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The definition of Equity is correct but the example was badly
worded ...
What I should have said was ... There is no additional EQUITY by
utilizing additional buying power but investing the same dollar
amount because although assets increase, liabilities do as well i.e.
whether leverage is 1x or 100x, EQUITY is the same until market
value changes. When market value changes EQUITY will be impacted
100x as much with leverage of 100x whether that be up or down.
--- In amibroker@xxxxxxxxxxxxxxx, "Fred" <ftonetti@xxxx> wrote:
> I'd agree that buying power is twice, but NOT equity. Equity is
> defined as the difference between the market value of a property
and
> the claims held against it. If this were not true then I could
have
> enjoyed having 10x the equity at the time of my last home purchase
by
> buying a home for 10x as much and taking out a mortgage that was
10x
> as much.
>
> --- In amibroker@xxxxxxxxxxxxxxx, "Tomasz Janeczko"
<amibroker@xxxx>
> wrote:
> > [amibroker] Re: Script and Stockconsultant websiteHello,
> >
> > Just a few posts ago I think I expressed clearly what is needed
> when contacting support:
> > http://finance.groups.yahoo.com/group/amibroker/message/86456
> >
> > Sending screenshot alone means nothing to me.
> >
> > Since you do NOT provide all necessary details (formula,
settings)
> that are needed to analyse
> > the case you are giving me NO CHANCE to know what you have done
to
> obtain results.
> >
> > _ASSUMING_ that this is the same case as Bert reported earlier
> (comparing results obtained
> > with ^RUT with 50% margin with results obtained with UAPIX
without
> margin,
> > I can say that numbers ARE correct.
> >
> > I can copy-paste response which I sent to him with exact
> calculations explaining why:
> >
> > === MY RESPONSE TO BERT COPY PASTE SECTION 1 ===
> > In this example
> > we assume the following: that UAPIX movements are exactly 2x the
> movement of ^RUT
> > (so there is exact 2x leverage between them). (Note that this
> assumption may not be true in
> > reality and is used for illustration purposes only)
> >
> > say UAPIX moves from 23.77 to 24.77 (+4.2%) and your initial
equity
> is
> > 23770 so you purchase 1000 shares. Your profit is $1000 and
percent
> profit is +4.2%
> >
> > At the same time ^RUT moves 2.1% from 638.67 to 652.10.
> > Now your cash amount is the same as in previous case 23770 but
you
> are on
> > 50% margin so your buying power is twice as much 2*23770 = 47540.
> > So you can purchase 74.4359 shares (for simplicity
> > in the example we assume that fractional purchases are possible)
> > Your dollar profit is (652.10-638.67) * 74.4359 = $1000 (approx
due
> to rounding) - the same
> > as in first case.
> >
> > Your PERCENT profit is however:
> > $1000 / $47540 = 2.1%
> >
> > This is so because in second case you had to buy shares for
$47540
> > while in first case you only spent $23770.
> >
> >
> > If you want expectancy to be the same in both cases you should
not
> use
> > percent profits but dollar profits instead.
> >
> >
> > === MY RESPONSE TO BERT COPY PASTE SECTION 2 ===
> >
> >
> > When you use leveraged instrument BOTH % profit and dollar
profit
> are twice
> > because PERCENT is based on SMALLER EQUITY VALUE.
> >
> > ( 2 * DOLLAR GAIN ) / EQUITY = TWICE normal % profit
> >
> > If you use magin account PERCENT PROFIT is calculated from
HIGHER
> EQUITY VALUE.
> > When use 50% margin account your EQUITY is TWICE your cash.
> > So even if DOLLAR GAIN is twice, PERCENT GAIN is the SAME
because
> equity (buying power)
> > is TWICE.
> >
> > ( 2 * DOLLAR GAIN ) / ( 2 * EQUITY ) = DOLLAR GAIN / EQUITY =
> normal % profit
> >
> > This is so because on margin account you actually purchase TWICE
> the original amount
> > and your dollar profit is also twice as much. But those 2/2
reduce
> and % profit remains the same.
> >
> > If you are using leveraged instrument, things are quite
different:
> > you invest only HALF the amount you would invest on margin
account,
> yet dollar profits are the same.
> > Hence percent profit is double.
