Digital Diatribes

A presentation of data on climate and other stuff

Account Statements from Gold Trading

Posted by The Diatribe Guy on January 22, 2010

In a post last week I laid out my gold trading strategy. In all fairness, if I’m going to do such a thing, I should provide real-life results from the strategy.

I am going to start with the October 31, 2009 statement. It should be noted that at the time I was carrying positions in items other than gold, and had been dabbling in other strategies. In fact, I still carry some of those positions, so this isn’t entirely the gold strategy, but all new positions have been only placed using the new strategy.

As I mentioned, this is a long-term strategy, and it is the very nature of the strategy to have carried positions at negative profit. That’s because profits are taken fairly quickly and banked, leaving only those positions yet to achieve profit.

As of the statement ending October 31, 2009, I had the following balance sheet:

Balance = $2,309.57
Carried positions: -$949.11
Equity: $1,360.46

The balance is the amount from realized positions, and the equity is the amount you have to work with today including unrealized positions. Both numbers are important, since you don’t actually lose your money until you close the position, but on the otehr hand you need to maintain positive equity or your broker will close you out at a loss.

As of 10/31/2009 I carried the following positions:
BUY USDCHF LOT SIZE 0.01 @ 1.0802, 1.0700, 1.0750, 1.0632, 1.0476 (5 positions)
BUY USDJPY LOT SIZE 0.01 @ 95.00, 94.50, 93.87, 93.05 (4 positions)
SELL XAUUSD (Gold) LOT SIZE 0.01 @ 950.45, 956.55, 963.90, 972.00 (4 positions)
SELL EURUSD LOT SIZE 0.01 @ 1.4206, 1.4264, 1.4264, 1.4325, 1.4474 (5 positions)
BUY XAUUSD LOT SIZE 0.01 @ 1040.00, 1050.00, 1060.00 (3 positions)

