Profit and Loss

Select the Profit tab

In order to access the profit and loss controls, in the main window of Trading Conceiver, select the main tab

  Profit

Controls

Time range

Calculations are performed within this time range.

By default, the first and the last dates available in the historical file are selected. You can select any interval, to calculate the profit in a different time frame.

Fixed fee per trade

This is the fixed fee or commission to pay to the broker, both at opening and closing of each operation.

It also known as fixed broker fee, fixed brokerage fee, fixed trade commission, flat fee, per-trade flat fee.

Percentage fee per trade

This is the percentage fee or commission to pay to the broker, both at opening and closing of each operation. The percentage is calculated with respect to the invested capital, i.e.it is a percentage of the transaction value.

Note that it is a percent (%), not per mille (‰).

Note also that it is not a 'per share rate', where a price is charged for every share traded.

It also known as percentage broker fee, percentage brokerage fee, percentage trade commission, floating fee.

Capital gain tax

Tax to be paid on the capital gain as a percentage.

Capital loss is tax-deductible

Capital losses can be used to offset capital gains on tax return. If you have already incurred in a loss, then you can use that loss to offset the capital gain used to calculate the capital gain tax in the subsequent winning trades.

Initial capital

The initial capital or balance.

In any currency you are using.

Slippage per trade

This is a worsening of the profit, a.k.a. negative slippage.

The trading prices reported by Trading Conceiver are theoretical, but in reality buying and selling could occur at prices slightly different, due to many reasons (gaps, delays, low volumes...). This could result in more favorable or less favorable prices. The slippage considered here is always less favorable and reduces the profit per trade by the indicated percentage. So it is calculated only once per trade, when closing the position. Note that it is not a percentage relative to the trading price, but to the profit (and loss).

Leverage

The leverage, i.e. the magnification of the price movement. The profit (and loss) of each trade is multiplied by the factor input here. For instruments with no leverage, like standard stocks, input 1.

The leverage is increased by some derivatives (options, swaps, futures).

Annual return

Calculations

Opening a position

When opening a position, all the available capital is invested, taking into account the brokerage fees, both fixed and percentage.

Closing a position

When closing an operation, the following steps are taken, in this order.

A profit is calculated by comparing the prices when opening and when closing the position.

This profit is worsened by the slippage. This is a pretty strong assumption, because in reality slippage sometimes will worsen but sometimes will improve performance. We are assuming it is always unfavorable.

The result is multiplied by the leverage.

The capital is updated based on the profit.

The brokerage fees are calculated, both fixed and percentage, and are subtracted from the capital.

The capital gain is calculated by subtracting the broker fees for opening and for closing the operation from the profit. This is an important point, because we are assuming something favorable for the trader. The capital gain, upon which taxes are based, is reduced by brokerage fees. This might not be the case for you.

The capital loss is taken into consideration. If the capital gain is negative, the capital loss is increased by an amount equal to the capital gain and no further actions are taken at this step. If the capital gain is positive, there are two options. If the capital loss is not tax-deductible, no actions are taken here. If, on the contrary, the capital loss is tax-deductible, and there are previous losses, the capital gain is reduced as much as possible according to previous losses. That is, if previous losses are greater than the capital gain, the capital gain is considered zero. If previous losses are less than the capital gain, the capital gain is reduced by an amount equal to the capital loss. The capital loss is updated (reduced) accordingly.

Taxes are calculated based on the remaining capital gain. If the capital gain is negative or zero, no taxes are to be payed. If the remaining capital gain is positive, taxes are calculated as a percentage of it.

The real profit of the operation is computed, taking into consideration all the previous steps. Furthermore, to make the profit more realistic, it takes into account that, before opening the position, the real capital was not only that resulting as the capital after the purchase, but there was also the opening position broker fee. So, in order for a profit to be positive, not only the price must move in the right direction, but it must over-perform brokerage fees, too. This reflects the considerations about the capital gain, so that they have the same sign. So it might happen that the capital increases after a trade, but the profit is negative. This is the profit e.g. listed in the table.

Stop & reverse

In case of a stop & reverse, i.e. when a position is closed and the opposite position is open right away, the fees and capital reported in the table are the final ones, after the opening of the new position.