Home  Journals  Financial Analytics: Science and Experience  32(218) - 2014 August

Investor's operations and the analysis of brokerage account

Available online: 19 August 2014

Subject Heading: Stock market

JEL Classification: 

Pages: 2-13

Due to the significant decline in the number of active private investors on the Russian stock market, as well as the need to improve the efficiency of the securities portfolio management of institutional investors, the problem of economic analysis of brokerage account with the aim of improving the effectiveness of individual trading transactions assumes a great importance. The object of the study is a brokerage account, and its subject is the contribution of the specific trading operations to the overall trading profit. The problem of the development of economic analysis of brokerage account with the aim of improving the effectiveness of individual trading transactions has acquired great importance due to the significant decline in the number of active private investors on the Russian stock market, as well as the need to improve the efficiency of the securities portfolio management of institutional investors. An analysis of a brokerage account may be both the internal and the external ones. An external analysis is performed by the broker to the client (trader). An internal analysis of the brokerage account must be carried out by the investor (trader) in the light of its objects and tasks. The aim of the work is to develop a methodology for internal analysis of the brokerage account taking into account the objectives of the individual trading transactions and based on that to develop the guidelines on factor analysis price gains (profit), which allows determining the contribution of individual operations in the overall profit. When discussing the development of methodologies for the brokerage account analysis, the author suggests the common approaches to profit accounting on the specific trading operations, which are understood as the linked transactions connected (consolidated) by single purpose. The author introduces the new concepts of the price taxable profit, operating profit, speculative profit, investment profit, reverse profit, short-profit, long-profit, which enable to perform the factor economic analysis of the change in the brokerage account value. The security portfolio managers of the institutional and private investors while carrying out economic analysis of the trade transactions performance may use the results of this paper for their activities. The article arrives at conclusions on the necessity of assessing the contribution in foreign exchange gain not only of the specific transactions in the sale of shares, but also in the separate trading operations, as well as it summarizes the principles of operating profit accounting in order to determine the foreign exchange gain of each individual trading operation.

Keywords: brokerage account, factor analysis, profit, share deal, reverse operation, basic stock, reverse stock, exchange rate gain, reverse profit, FIFO, buy-and-hold strategy, short selling

References:

1. Vince R. Matematika upravleniya kapitalom. Metody analiza riska dlya treiderov i portfel'nykh menedzherov [The Mathematics of Money Management: Risk Analysis Techniques for Traders]. Мoscow, Al'pina Pablisher Publ., 2013, 408 p.
2. Kogdenko V.G. Faktornyi analiz ekonomicheskoi pribyli (EVA) kak sposob otsenki effektivnosti deyatel'nosti organizatsii [Factorial analysis of the economic profit (EVA) as a way to assess the effectiveness of an organization activity]. Finansovaya analitika: problemy i resheniya – Financial analytics: science and experience, 2009, no. 1, pp. 65–69.
3. Rossiiskii fondovyi rynok. Sobytiya i fakty. Obzor rynka za 2013 god [The Russian stock market. The events and facts. The market review for 2013]. Available at: Link. (accessed 02.07.2014) (In Russ.)

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ISSN 2311-8768 (Online)
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