Disaster Planning

Disaster planning is a morbid topic that few of us like to think about, but in all reality you can be the world’s best trader and loose it all to something outside of the markets. This posting will go through some of the topics you may want to put some thought into.

Disaster planning is a morbid topic that few of us like to think about, but in all reality you can be the world’s best trader and loose it all to something outside of the markets. This posting will go through some of the topics you may want to put some thought into.

Death / Medical Emergency
At the top of the list of things we would prefer not to think about is your own demise or worse a major medical mishap that leaves you unable to feed yourself, let alone manage your financial affairs. You need to think about and plan for the worst and hope for the best. For example, if you ended up in an emergency room, would your partner know how to close your open trades? do they even have a clue where the money is? It might be worth placing some instructions somewhere safe for your partner or someone you trust to be able to locate your multiple investments, close trades, withdraw money, etc. In addition to this, perhaps some private health cover, income protection insurance and life insurance would not go astray. Similarly, having your affairs sorted, such as your will, power of attorney and advanced care directives put in place would be worth looking at.

Theft, Fire, Flood and other Random Acts of God
You need to think about how you can set yourself up as a trader, so that if your house is burgled, burnt down and filled with water, you can still operate as a trader. I am increasingly looking at remotely hosted ways of managing my trading affairs so that I am not dependent on the mountain of IT equipment we all tend to accumulate at home. Oh, and a little bit of home insurance would not go astray either.

Computer, Power and/or Network Failure
So far I have had my power supply blow up, mother board burn out, water drenched computers, hard drive crashes and numerous other things. If I add to this the number of times I have lost power to the house, lost my network connection or had my computer contract some horrible virus, you start to get the idea of how fragile your computing environment is. It is like the computer gods are really angry with me.

It is well worth the investment in things like an uninteruptable power supply, firewall, anti-virus software, back up and recovery software, external hard drives, etc. A second computer in the house has saved my arse more times than you would think. Similiarly, the more you can make use of remotely hosted services, the more you can easily recover after equipment failure.

Broker Blowup
Your broker can blowup overnight and you can easily have your account locked up as legal proceedings occur over the insolvent bones of a dead company. Just go and ask some of the poor souls who still haven’t recovered their accounts after RefCo went under. You should consider spreading your account amoung 2 or more brokers.

Out of Control Trader
This risk is probably the biggest risk of all. You know what I mean, you get desparate or very greedy and you blow your trading account. Having an independent risk manager, such as your partner, is well worth it. They need to continuously monitor that you are sticking within your money management rules and should give you a swift kick up the arse if your account ever goes below your line in the sand.

Macrotactics is a blog devoted to recording a part time trader’s journey into the world of trading currencies. In my day job I work as a manager in an Information Technology company. I live in sunny Queensland, Australia with my wife, a cat and a baby on the way. I have been banging my head on this trading thing for at least 3 years now and the deeper I dig into the topic of trading, the more I realise there is to learn. Trading for me has

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