I am looking at my IB annual statement trying to figure out my FX P&L for last year. Could someone tell me how to read this statement? Just looking to get the net gain in USD to report on my tax return. My base currency is USD. Each currency shows sales and purchases in that currency but not in USD. I assume the answer is somewhere in the "Change in Position Value" section. That section also includes my stock and futures trades. I won't be trading forex with IB again. This is too much trouble. Other brokers give you P&L in USD.
Yes, it is nightmare. I keep all my FX trades logged in excel to the penny...Still amazes me IB has yet to find a way to give us our FX PL to the penny each year. It's a black hole.
This is what i was eluding to in the other thread that I posted. No one responded so I assumed no one understood what I meant. When you close out a position you are paid your profits in the settlement currency (also called quote currency which is the bottom of the pair.) This means that the profit you have will be at risk to market fluctuations. So the amount of CAD or CHF or JPY that you have in earnings will never be to the penny until you convert it back to USD. I suspect from what you are saying that you have money still in these foreign currencies. You would need to BUY USD/CHF to clear out your CHF and likewise for other foreign currencies. Is this what you were referring to? My question was how often do most people "zero out" this foreign currency into USD? I was thinking of doing this once a month or so.
N54, That is not what I was referring to but that may be the easiest way to figure my gains. I always converted the foreign currencies to USD after closing the trade. I will look back at those conversion transactions to determine my P&L. Thanks.
I zero out after each non-base currency trade. It's somewhat a pain, but out of the 5 pairs I trade, only 2 are non-base. If not, you are exposed to market flux and interest rate flux.
NB54, That is not what I was referring to but that may be the easiest way to determine my P&L. I zero out the foreign currencies after every trade. By adding up all of those currency conversions it should give me the total. Is there ever a case where I would have USD left over after closing a trade?
Let me give you some simple example that works for me, even though most of my trading involves cross currencies (i.e. don't involve USD). + Beginning year cash in foreign currencies (valued in USD) = $5000 + Year end cash in foreign currencies (valued in USD) = $2000 + Foreign currency trading gains (both cross trades and those involving USD) = X - You'll see in a moment that the value of X doesn't get directly input into the year end gain calculation. + Commissions on foreign currency trades = $1000 - This is always paid in USD at IB for a USD account. + Net purchases of USD = $25,000 - This would include gains from forex trades involving USD (e.g. buy/sell AUD.USD) and periodic purchases of USD to clear currency gains from forex trades not involving USD (e.g. buy/sell EUR.CHF). + NET P/L for tax reporting = Net purchases of USD - commissions - beginning year foreign cash + year end foreign cash = 25,000 -1000 - 5000 + 2000 = 21,000 It gets a bit more complicated if you have foreign dividends (you need to subtract these), foreign stock purchases (you need to add these in), foreign stock sales (you need to subtract these), open trades at year end, etc. But it will give you a very accurate figure that takes into account not only the P/L from your direct trades but also the P/L resulting from currency changes that occur from the time you close a trade until you convert the foreign currency into USD. And all of this data is available on IB's year end statement. I do track each of my trades in Excel and use day end exchange rates to monitor my progress but the above eliminates any errors I might have made along the way and takes into account differences between day end and actual rates. Comments/questions?