A newbie learns that brokers make mistakes

[kperrin]

I've been trading for two months now. Net-net I've made some money, but mostly I'm on a steep learning curve about the mechanics, mathematics, psychology and pitfalls of options trading.

My lesson this month, among others, is that brokers make mistakes. My broker has managed to do the following:

-Reverse the selling and buying prices on the statements for the closing of a spread position producing an apparent loss which was in fact a profit.

-Duplicate a closing order creating a call spread, but obviously in the opposite direction

-Duplicate a closing order creating a naked short put with a whopping cash credit to my account and a margin exposure WAY in excess of my limits

I have not mentioned the broker's name because this is not about slagging a particular broker, just to observe that keeping tabs on every transaction is important. The broker quickly fixed every problem when I pointed them out.

I now keep a book and literally paste in the statements from each opening and closing transaction together on the same page so I can see visually that it was done right.

I'm sure with more experience I will be less obsessive about this, but for other newbies I can recommend that checking your broker's work is important.

 

[tomahawk]

Very disturbing. Can you at least give us a clue who it is? ... consider it a public service maybe?

 

[kperrin]

As I say, I am not slagging off the broker, which is E*Trade.

I am, however, surprised that everything is manual when it comes to spread trading. I thought all this stuff was electronic, thus the name "E*Trade".

I have to phone in every spread order, and they post all the transactions manually, which is where the errors come from.

As I said, they are very friendly and helpful and they fixed every error as soon as I pointed it out, but if a bank made these kind or errors...

 

[Wayne Gibbous]

A real broker (and a real good broker) ---> http://individuals.interactivebrokers.com/en/main.php

 

[spindr0]

I now keep a book and literally paste in the statements from each opening and closing transaction together on the same page so I can see visually that it was done right.

I'm sure with more experience I will be less obsessive about this, but for other newbies I can recommend that checking your broker's work is important.

It's not obsessive to make sure that someone you're doing business with does it properly and doesn't short change you of profits or add to your losses. It's also a good idea to check your own work

 

[SideShowBob]

Quote from kperrin:

As I say, I am not slagging off the broker, which is E*Trade.

I am, however, surprised that everything is manual when it comes to spread trading. I thought all this stuff was electronic, thus the name "E*Trade".

I have to phone in every spread order, and they post all the transactions manually, which is where the errors come from.

As I said, they are very friendly and helpful and they fixed every error as soon as I pointed it out, but if a bank made these kind or errors...

Who says E-Trade bank isn't making the same errors. And in this case etrade is like a bank, they have your money and they're f***ing it up.

Years ago I had Scottrade mess up several mutual fund transactions for me. Mess up as in lose them. Completely. Entered by 4 PM, there at 8 PM, gone the next morning. The net result was slightly in my favor, but after the second time I was gone.....