After last week PNL high peak, where we touched +410K, we had another "load phase" where practically all our profits have been absorbed by a new "investment". Currently, the load is on crude oil (CL), natural gas (this one is slowly recovering through scalping) (NG), SI and ZL (which I am looking forward to close as soon as possible). Actually towards the end of the last week at moments our PNL peaked underwater, below -60K. Currently, we are fluctuating in the +130K zone with a very high G-L ("gain-loss"), which expresses our increased "potential" for profit. It's evident that when we try to achieve an effect intuitively close to "compounding" the profits, the "risk" (= drawdown that will happen) also has a corresponding "amplification". Today I rolled over NGM6 directly to NGU6, as the contango in conjunction with the short position was in our favor, and the spread of the target contract acceptable.
What timeframe is the PNL calculated on? I thought its daily like how IB gives you by default, but I don't think that' right?
Hi jarjar, that's right, the application PNL is computed "real time", meaning that it is recomputed either as soon as a bid or ask is received or a (partial) fill event (or relative commission) is received, as those are the factors affecting it, and its various components (realized profit/loss, unrealized, comms). As indicated in a previous post, all the PNL and G-L computations (and various others) are performed independently of the underlying account (and therefore also independent of the "AccountUpdates" events sent by IB via API, which are anyway considered to check position synchronicity, but quite useless to properly keep track of your PNL) and that is necessary for various good reasons, including the possibility to start multiple application instances on the same account. What is displayed on the screen at each instant is the entire PNL history (tick by tick, but obviously resampled) since the trading session started (about 230 days ago). Same for the instruments: what is shown on each layer is the complete price (both bid/ask) history (including all the rollovers). [I use also a separate 60 mins view, but that is for some quick manual scalping stunts that one might want to try on occasions, or just to quickly check the data coming in.]
Have you ever thought of posting monthly PnL statements or just the numbers for those interested in performance?
Interesting. That's insane how you can go from 410k PNL to -60k, if I was not risk averse I would be in the ER room right now. Do you think the IB platform/API could partially be responsible for this?
Hello d08, if you mean the complete broker reports with all details of trades, I periodically attach them (you may have missed the posts where I have attached them). One of the recent ones is this post
Well, yes these futures have large swings, so it's not uncommon to see PNL peaks either favorable or unfavorable if you hold a relatively large position. Of course, it's not responsible IB, as I said I compute the PNL independently: it's just that the instrument moves quite a lot (that is also why scalping it in general works fine). While holding the short CL position (which works ok with the instrument contango), I have at the same time sold a good number of CL PUTs (expiry may 17) which must provide an income as far as the price does not come down. The question of "risk" is that with trading, risk is not an "abstract" concept. Sometimes I noticed that people not much familiar with trading have a too "vague" idea of what risk is, in this context. It's not like asking what is the "risk" that I will get wet if I go out without umbrella, in which case an unfavorable event may or may not happen. When trading is concerned, the risk is something much more tangible and real: it's actual drawdown and it's sure that (sooner or later) you will experience it. So it's not "hypothetical" but something that will happen for sure, and it's actually what eventually may generate new profits. So one must be prepared for it and willing to endure it (if he wants to trade, of course). How much DD? well that's another matter, and you have "some" degrees of freedom on choosing how much to load up. The more you take, the easier is that the available capital will not be any more sufficient at some point in the future (or the "pain" of being in DD too large to endure, if we are talking of a private investor).
Oh, okay, thanks. You're dealing with a demo account and that changes things quite drastically for me.
It's not real dollars but a paper trading account, that's why you don't see much emotions involved. Losing that much real dollars would definitely take a toll on the trader's mental state.
That is generally true. Personally, I have been trading both real accounts and paper trading accounts. I can tell you that I am much more worried in these public illustrations than when trading my own real money. Here it's not just money at stake Whatever figure one is going to trade, one has to be prepared to lose 100% (simply don't put at stake the money that you are not prepared to lose). Any other attitude will lead to sure failure. It's like doing a backflip. Failure to commit 100% is actually the most probable way to get hurt (provided that you already know the technique anyway.) On the risk side, you have some degrees of control. There are essentially 2 components: position (on which you have some control), volatility (where you do not have control, but perhaps some "hints" based on current and historical data). In part you can decide how much DD you may take, depending on how high is your "target". (A larger target, will require a greater "investment" = DD.) Of course, sometimes, excessive anxiety or greed can lead to aim too high.