# Why is an open P&L useful or even necessary on trading platforms?



## twowheeled (Jan 15, 2011)

I have been using Questrade's platform for the past few years. Lately I have been reviewing my investment strategy, trying to improve and remove the emotional aspects from my trading. What I realized is how useless, frustrating, and emotional this column makes me when checking my positions each day. 

Yet I see this figure on every single platform as one of the standard columns. Using any kind of watchlist service like bloomberg also adds this as a default. So once again, why is the open $ profit and loss such a standard metric? It gives no immediately useful information. Today I have an open profit of $1000. But was that on a $60k investment or a $1000 investment? Having this pop up on a daily basis only makes the investor feel terrible on a loss "oh I lost $1000 today" or elated during a gain. But it gives no data on the actual performance of that holding. And it leads to irrational and emotional trading like "if I just break even again on this losing stock, I will sell it." 

What do you think?


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## OnlyMyOpinion (Sep 1, 2013)

I have an item in that nasty column that says I am down $12k since the end of November. 
It is comparing book to mkt value, so it has some validity. It can point out a position worth reconsidering. 
But it has never made me feel useless, frustrated and emotional. 
It is a transitory number that goes up and down daily and is only 1 of 33 in a diversified portfolio. 
The rollup at the bottom is significantly positive, so life goes on.

In short, have a plan, pick your investments carefully, and don't have all your money in too few holdings


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## janus10 (Nov 7, 2013)

twowheeled said:


> I have been using Questrade's platform for the past few years. Lately I have been reviewing my investment strategy, trying to improve and remove the emotional aspects from my trading. What I realized is how useless, frustrating, and emotional this column makes me when checking my positions each day.
> 
> Yet I see this figure on every single platform as one of the standard columns. Using any kind of watchlist service like bloomberg also adds this as a default. So once again, why is the open $ profit and loss such a standard metric? It gives no immediately useful information. Today I have an open profit of $1000. But was that on a $60k investment or a $1000 investment? Having this pop up on a daily basis only makes the investor feel terrible on a loss "oh I lost $1000 today" or elated during a gain. But it gives no data on the actual performance of that holding. And it leads to irrational and emotional trading like "if I just break even again on this losing stock, I will sell it."
> 
> What do you think?


I used it to determine which stocks to sell for tax loss recognition late December. Another use is on my platform I have realtime pricing for S&P, Dow, Nasdaq and NYMEX but NOT TSX. Having the daily P&L actually allows me to figure out the realtime price (strange how they give me that info but not the actual pricing, Bid/Ask spreads, volume, etc.)

Because I generally trade US listed vehicles, having the daily realized gains is nice because it automatically converts it from USD to CAD for me.

But, in no way does it influence me in the way you described. It's just a metric. At the end of the day, the total balance and my margin position are key numbers.


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## AlexanderOgden (Jun 8, 2020)

OnlyMyOpinion said:


> I have an item in that nasty column that says I am down $12k since the end of November.
> It is comparing book to mkt value, so it has some validity. It can point out a position worth reconsidering.
> But it has never made me feel useless, frustrated and emotional.
> It is a transitory number that goes up and down daily and is only 1 of 33 in a diversified portfolio.
> ...


can u tell me something interesting about trading?
I am a newbie


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## SamMacDonald (Jun 8, 2020)

AlexanderOgden said:


> can u tell me something interesting about trading?
> I am a newbie


I am too,but I hope that I will be good in trading


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## Rusty O'Toole (Feb 1, 2012)

It's useful information especially for a trader. For a long term investor it could be a wake up call that his investments are not doing as well as he thought. But if you find it annoying and unnecessary you can always ignore it.


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## MrBlackhill (Jun 10, 2020)

And what about your Closed P&L? That's subjective to the calculation methodology.

Let's take an easy example with two (of the many) methodologies.

You buy 1 stock of company XYZ at 100$, then you buy 1 more stock of company XYZ at 200$. Therefore, you have 2 stocks averaging 150$ stock price.
You sell 1 stock of company XYZ at 150$. Methology A tells you that you just did 0$ P&L on that sell because you sold at your average stock price. You average stock price remains 150$ because it's based on your average buy price.
You sell 1 more stock of company XYZ at 150$. Methology A tells you that you just did 0$ P&L on that sell because you sold at your average stock price. You average stock price is N/A as you don't have stocks remaining.
Now that you've sold all your stocks, your P&L is 0$. That's true, you bought for a total of 300$ worth of stocks and you've sold for a total of 300$ worth of stocks.

Let's start again with methodology B.

You buy 1 stock of company XYZ at 100$, then you buy 1 more stock of company XYZ at 200$. Therefore, you have 2 stocks averaging 150$ stock price.
You sell 1 stock of company XYZ at 150$. Methology B tells you that you just did 50$ P&L on that sell because of FIFO (First In First Out), meaning you've sold the 1 stock you bought 100$ at 150$ and gained 50$. Your average stock price jumps to 200$ (because you sold the stock you bought at 100$ and you still have 1 stock you bought at 200$).
You sell 1 more stock of company XYZ at 150$. Methology B tells you that you just did -50$ P&L on that sell because of FIFO (First In First Out), meaning you've now sold the 1 stock you bought 200$ at 150$ and lost 50$. You average stock price is N/A as you don't have stocks remaining. Your P&L is 0$ because you gained 50$ then you lost 50$.
Now that you've sold all your stocks, your P&L is 0$. That's true, you bought for a total of 300$ worth of stocks and you've sold for a total of 300$ worth of stocks.

Now imagine both methodologies in a more complex context of buying and selling and you'll understand that it will affect your reasoning on your target sell price and how much profit you have done (or you think you have done) so far.


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## MrBlackhill (Jun 10, 2020)

And yet I'll have to search for this also unless you guys have the answer already.

How does Questrade calculate the daily P&L?

Today, BMO.TO is up +0.54% and Questrade is showing that my %P&L Day is -0.29% for that stock. How is that so? (I haven't bought nor sold any shares during the day)


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