Accounting for Open Positions

...continued from yesterday

The next part of the monthly brokerage statement (“MBS”) you should check is the list of your open positions.

There is no uniformity in the title for that section of the MBS. Here are some possible names for it

-Portfolio Assets
-Your Investment Holdings
-Positions In Your Account
-Positions
-Details of Your Investments
-Portfolio

This information could be at the beginning, middle or end of the MBS. To ensure you don’t get bored, brokers from time to time change the location in which they put this information on your MBS!

When you find this information, compare the open positions listed in the MBS against your own records.

To facilitate review of your trading performance and to facilitate annual income tax filing, you should keep a record of closed positions including details such as:
-date position opened
-name of instrument and symbol
-quantity
-price when position opened
-price when position closed
-commissions
-other costs
-net profit/loss

Here's a time saving tip for this part of the MBS. As and when you open positions, record them first to a ledger that you set up for open positions. Don't record them immediately to the Cash Journal. Wait until you close the position to record the profit/loss into the Cash Journal. Then when you close the position, cut and paste the information about the position onto another ledger for closed positions.

If and when necessary, you can calculate the cash position in your account by deducting the original value of your open positions from the last balance amount in your Cash Journal to "update" it to the current date. If that doesn't work for you, then just revert to the "proper" way of recording open positions immediately into the Cash Journal and also recording the closing of that position to the Cash Journal as and when they occur. That's double the work compared to the shortcut method, done only as a pedantic exercise.

continued tomorrow ...

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