OK, this will be tedious, but it’s an establishment of history… NOVEMBER transactions:
o/s XAUUSD BUY @ 1040 closed on 11/2, +$9.99 profit
o/s XAUUSD BUY @ 1050 closed on 11/2, +7.49
o/s XAUUSD BUY @ 1060 closed on 11/3, +4.99
11/3 buy 0.01 xauusd @ 1060.00 closed 11/3 +5.00
11/3 buy 0.01 xauusd @ 1070.1 closed 11/3 +2.40
11/4 buy 0.01 xauusd @ 1090.1 closed 11/4 +2.40
11/4 buy 0.01 xauusd @ 1090.00 closed 11/4 +2.50
11/4 buy 0.01 xauusd @ 1089.76 closed 11/4 +2.74
11/5 buy 0.01 xauusd @ 1090.00 closed 11/5 +2.50
11/5 buy 0.01 xauusd @ 1090.00 closed 11/5 +2.50
11/5 buy 0.01 xauusd @ 1090.00 closed 11/5 +2.50
11/5 buy 0.01 xauusd @ 1090.00 closed 11/6 +2.50
11/6 buy 0.01 xauusd @ 1090.00 closed 11/6 +2.50
11/6 buy 0.01 xauusd @ 1100.80 closed 11/9 +1.70
11/10 buy 0.01 xauusd @ 1100.00 closed 11/10 +5.00
11/10 buy 0.01 xauusd @ 1100.00 closed 11/10 +4.25
11/9 buy 0.01 xauusd @ 1110.42 closed 11/11 +2.08
11/12 buy 0.01 xauusd @ 1120.00 closed 11/12 +2.50
11/12 buy 0.01 xauusd @ 1113.66 closed 11/12 +2.50
11/13 buy 0.01 xauusd @ 1106.06 closed 11/13 +2.60
11/12 buy 0.01 xauusd @ 1110.00 closed 11/13 +5.00
11/13 buy 0.01 xauusd @ 1114.26 closed 11/13 +2.50
11/16 buy 0.01 xauusd @ 1125.15 closed 11/16 +1.58
11/16 buy 0.01 xauusd @ 1130.05 closed 11/16 +2.45
11/16 buy 0.01 xauusd @ 1129.46 closed 11/16 +3.04
11/16 buy 0.01 xauusd @ 1130.00 closed 11/16 +2.50
11/16 buy 0.01 xauusd @ 1140.05 closed 11/16 +2.45
11/17 buy 0.01 xauusd @ 1130.00 closed 11/17 +5.00
11/16 buy 0.01 xauusd @ 1140.00 closed 11/18 +2.50
11/18 buy 0.01 xauusd @ 1140.00 closed 11/18 +2.50
11/18 buy 0.01 xauusd @ 1150.05 closed 11/18 +2.45
11/19 buy 0.01 xauusd @ 1140.00 closed 11/19 +5.00
11/20 buy 0.01 xauusd @ 1140.00 closed 11/20 +5.00
11/18 buy 0.01 xauusd @ 1144.11 closed 11/20 +6.68
11/24 buy 0.01 xauusd @ 1160.00 closed 11/24 +5.00
11/23 buy 0.01 xauusd @ 1170.00 closed 11/25 +2.50
11/25 buy 0.01 xauusd @ 1179.34 closed 11/25 +3.16
11/25 WIRE TRANSFER +1000.00
11/26 buy 0.01 xauusd @ 1190.00 closed 11/26 +2.50
11/27 buy 0.01 xauusd @ 1140.00 closed 11/27 +15.00
11/27 buy 0.01 xauusd @ 1150.00 closed 11/27 +12.50
11/27 buy 0.01 xauusd @ 1160.00 closed 11/27 +10.00
11/27 buy 0.01 xauusd @ 1170.00 closed 11/27 +7.50
11/30 buy 0.01 xauusd @ 1170.00 closed 11/30 +7.50
11/30 buy 0.01 xauusd @ 1170.00 closed 11/30 +5.45
11/27 buy 0.01 xauusd @ 1180.00 open as of 11/30
11/26 buy 0.01 xauusd @ 1190.00 open as of 11/30

OK, now it gets a little confusing… new regulations went into play during November where positions must be settled on a First-In-First-Out basis within the same currency, and hedged positions are actually settled against each other. However, the trading platform allows you to engage in business as usual to enable you to maintain your strategy and continue trading your strategy as desired. The implications of this is that the actual settlement in your account reduces your actual balance significantly from where it would otherwise be, but it also reduces your outstanding profit/loss position. Reconciliation is tricky at this point between the trading platform and the account, but I’ve gone through the exercise and it all works out. So, the actual settlement as shown above is not actually the way it’s settled in reality. But the math works out the same, as if I really am settling according to that strategy. It’s all fairly confusing if you’re not working with this, but I point this out because the cash balance dropped significantly even with the $1000 cash infusion and I wanted to explain why that is. The equity is really the more important measure, anyway, but I like to track the cash balance, too.

The account at the end of November, then, after all the above, looks like:

Ending Cash on Deposit: $2,070.65
Unrealized Profit/Loss: -$482.49
Ending Account Equity: $1,588.16.

Equity increased by $228, but there was a cash infusion of $1000, so I actually had a loss. But all those numbers are positive? How could this be? The answer is because I have all these short, hedged positions and the market went the otehr way. So, while I took profit on my primary strategy, my unrealized losses grew significantly during November on the short positions. The plan is to hold those until I can eventually dump them at (hopefully) a small profit. This action is expected. It will take some time to build up the account to absorb completely market swings against your positions. Eventually I will get rid of these, and then the only time I will see hits to equity are in market downturns on Gold.

It’s pretty late right now, so I’ll tack on December and January when I have a chance. I’ll try to keep you updated as I go along.

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One Response to “Account Statements from Gold Trading”

  1. […] Account Statements from Gold Trading […]

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