I spent some time the other day putting together a dynamic spreadsheet to help me keep track of just what my Forex trading is doing for me. Prior to getting this thing organized, I was constantly opening up calculators to figure out where I stood in terms of current income, annual percentage rates, etc. I'd have five or six calculators open on my screen at any given moment. That method delivers the goods but it's hard to keep them in mind later on after you've shut down all of the calculators.
My main concern is the daily interest income generated by my account, so the bulk of the spreadsheet is devoted to tracking that. I plug in the current rate of the particular currency cross I'm using - right now I'm shorting the U.S. Dollar and buying the new Turkish Lira for an interest positive carry of 12.75% - as well as the rate Oanda is paying on the base U.S. dollar deposit in the account (presently 1.95%). The resulting annual interest income is divided against the account balance to give me my annual rate of return for that interest. Presently, it stands at 33.75%.
I also keep track of the percentage of the balance that is what I call "original capital," or money I've worked for elsewhere and deposited, and the percentage that is capital gains and accrued interest. This information is neat to have but is really not at all important to what I am doing. Presently, 13% of the account balance is there because of accumulated interest and capital gains. As I deposit more money, this percentage will get knocked back down, then slowly rise again, and so on. It has nothing to do with the income being generated by the account, it's just there just because.
Going forward, since I made several parts of the spreadsheet dynamic, all of these rates and percentages adjust automatically as the balance changes. This comes in very handy when it comes to making decisions about keeping money in play or pulling it out of the account to put toward other investments. It's all about finding the best return possible at a particular point in time.
My desire to get this thing put together comes from my recent realization that it would take me less money on deposit in my forex account to generate interest equal to my monthly debt payments than it would to save up the money and wipe out the debts in one go. I can use calculators to figure out the exact balance I'll need to hit that mark at X interest rate, but it's nice to know at a glance where I'm at now, when I've gotten there, and beyond.
2 comments:
Hey Paul,
First off, let me say, I love your blog. I can honestly say it is one of two that I follow faithfully.
I also have to let you know how much I appreciate you turning me on to Oanda, I've been using my practice account for about two months now, and I'm finally comfortable enough to deposit real money, so I have a check in the mail to them right now.
I really enjoy reading all of your updates on Forex, and would love to get a copy of that spreadsheet if you would be willing to share. I do understand that your time went into it, so if, being the capitalist that you are, you would like something for it, let me know.
Hi, Tony! I was wondering if you're still out there. I'm glad to hear that you're still following my blog despite my recent slacking (the scheduled posting function is coming in very handy!).
The spreadsheet isn't fancy and didn't take me very long at all. Even if it did, despite being the capitalist that I am, I wouldn't charge for it. For one thing, you'll probably be the only person to ever ask for a copy, so demand would be low, and this isn't anything that someone else couldn't whip up in a few minutes, so there's no scarcity. Besides, I'm happy to pass around something like this to people who are going to use it to build wealth - I'd rather live amongst wealthy people than not, so it's worthwhile to me to give away a little of my time to create some more of them.
So, that said, how do I send this to you?
What techniques have you been using in your forex account? The one the spreadsheet works with is the only one I've been using as of late since it fits my working life so well. Are you doing the scalping thing or something longer term?
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