Thread on FI portfolio value.

1) One thing this week has shown is that traders remain very attached to the portfolio value based on the buy price. Getting upset when it drops and happy with it rises. But this valuation is meaningless now.

2) You cannot sell your port right now for the buy price value. Only the IS value. While traders fixate on (relatively) tiny drops and rises the IS prices are much more volatile. On one measure I've dropped 25% and then gone up 15%. On another I've dropped 2% and gone up 1%.

3) Once full OBs come in the buy price as it currently is will cease to exist and will be set by traders. The current valuation on the site will either have to change or be even more obviously meaningless.

4) In a normal market your port valuation would be based either on the last traded price or, more typically, the mid point between the lowest offer and highest bid. I don't know if FI will do that but it would be the closest reflection of actual value.

5) This number will be much more volatile that the current buy price valuation. If traders focus, as they do now, on short term movement only they'll be in a constant state of panic or excitement which is not healthy or conducive to good trading.

6) Traders will have to learn to zoom out; look at the longer term picture and get more relaxed about nominal shifts in the value of their port. Otherwise they'll just get fleeced by experienced traders.

7) (Even if FI keep some kind of valuation in place based on the existing model - being distracted by that will mean you're not paying attention to what's actually happening.)