Realities and Complexities of Trading

Trader's Mindset

Mar 27

A few weeks ago, I had a short put position on at Tastyworks. I stalked the exit and patiently waited for the expert time to close. And, then I was able to read a slight change in the tape and knew it was time to take profits. But, when I went to close the position, the broker returned an error. I was unable to close the position! I had to go try to find their support email because it was after hours. I did, at least, receive a quick response that they were unable to close futures positions.

I had timed the market perfectly but I might as well have not because I was unable to close my trade until the next day.

Was it a one-off?

I have an ultra-high performance system. Yet, recently, I was scalping near the close when my Tradestation platform froze up. I was able to see the market but unable to interact with the platform. I had to kill the platform and restart it.

And, then there was yesterday, Tradestation disconnected from live server for trading over a dozen times. That was very frustrating.

The lesson is that your trade plan needs to take into account the real world complexities and problems you are likely to encounter trading. The purpose of this post is not to point fingers at any specific broker. Sure, it is sometimes or even often times the broker’s fault: but that won’t help.

There are so many reasons traders on small accounts blow out. Imagine if I were trading at near my limit in these cases. Fortunately, I was trading small.

Your trade plan needs to factor in the types of problems you are likely to encounter– and you need to find and battle test a ship that is right for your trade plan. For scalping futures and micros, I have found AMP to be very reliable and cost-effective both through their CQG web platform and NinjaTrader.

Nothing is perfect, of course. CQG web trader suffers from not having something as basic as an effective “close position” button and closing at market will leave my orders hanging. In fast markets, it can be difficult to cancel the orders fast enough. While NinjaTrader, lacks any sort of window management making it extremely cumbersome to setup for multi-symbol analysis. Tradestation, on the other hand, has higher commissions.

Let me suggest, it is not the job of at trader to complain or wait-out for a perfect solution but to develop a plan that can work within the realities of real-world conditions. As some examples, having multiple brokers allows one to to hedge if you lose access to the platform– although you can certainly lose on the hedge too. If you are trading size then your solution likely requires that you have your stop and target in at entry.

Trading on a longer time frame can make precise timing less critical. Trading options, in lieu, of common shares can limit the risks of trade disconnections, gaps, or other risks as well.

What is relevant is to stay small until you have a good handle on the externalities and complexities your trading method may encounter, develop mitigation strategies, and scale up slowly.

About the Author

The author is passionate about markets. He has developed top ranked futures strategies. His core focus is (1) applying machine learning and developing systematic strategies, and (2) solving the toughest problems of discretionary trading by applying quantitative tools, machine learning, and performance discipline. You can contact the author at curtis@beyondbacktesting.com.

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