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Re: Account Cash Balance



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Thank you (I've kept the name private).

So really, "cash" in my account *is* in fact updated every day. As you say,
ACB, OTE, and LV are just accounting terms. LV is really the cash balance
after marking to market.

Here's another question. I don't want to look the gift-horse in mouth, but
my broker has confirmed that TBills will be allowed to mature without
breaking them even with a negative LV. As long as the M/E is positive. This
is in effect lending the customer interest free money (if LV is negative).
Here's an example:

1)Open account with $20,000.

2)Buy 20,000 TBill (cost = $19750, let's say), leaving ~$250 cash in the
account. Available margin: $19,000 from TBill haircut + $250 cash. LV:$250

3)Buy 1 US contract. Margin: $2500. M/E: $16,750.

4)Close open position with an $8,000 loss. (Bad trade!) New LV: -$7,750.
However, since M/E: $11,250 is still positive, the FCM doesn't require you
to break the TBill. At this point, the FCM is "carrying" you loss while you,
the customer, is earning interest on that $20K TBill. Not bad (loss on the
trade notwithstanding)

Isn't this interesting?

Scott Hoffman



>Scott,
>I saw your question on the Omega List about ACB and thought that I could
>provide a little insight.  ACB is not marked to the market everyday, but
>Open Trade Equity (OTE) is.  Adding the ACB and OTE equals LV.
>I've asked the same question before.  From my understanding, the reason
>that the accounting is done this way is so that you have a basis point
>to go from.  With the ACB you can see where your account stood before
>you entered positions, see what your trades are doing for you with the
>OTE and determine where your account stands now with the LV.
>I hope that this helps answer your question.  I know that it seems
>contrary to what marking to the market means, but ACB, OTE, LV, and all
>the other acronyms on your statement are just accounting terms.  Your
>bottom line remains the same.  Feel free to let me know if I can help
>with any other questions.
>