> >
> > =====
> >
> > Best regards,
> > Tomasz Janeczko
> > amibroker.com
> > ----- Original Message -----
> > From: Fred Tonetti
> > To: amibroker@xxxxxxxxxxxxxxx
> > Sent: Wednesday, August 31, 2005 1:58 AM
> > Subject: [amibroker] Re: AmiBroker Support
> >
> >
> > Looks like the attachment didn't make it in the previous post .
> >
> >
> >
> > = = = = = = = = = = = =
> >
> >
> >
> > TJ,
> >
> >
> >
> > Really ? Maybe we don't understand the statistics . See the
> attachment. Same system on both sides traded without margin on
the
> left, with margin on the right.
> >
> >
> >
> > Should:
> >
> >
> >
> > - Avg Profit/Loss% in ALL TRADES Section
> >
> > - Avg Profit % in WINNERS Section
> >
> > - Max Trade% Drawdown
> >
> >
> >
> > be the same ?
> >
> >
> >
> > If so can you please explain ?
> >
> >
> >
> > Thanks, Fred
> >
> >
> >
> > = = = = = = = = = = =
> >
> >
> >
> > Follow up: I have made a check to verify your report about
avg.
> profit/loss
> > and all I can say is that I can not confirm your observations.
> >
> > Best regards,
> > Tomasz Janeczko
> > amibroker.com
> >
> >
> > ----- Original Message -----
> > From: "Tomasz Janeczko" <amibroker@>
> > To: <amibroker@xxxxxxxxxxxxxxx>
> > Sent: Tuesday, August 30, 2005 5:51 PM
> > Subject: Re: [amibroker] Is AmiBroker Support on
Vacation, "rude"
> or what??
> >
> >
> > > Hello,
> > >
> > > I have forwarded your message to Marcin for checking in
detail.
> > > One thing is sure that we do not "selectively decide" what
> issues to respond
> > to.
> > >
> > > I have quickly checked the issue you mentioned and you don't
> ask any question
> > in it.
> > >
> > > All I can see are some thoghts/observations.
> > >
> > > Best regards,
> > > Tomasz Janeczko
> > > amibroker.com
> > > ----- Original Message -----
> > > From: "bistrader" <bistrader@>
> > > To: <amibroker@xxxxxxxxxxxxxxx>
> > > Sent: Tuesday, August 30, 2005 4:35 PM
> > > Subject: [amibroker] Is AmiBroker Support on
Vacation, "rude"
> or what??
> > >
> > >
> > >>I find it disturbing that AmiBroker Support selectively
decides
> what
> > >> issues it wants to respond to. I have talked to several in
our
> > >> FastTrack group that send emails to AmiBroker Support and
even
> Tomasz
> > >> asking for help. Oh sure, they get the standard message
saying
> that
> > >> a response will be provided within 24 hours but they never
> hear a
> > >> thing on what they consider to be critical items. One might
> ask, why
> > >> is AmiBroker Support and even Tomasz being so selective in
> what they
> > >> repond to? I, for one, have no idea.
> > >>
> > >> I certainly hope that this does not continue. I really like
the
> > >> software and the response by AmiBroker prior to these
string
> of cases
> > >> has been quite good.
> > >>
> > >> In any case, I hope it changes. I saw a message recently
where
> > >> someone on this board implied that someone else was being
> rude. Is
> > >> it "rude" when one tells you that a response will be
provided
> and
> > >> none ever is? Is it "rude" when someone does not respond
even
> when
> > >> repeated requests are made. I hope not. I would rather
think
> that
> > >> he/she just got caught up in the moment. An oversight, if
you
> will.
> > >>
> > >> So, if interested, think about responding to request 22642
> originally
> > >> sent to AmiBroker on September 12th and then again on
September
> > >> 18th. Try to be nice as we should all practice what we
preach.
> >
> >
> >
> >
> >
> >
> >
> >
> >
> >
> >
> > -----------------------------------------------------------------
---
> ----------
> >
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> > Try SPAMfighter for free now!
> >
> >
> >
> > -----------------------------------------------------------------
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> ----------
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> > Paying users do not have this message in their emails.
> > Try SPAMfighter for free now!
> >
> >
> > Please note that this group is for discussion between users
only.
> >
> > To get support from AmiBroker please send an e-mail directly
to
> > SUPPORT {at} amibroker.com
> >
> > For other support material please check also:
> > http://www.amibroker.com/support.html
> >
> >
> >
> >
> >
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> >
> >
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> >
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> >
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> >
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