- ago
Would be handy to have a percentage value for Preferences -> Trading -> Trading Thresholds 'Account Buying Power below' instead of a fixed nominal value.

Like that you could limit open positions e.g. once 50% of buying power is used up.
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Cone7
- ago
#1
50% - relative to...? the start of the day? If you used 50% today, would it still be 50% tomorrow, so about 25% of 2 days ago? I'm having a having a hard time with this idea conceptually. I may be the only one, but please humor me with a numerical example.
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- ago
#2
You're not the only one to be confused by this idea.
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- ago
#3
Relative to the current buying power that is changing over time / per trade.

It is the same calculation like the famous use x% of your capital money management.

Example for a day strategy:
Day 1 buying power: $25000 (50% = $12500)
Day 2 buying power: $24000 (50% = $12000)
Day 3 buying power: $26000 (50% = $13000)

So, if there would be a relative % value, there would not be the need to calculate and adapt 'Account Buying Power below' on a daily (periodic) base.
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Cone7
- ago
#4
So it's relative to the buying power at the start of the session. Okay. But since there isn't a history of buying power, it could only be relative to when Wealth-Lab first connected to the broker.

It's not the same as % of account value, which an instantaneous value that can be accessed at any time.
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- ago
#5
To add to Cone's reply, WL should not try to keep historical values of buying power or account value for use in this context because that could be too unreliable.
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- ago
#6
Thanks for the deeper insights.

For Alpaca there are four different multipliers and you have to figure out the threshold for your scenario.

Can you please explain why do we need a history for the buying power? Seems I did not fully understand the conceptual problems of a relative buying power threshold. Can't you just query it?

https://alpaca.markets/docs/api-references/trading-api/account/
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- ago
#7
Because such APIs only return the snapshot value for today without any reference for Day 2, Day 3 etc. There's nothing for WL to compare the value with.
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- ago
#8
I don’t think we’d need historical values. We are talking about using a snapshot of account buying power to determine a value for Trading Thresholds. It seems doable, but i’d suspect a percentage of current account value rather than buying power would be a more popular choice.
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Cone7
- ago
#9
CODE:
Can you please explain why do we need a history for the buying power?
It goes back to my first question... relative to what? Sure, we can get the buying power at any time, but if the buying power is $45,000 now, we need to know what it was at some point in the past to compare it. Consequently, Wealth-Lab would connect and store the buying power for the day, say $60,000, and then later after trading some, we'll find that it's now $45,000, or 45/60 * 100 = 75%.

@Glitch - current account value is a completely different idea (and the reason we use it for % of equity sizing). You could trade to 0% buying power and in a hypothetical static price environment the current account value would be the same as before.
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- ago
#10
It would be relative to the start of the WL session.
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Cone7
- ago
#11
I see, account value would work that way too. I was thinking in terms of 50% .. which would be a really BAD day for an account, and probably you'd actually want to start buying then!
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- ago
#12
Like Glitch mentioned, the use case for me would be a snapshot. I published a system on collective2 and here you have a query reflecting the account values:

CODE:
"marginEquityData" : { "buyPower" : 10487, "modelAccountValue" : 25485, "marginUsed" : 0, "equity" : 138, "updatedLastTimeET" : "2022-05-05 17:48:29", "cash" : 10349, }


They have a kind of odd margin pool, that allows using your margin for a mix of stocks, futures and option. The idea behind that is probably to be able to hedge with futures or options. Or to run strategies using stocks and options:

https://support.collective2.com/hc/en-us/articles/217220137-Does-my-Buy-Power-include-margin-
https://support.collective2.com/hc/en-us/articles/203142230-What-if-I-don-t-want-to-use-margin-in-my-stock-system-

Bottom line for me is, I do not want use margin and as suggested "only trade half of buying power". As a function in kind of pseudo code:

CODE:
If ('buyPower' <= (modelAccountValue / 2)) { return tradingThreshold = true }
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- ago
#13
You could use an equity position size of 50% and max open position of 1 which would maintain 1 position at only 50% account value at a time. Or 25% and 2 open positions to maintain the system at 50% of your account value or any multiple therein using wealthlabs current tools from what you are describing above.
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Cone7
- ago
#14
Okay, but still no one has voted for this... not even the author of the request!
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- ago
#15
I figured out handle my money management for my needs and with this account with the following parameters:

- Position Size: 20% of equity
- Thrading Treshold (Number of entry orders exeeds): 5

This this is in line with arflouro82's suggestion.

Thanks for the discussion, it helped me to understand the features of the preferences better. So I think there is no need for this feature request.
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