Handling A Fat-Finger Order

A "fat-finger" order is one entered with a typo-level mistake — an extra zero on the size, a decimal point in the wrong place, buying instead of selling — that gets submitted to the market before anyone catches it. These happen to experienced traders too; the danger isn't the mistake itself but what happens in the following seconds if it isn't caught immediately.

The standard response, in order: stop, don't compound. First, check whether the order actually filled or is still resting — don't touch anything until you know which. If it's resting unfilled, cancel it immediately, before doing anything else. If it has already filled, resist the instinct to immediately "fix" the exposure by trading aggressively in the opposite direction — panicked unwinding into a thin market often loses more than the original mistake, and can itself move the price against you. Instead, assess the actual position and risk calmly, alert a supervisor or risk desk per firm policy (most have a required immediate-escalation rule for exactly this), and then unwind in a controlled, appropriately sized way. Firms build automated pre-trade risk checks — max order size, price collars, position limits — specifically to catch fat fingers before they reach the market, which is why a human catching one manually is often treated as a control failure worth reviewing afterward, not just an unlucky slip.