatives available, too. I have recently started using one and am very pleased with the results.
The secret to keeping your data and computer safe is to plan ahead and not let an unexpected and unpleasant turn of events affect your futures trading account. You can’t control the wide range of problems that can occur, but you can control the consequences.