Protect Capital & Preserve Data When H.F. Imminent

This article continues from yesterday's (September 5, 2006 "Hurricanes & Flooding").

PROTECT THE CAPITAL IN YOUR ACCOUNT

Close out all trading positions. Ask your broker to send the cash to your bank account. Don’t leave the cash in your brokerage account.

You may have forgotten or may have never read your Brokerage Account Agreement. It says that you have a specific time length (sometimes 24 hours, sometimes 30 days) within which to notify your own broker in writing about any mistakes in any account statement that it sends you. If you miss the deadline, the statement is deemed correct.

If your broker sends you statements every business day (TradeStation does that), then your Brokerage Agreement might result in you having only 1 day to file notice of objection to any mistakes in it.

What if during a H.F. you are unable to access the internet for the purpose of examining statements from your broker? And what if your broker mistakenly attributes losing trades to your account while you were so disabled? Your brokerage agreement would provide that the mistake is deemed correct. If the mistake is adverse, you’ll have lost money.

You don’t want to have to get into litigation with your broker to recover your cash. You’ll be too busy suing your insurer over what H.F. damage is covered by your insurance.

Account agreements at banks usually give you a longer period of time than at brokers within which to file a written protest against mistakes in an account statement. Also, my guess is that politicians would expect to get more political mileage out helping an “ordinary bank customer” get money back from a “savings account” than helping a “greedy trader” get money out of a brokerage account. Therefore, you have a better fighting chance against your bank than against your broker.

If you trade an instrument that has a deadline (e.g. options or futures), closing out your position safeguards you from missing that deadline and the loss of money that would result from missing it due to the H.F.

Get enough cash in small bills, like $20 or less, to cover a month of living expenses. You’ll need cash to buy food, water and other things during and after the H.F. During a H.F., vendors cannot and will not accept credit cards. They will also refuse to accept large bills for fear of getting counterfeit money. My experience is that they only accept small bills, like $20’s or less.

PRESERVE YOUR DATA

Use a scanner to make digital copies of all your paper records. You can get a scanner with an automatic sheet feeder for about $100. First, put a digital copy onto a CD/DVD disk and keep the disk in your physical possession if you have to evacuate. Second, upload a copy to an internet archive. Yahoo has a free one . So does MediaMax

Similarly save onto disks and upload to the internet the digital copy of your Trading Business Plan, Trading Journal, Account Ledgers, Trading Platform configuration, Computer Programs, and any other computer resources you use in your trading.

Make digital copies of all other documents proving ownership of your non-trading assets too (like your house/condo). Save and upload them as described above. Then, seal the originals in a water tight plastic bag, taping the opening shut with duct or masking tape. Keep these in your physical possession if you have to evacuate.

More tomorrow...

Copyright 2006 Raymond T. Lee. All rights reserved.
Leisurely e-Mini Futures Trading
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