Question:
I funded an account with Anacott about three weeks ago. Since then, you've closed a few winning trades and opened a number of new positions. My account balance with OptionsXpress is now down about $1100 from where it started. I don't know how to understand my account balance at any given point. Is it accurate to say that most of your open positions are normally under water, but will end up as winners eventually? Or is it more accurate to say that the positions I currently have open are doing poorly, so I'm likely to get stuck in them for a while? Any other advice you can offer on how best to determine my current balance would be appreciated.
Solution:
This is a good question and one that is asked most frequently. When we open a new position we are typically 'underwater' by between 6% and 10% due to the BID/ASK spread on the position. As we open new positions this will decrease the 'account balance' accordingly. The other factor that can affect the 'account balance' is the minute by minute performance of each position as the price of the underlying securities change with market conditions. The positions that you have at the moment are doing OK, some have dropped more than anticipated but this will just allow us to 'lock in' more profits and exit positions quicker on the next upswing.
[--- UPDATED: 12/03/2005 10:25:54 BY AGENT: Rob Camden ---]
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