The risk of exchange system outages
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 5 min
In short
Exchange systems are most likely to struggle exactly when access spikes — which means the hardest times to get through are the volatile ones when everyone wants to trade at once. Assume you may not be able to transact at the price you expect, and size positions with that in mind.
Key points
- Access is hardest precisely when the market moves fastest
- You may be unable to open the order screen at all
- App, web and API can recover at different times
- Plan capital as if you might not be able to trade
Definition
A state in which an exchange's systems stop responding normally due to overload or faults, preventing orders, cancellations or transfers — and the losses that can follow.
When prices move sharply, a flood of orders and page requests hits the system at the same instant. If processing falls behind, screens fail to load, orders are rejected and fills show up late. Even a venue that feels fast in calm markets is exposed to this.
The painful case is being unable to act on a position you want to close. Orders placed to cap a loss may not behave as intended. With leverage in play, the situation can deteriorate while you have no way to intervene.
The practical defence is to assume there will be periods when you cannot use the system: do not depend on a single venue, do not size positions with no margin for error, and do not rely entirely on manual intervention to exit. Policies on outage handling differ by operator, so reading theirs once makes decisions faster.
Watch out for
- · Losses from orders that did not execute during an outage are not necessarily compensated
- · Re-sending orders while disconnected can cause duplicate fills on recovery
- · With leverage, losses can grow while you are locked out