The day our brake fired on a transfer
In our first week of live trading, the system saw the account fall about 19%, almost at once. Nothing had crashed. Money had simply moved from one part of the exchange account to another, and for a short while the software could see it leave but not arrive.
The brake treated it as a real loss and stopped all new buying, exactly as it was built to do. No trade was closed and nothing was sold in a panic. When the money showed up again, the account was whole. But a safety system that can't tell a transfer from a loss will cry wolf, and a brake people learn to ignore isn't a brake.
Why it happened
The system values the whole account around the clock: cash, savings and every coin held. It then compares that value with its peak, with deposits and withdrawals left out, so new money never looks like profit and taken-out money never looks like a loss.
A transfer between two wallets inside the same exchange is neither. For a moment, the money existed in neither place the system was reading. To the brake, that looked like a fifth of the account gone.
What the brake did, and why that was right
The brake decides before I do. That only works if it decides on the truth.
It did the safe thing: it stopped new buying and waited. Open trades kept their planned exits. Had the loss been real, that is precisely the behaviour you'd want. A false alarm that briefly pauses buying is cheap. A real loss that the system ignores is not.
What we changed
- It reads the exchange's own record of transfers. A sudden change is now matched against the exchange's transaction history before anything else happens.
- Deposits are recognised by themselves. When money arrives, the system books it as a deposit, not as profit. Each transfer can be matched only once, so the same money can't be counted twice.
- Withdrawals always ask. Money leaving is never assumed to be a transfer. The system asks, and shows the matching record, so a real loss can't be explained away.
- A big jump is checked twice. Any sudden move is read a second time before the brake acts on it.
What this taught us
Every safety rule needs a test against the boring events, not just the scary ones: deposits, transfers, an exchange page loading slowly. The incident cost nothing, and it became a rule. That is the deal we make with ourselves: every incident becomes a rule, and every rule is written down.
Questions or pushback? Reply by email. We read every one, and the good questions become FAQ entries and new posts.
Risk notice: this article is for information only. It is not financial, investment or tax advice, and nothing here is an offer or solicitation. Cryptoassets are highly volatile and you can lose all of your money. Backtested figures are hypothetical and optimistic; live figures cover a short period. Past results never promise future ones.