To keep myself honest I keep track of every single override and my rationale + make regular review later. Is a habit and part of my process now. The obligation to make that "record" alone makes me want to do this less. When I'm thinking about making any change I also always ask myself something like - "when you look at this in a month/year from now, what are the chances you will think it was a calculated decision that you would have done again?". And I consider how I will feel if it result in positive or negative PL. Sign of PL afterwards, logically, is irrelevant, and yet, I am not a machine and find that exercise useful. Having done that cycle many times - my number of overrides is now extremely low, comparing to what I hear from other traders. So it works for me. Looking back at the change I mentioned - I feel ~80% fine about it. Which means that - when I read my rational back then, I agree with it on most of the days and would very likely have done the same thing again under the same circumstances. It just seemed appropriate as an example of different degrees of overrides. To take it further - this year, I also have "fixed" a number of things that made me money. Meaning - there was no systematic edge in them and they were deviations from what was supposed to happen. Or had positive expectancy but at a cost of a higher chance of a margin call. It is fun to talk about it to people who trade discretionary or don't trade at all, but for systematic trader there is absolutely no good reason that will stand a test of time not to "fix" them. Val
I do that too. My trade table has a memo field that allows for inserting comments when required. I have made five such overrides since the beginning and am about 50% satisfied with them. In other words, if I hadn't done them it would barely have made a difference. So even though five is statistically a very low number, "no difference" means I probably wouldn't be a good discretionary trader yet.
+++ Monthly (and yearly) update +++ So the bot completed the first year of life. Not a bad start, although I'm not completely satisfied with the way I managed it all. For example I'm currently trading smaller positions, given the recent and still ongoing drawdown. Not sure if this is the best thing to do. On the one hand greediness is telling me "don't do it, trade full positions as in the backtest; if it worked in 13 years, it will still work". On the other hand cautiousness urges me to slow down and see what happens. The plan is to first recover the losses using smaller yet gradually larger positions, then go back to using full size as before.
+++ Monthly update +++ Current unrealized P&L: $1805. I am concerned about the ongoing devaluation of USD versus EUR, as I live in Europe, but I have my IB account in $. I tried to think of a strategy to mitigate the risk of currency exposure, but could not find anything other than buying and holding EUR. But I should pay interest, I don't know if it's worth it. Any ideas?
I'm in a similar situation with CAD/USD. Last month I converted a portion of registered accounts (RSP/TFSA) to CAD cash so partially hedged. I am considering a leveraged futures position to make that trade higher % of net worth. Val
So you converted the base currency of some of your accounts to CAD? Wouldn't it be roughly the same as buying and holding some CAD in a USD account?
It would. Re base currency - nope, I still keep USD as my base. If I understand correctly base currency with IB and your market exposure are completely separate. Base currency is more of a reporting thing, for example - in what $ your reports will be generated. I do my reporting outside of IB anyway, and for trading account USD is more convenient and I don't have FX noise. The conversions I do are just simple buying / selling USD.CAD for a particular account.
Agreed. The IB account is a multi-currency account. Whether you want to hedge the currencies in use to a certain currency of your choice is at the discretion of the account holder. What IB calls "base currency" is meant for reporting purposes only.
It's been some time since I had my base currency in EUR, so I may be wrong. Or things may have changed in the meantime, but I remember that if you set your base currency to anything than USD, you pay interest.
IB calculates the interests for each of the currencies in your account separately. For each currency they calculate your cash position and subtract any margin requirements you may have in that currency. The results is that for each currency you may receive credit interest, or that you are being charged debit interest. The percentage depends on the currency and amount. See also: (credit interest) https://www.interactivebrokers.com/en/index.php?f=46385 (margin/debit interest) https://www.interactivebrokers.com/en/index.php?f=46376&p=m However, in the current situation of low interest rates, is the credit interest either zero, or negative for large cash amounts. Only a large cash position in either Mexican Pesos or South African Rand would give you a positive credit payment.