How does the cash position work?

Almost everyone has a cash position in their portfolio. While most investors see cash as something temporary, it's really a full position in its own right. Holding cash can have a big impact on the return of your portfolio.

In falling markets, for example, it pays to hold cash, because your cash doesn't make a loss. In rising markets, it costs you return. To calculate your return fully, we need to know your cash position at every moment. That's why PDT calculates back what your daily cash position was in the past. This way, you don't have to enter or track it yourself.

One cash position per currency

For each broker, we keep a separate cash position for every currency. If you receive a dividend in dollars, it goes to your dollar cash position. Money you hold in euros stays in your euro cash position. This way you can see exactly how much you hold in each currency, just like at your broker.

Cash positions with a balance of 0 are hidden from your portfolio.

How is my cash position calculated?

To calculate your cash position, we look at all actions that move money into or out of a cash position:

• Deposits and withdrawals: a deposit increases your cash position, a withdrawal decreases it.
• Transactions: when you buy a security, we decrease the cash position you paid with. When you sell a security, we increase the cash position that receives the proceeds.
• Dividends: a dividend increases the cash position you receive it in.
• FX conversions: a conversion decreases one cash position and increases the other.
• Costs and tax: transaction, dividend, conversion and booking costs and tax, and broker expenses, are deducted from the cash position you paid them with.
• Income: income from your broker, such as cashback, increases your cash position.

It's important that all your actions are entered correctly, because we use them to calculate your past cash positions.

When you invest with borrowed money via margin, a negative cash position can arise. This is because we treat margin as debt. For example, your portfolio value can be lower because we include the 'repayment' of this 'debt'.

The performance of your cash position

Click a cash position in your portfolio to open its sidebar. There you'll see its balance, every action that moved money into or out of it, and its performance.

The performance shows what your cash position has cost or earned you. Costs and tax, such as conversion costs and booking costs, are shown as separate lines, so you can see right away where your money goes.

Is a cash position in a currency other than your base currency? Then its value moves with the exchange rate. That's why the performance also shows profit or loss on exchange rate, split into unrealised (on the balance you hold now) and realised (on money you converted or withdrew).