1. User Account and Accounting Units - adharapayments/User-Manual GitHub Wiki
When onboarded into Adhara Currency Trader platform, users are given an individual User Trading Account. Users use their credentials (login and password) to access the trading and backoffice GUI as well as to connect from their automated trading strategies.
A trading account is composed of several Accounting Units. Accounting Units are the basic components of the users' trading accounts. They are used to identify and track positions and P&L of individual trading strategies. The user's total funds and P&L for the complete trading account is the addition of all of the funds and P&L of all the accounting units available.
Each accounting unit can contain two types of positions:
- Single currencies, called "assets" in ACT terminology, or simply "cash". These consist of single currency positions, such as EURs, USDs, CHFs, GBPs, and the like. ACT's accounting units are Multi-asset, meaning that they can hold cash positions in different currencies simultaneously
- Currency pairs, called "securities" in ACT terminology, such as EUR/USD, GBP/USD, AUD/JPY, and the like. A security is thus a pair of two assets, the first of which is called the base asset, while the second one is called the term asset. Technically, ACT treats positions in securities as single swaps, and so each successful trade in a particular security either increases or decreases the total exposure to the relevant currency pair. Positions in currency pairs are simply called "positions" for convenience.
The total mark to market for a particular accounting unit is calculated as the mark to market value of each cash position in each asset at the market going rate, plus the mark to market of each currency pair (swap) position at the going rate (also called "floating P&L"). The current P&L for a given period is the total mark to market of the accounting unit minus the total mark to market at the beginning of the period. At inception, each accounting unit has no cash and no positions, therefore its mark to market is zero. And so the total historical accumulated P&L of an accounting unit since its inception equals its current mark to market value.
Upon creation, each trading account is built with three predefined accounting units:
- Wallet: this accounting unit is intended to hold the cash coming in and out from bank transfers, so they are isolated from real P&L realized from the user's trading activities. Therefore it only holds cash, i.e. no positions in securities.
- Algorithmic trading: this accounting unit holds positions opened from algorithmic trading strategies, accessed through the provided trading APIs. Cash amounts are also mounted as a result of i) commissions being charged on trading activity (typically in USD), ii) swaps being charged on open positions at rollover time (typically on base currency), and iii) positions settled on the term currency of the corresponding security
- Manual trading: this accounting unit holds positions opened through the manual trading GUI, and cash mounting from manual trading operations as well.
Over time, users can request additional algorithmic trading accounting units. Trades, positions and P&L for each of them can then be held and tracked separately, so the users can discriminate different strategies based on their performance without complex post-trade analysis.
It is worth noting that accounting units are only a "logical" partition of the trader's trading account, which is the consolidation of all accounting units into one global account. Therefore, a user can have in a given point in time a long position in one accounting unit and a short position in another one, resulting in a zero position in the consolidated, global trading account. Also, different long or short positions in different accounting units may result in (larger) consolidated positions with different (average) prices at the overall trading account level. In any case, what always holds true is that the addition of the mark-to-market values of all the accounting units equals the mark-to-market value of the overall trading account.
In ACT's terminology, a trading account is said to be implemented on top of one or several prime broker accounts. Prime broker accounts can be thought as the final bank repositories for the trader's cash and positions. ACT can support multiple prime broker accounts, although most systems typically use one.