Course Name: Price Action Trading Strategies Using Python, Section No: 9, Unit No: 4, Unit type: Notebook
Hello,
Why here we are calculating costs for the trade book adding colums of entry + exit price? Can you explain the logic behind this?
I think this is a better way to account in the trade book the costs, as the variable called "total_charges" is the total fees we pay in percentage, we should substract to the PnL the equivalent of the PnL*"total_charges".
What do you think?
Hi Daniel,
The sum of entry price and exit price gives us the total value involved in each trade. And the total value of each trade multiplied by the total charges, tells us the total cost for that trade.
Hope this helps!
Thanks
Rushda
But for the PnL we're calculating PnL = (exit price - entry price) * position. Why are using for cost a different way to calculate this? Cost shouldn't be a % taken from the PnL?
Hi Daniel,
We have to account for the cost on the entire buy or sell amount. For example, if you buy the stock at $100, the trade cost will be on $100 and not when you have squared off and calculate the Profit or loss. This is why even if you had a profit of $0.015, but the total charges were $0.016, you will be in a loss.
But yes, there are different ways to calculate costs and you can either do it at trade level or overall as well. It depends on what you require.
Hope this helps. Thanks.