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It's not a great situation that this is possible but you could make a similar error for the same amount of money in your brokerage account and also have no reco

by in3d 5y ago

It's not a great situation that this is possible but you could make a similar error for the same amount of money in your brokerage account and also have no recourse. It could be a typo in the ticker symbol, you could buy an option for the wrong month, you could buy instead of selling, you could enter an extra zero, you could not notice a multiplier for the futures, you could let a physical delivery future expire, etc. Using Interactive Brokers or other brokers with advanced user interfaces, it's even possible to turn off confirmations or do most things with just a keyboard or through an API. I don't see this situation as significantly different.

rich_sasha 5y ago
But it is. If you buy the wrong asset, you can sell it back and get most of your money back. There is a low friction “undo” button. No such thing in crypto.
- in3d 5y ago
  Buy a penny stock or an illiquid option and you certainly won't get most of your money back. In addition, there are many other hidden risks. For example, you could have the broker increase the margin rates overnight leading to forced liquidations or the stock could be halted and impossible to trade for months. You can even end up owing more than your whole account is worth if margin is enabled.
  - rich_sasha 5y ago
    Right, if I’m unlucky then sure, something like this can happen. But I’d have to be really unlucky and/or careless to really lose 20%+ of my money. Whereas with crypto it’s so easy to lose 100% plus gas fees, all the time.
- faeyanpiraat 5y ago
  Options work differently, you can lose all your money.
  - rich_sasha 5y ago
    If by accident I buy an option / wrong option, realise that, I can probably sell it and get my money back, less commission, spread and change in value.
    - faeyanpiraat 5y ago
      Yes but if the option expires, and you realize at the end of that period you bought the wrong thing, then that is the case I've talked about. Not sure how likely is that scenario though.
wbl 5y ago
Erroneous trades get busted. If you sell for 10 and the price was 100 it will get corrected.
- deleted 5y ago
  [deleted]
- in3d 5y ago
  Only applies to some trades of some securities on some exchanges. Even in the most pedestrian cases, NYSE and Nasdaq, you can be up to 20% off after-hours and with portfolio margin this can wipe you out instantly. These rules were created to prevent glitches due to automated trading that might cause significant market meltdowns, not to correct trader's mistakes. "Harouna Traore, who was taking a class in Paris to become a day trader, used a demonstration version of British brokerage firm Valbury Capital’s platform to learn how to trade equity futures last summer, according to the Financial Times. He opened an account at Valbury with about 20,000 euros, or $23,000. A short time later, he was at home practicing on what he thought was the demo, racking up more than 1 billion euros of orders in U.S. and European stock futures, and losing more than 1 million euros. Then, Traore came to the shocking realization that the trades were live." https://www.cnbc.com/2018/06/21/trader-builds-5-billion-position-after-realizing-it-wasnt-a-demo.html https://www.cnbc.com/2018/06/21/trader-builds-5-billion-posi...
CJefferson 5y ago
If I tried to buy "Applr" instead of "Apple", then either: a) There is a company called "Applr", so I at least have something (a different stock) b) There is no comany called "Applr", so the trade is cancelled. This is like saying "You tried to be Applr, that doesn't exist, so you money just got blackholed".
- TheFreim 5y ago
  > There is no comany called "Applr", so the trade is cancelled. I'm surprised there hasn't been something like this developed in the cryptocurrency space yet. Some sort of system where creating a wallet requires initialization before it can receive anything. Something like that would prevent most problems of typing in the wrong address because it would not be initialized.
  - rich_sasha 5y ago
    These exist in some smart contracts. The problem is that executing a line of code on chain is really expensive. Already quite optimised and stripped back code can cost 50-100 USD equivalent to do something fairly trivial, like swap one token for another. Each of these checks increases the already high barrier to entry, and has little utility for the creators.

by in3d 5y ago

rich_sasha 5y ago

But it is. If you buy the wrong asset, you can sell it back and get most of your money back. There is a low friction “undo” button. No such thing in crypto.

in3d 5y ago
Buy a penny stock or an illiquid option and you certainly won't get most of your money back. In addition, there are many other hidden risks. For example, you could have the broker increase the margin rates overnight leading to forced liquidations or the stock could be halted and impossible to trade for months. You can even end up owing more than your whole account is worth if margin is enabled.
- rich_sasha 5y ago
  Right, if I’m unlucky then sure, something like this can happen. But I’d have to be really unlucky and/or careless to really lose 20%+ of my money. Whereas with crypto it’s so easy to lose 100% plus gas fees, all the time.
faeyanpiraat 5y ago
Options work differently, you can lose all your money.
- rich_sasha 5y ago
  If by accident I buy an option / wrong option, realise that, I can probably sell it and get my money back, less commission, spread and change in value.
  - faeyanpiraat 5y ago
    Yes but if the option expires, and you realize at the end of that period you bought the wrong thing, then that is the case I've talked about. Not sure how likely is that scenario though.

wbl 5y ago

Erroneous trades get busted. If you sell for 10 and the price was 100 it will get corrected.

deleted 5y ago
[deleted]
in3d 5y ago
Only applies to some trades of some securities on some exchanges. Even in the most pedestrian cases, NYSE and Nasdaq, you can be up to 20% off after-hours and with portfolio margin this can wipe you out instantly. These rules were created to prevent glitches due to automated trading that might cause significant market meltdowns, not to correct trader's mistakes. "Harouna Traore, who was taking a class in Paris to become a day trader, used a demonstration version of British brokerage firm Valbury Capital’s platform to learn how to trade equity futures last summer, according to the Financial Times. He opened an account at Valbury with about 20,000 euros, or $23,000. A short time later, he was at home practicing on what he thought was the demo, racking up more than 1 billion euros of orders in U.S. and European stock futures, and losing more than 1 million euros. Then, Traore came to the shocking realization that the trades were live." https://www.cnbc.com/2018/06/21/trader-builds-5-billion-position-after-realizing-it-wasnt-a-demo.html https://www.cnbc.com/2018/06/21/trader-builds-5-billion-posi...

CJefferson 5y ago

If I tried to buy "Applr" instead of "Apple", then either: a) There is a company called "Applr", so I at least have something (a different stock) b) There is no comany called "Applr", so the trade is cancelled. This is like saying "You tried to be Applr, that doesn't exist, so you money just got blackholed".

TheFreim 5y ago
> There is no comany called "Applr", so the trade is cancelled. I'm surprised there hasn't been something like this developed in the cryptocurrency space yet. Some sort of system where creating a wallet requires initialization before it can receive anything. Something like that would prevent most problems of typing in the wrong address because it would not be initialized.
- rich_sasha 5y ago
  These exist in some smart contracts. The problem is that executing a line of code on chain is really expensive. Already quite optimised and stripped back code can cost 50-100 USD equivalent to do something fairly trivial, like swap one token for another. Each of these checks increases the already high barrier to entry, and has little utility for the creators.