Please explain busted trades

nope they only bust one side.can you imagine how far up the line they would have to go to bust all the trades.
if you get a gift fill you know isnt right i suggest you dont close it right away and just cross your fingers and hope they dont call.
 
One good thing is there are plenty of brokers out there. If you think you are getting hosed, talk to a customer service supervisor and tell them you are shutting your account pronto if they make you eat someone else's mistake. IB will probably tell you so long, but others are surprisingly willing to make concessions, particularly if you are doing a lot of commish. One compromise is to make up the mistake in reduced commish. Also, always escalate any dispute to the compliance officer. They are usually lawyers who despise the sales traders at firms and like to bust their chops.
 
I think there may be a problem getting IB to stand behind you in a bust. I like IB platform and commisions, but the Help Desk is notorious for being misnamed.

I would still raise holy hell, on a trade 10 points away. I assume it was not BRK/a.
 
The exchange will bust only trades they deem to be out of range. They set the rules. You under estimate the length that IB goes to when trying to bust trades. On the prop side it is the same thing. Say we hit an order out of range - and many are boarderline. The exchange calls us later - after we hedge - and say - trade XYZ MAY be busted. We then have to wait 1 hour to hear back from them. Even if we say fine, they will not make a decision until they check their parameters.

Another example of one sided busts was the Eurex fiasco when a size order knocked the market down 1000 ? points. They took 5 hours to decide any trade under X level was busted.

The reason you can't bust both sides if one side is legal is that it causes a chain effect with potentially an endless supply of people. The exchanges do not want to get involved.
 
Originally posted by stock777
I think there may be a problem getting IB to stand behind you in a bust. I like IB platform and commisions, but the Help Desk is notorious for being misnamed.

I would still raise holy hell, on a trade 10 points away. I assume it was not BRK/a.
More...

No, it wasn't BRK/a. It was a stock trading at $33 and I bought it at $43 in pre-market trading. Again, I don't want to make any excuses for my mistakes. My point was that the playing field is not level in terms of busts - so be careful.

As for IB standing behind me in a bust, it has been my experience that they try hard for the customer in these situations. The problem is not IB, it is Instinet (or BRUT, or BTRADE, etc.). The worst thing is that when a bust unfairly goes against me, I get angered and need to vent. Unfortunately, I can't vent my anger at Instinet, I can only indirectly vent my anger through IB. Does somebody have a direct line to Insinet? :)

Carl
 
try to use the 1 Percent hot setting in your TWS " 1 "

that should prevent major foulups ...

who knows .... their might even be a way to set it at 1/2 of 1 %
 
wel ok i guess i can understand that, but how do you define what is normal range and abnormal range when on the dow mini $2 sometimes you have spreads of 30 + points and if it gets hit well ok, im there to provide liquidity so next in line gets it. its not like it was filled over someone else. there was no one there, and the mini only trades on cbot, so what constitutes a normal trading range for that particular contract? def any thoughts or something i should abide by. see i like to just bid it low maybe 20+ points below and see if it gets hit, whether somebody blows a stop or just hits it cause he needs out, but that has worked nicely for me, well until IB called. So is that wrong what im doing? i dont want to go through another bust every time i buy something lower than the Dow is at. thnx for any info/help.:p
 
I certainly don't want to unfairly paint IB as unwilling to represent the customer. I have only had one very small trade busted during the last 2 years, and it was nothing I was about to pursue.

I do find that when I call with issues, it's a bit of a battle getting someone to get on the same page, there seems to be an assumption that the caller is probably a boob, until proven otherwise.

Traders need to realize that only the bad side of the trade is bustable, the 'cover' has nothing to do with the bad print, and cannot and should not be busted.

As far as the Instinet thing, what I don't like is the double standard. I know what clearly erroneous is, and so does Instinet. If the stock you bought at 43, had no news , and no other trades in that range, then you were entitled to a bust, if you promtly requested it. If they refuse, then they have to defend the position, and justify it in light of the busts they do allow. IB should have pursued it, and saying it's Inets decision is not acceptable.

 
IB has done well by me the couple of times that I needed to ask for a bust, as well as a couple dozen times that the exchanges or contra-party wanted to bust a trade. Even when the exchange had already made a decision, and I explained how that would be grossly unfair to me because I had already laid it off, IB went back and got them to change their mind and adjust the price to what was fair for both the contra-party and myself, instead of busting the trade and leaving me with a position.

While I never thought I'd defend Instinet for anything, my best experiences in this regard have been with them (via IB). They seem to understand the issues facing traders, particularly in illiquid stocks or times of day, and will tend to adjust a trade instead of busting it if you let them know that you already laid it off. While you might not get to keep the 10-point windfall that you thought you'd get, you'll usually get adjusted to a reasonable price, in my experience.

While it might seem stupid, on the rare occasion that I think the contra-party made a mistake, and the price is in kind of a borderline area, I've called IB and asked them to ask the ECN how they will rule if the contra-party asks to bust it. If they say it's OK, I suppose they could still change their mind later, but they haven't in the past. I can then consider it mine and deal with it as such.

In my experience, I've never been able to keep anything more than about 10% away from a "fair" price. If you get one of these, you'll probably want to consider hanging onto it if you can't lay it off at a reasonable price. There's always the risk that the guy that hit you was right, and nobody else knows about it yet. Learning to "arb" this decision is one of the things that only experience can teach.
 
I think I owe this thank note to IB, ARCA and the 0.01 guy on the other side since I got a bust for a very bad trade this morning.
Erroneously my software hit a 0.01 bid just after open...

Asterix
 
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