I’ve recently learned about Wash Sales upon questioning why the price for my shares of stock purchased through a Collective2 strategy didn’t match between what my broker was reporting and what Collective2 was reporting on the Profit/Loss report and the ‘Entry Price’ on the Manage Positions page.
A trade that the system had entered me in dropped significantly in price. I came into margin violation at my broker, and my broker sold shares to cover the margin.
Later, within 5 days or so, Collective2 tried to sync me back up with the strategy, recognizing that I was out of balance with the strategy. This could have been after I added more funds to my brokerage account to support other strategies. This strategy appears to have auto sync’d and ended up purchasing more of the stock with my additional funds I had deposited. This created a Wash Sale. The entry price vs the Cost Price is significantly different, and reports on Collective2 are grossly incorrect because of these Wash Sales and due to Collective2 always trying to remain in sync.
Questions:
- How do I adjust the entry price in my Collective2 reports to correctly reflect the actual price that I am in the trade with at the broker?
- Any way to prevent this in the future when my broker automatically sells my stock to recover margin, and not have Collective2 try to auto sync once it has enough funds to enter more trades?
We require that you leave AutoSync turned on, as a safety precaution.
Re: wash sales: The truth is that I’m not very familiar with the intricacies of wash-sale rules, or what trigger you are trying to avoid and why. On the most simplistic level, let me suggest that the best policy is to try never to have a margin call – that is, have sufficient capital in your account to weather drawdowns that inevitably come. (If this sounds obvious, then I apologize, but it is worth saying, I think.)
If you do have a margin call, and your broker liquidates your positions, then be aware of whatever wash-sale rules you are trying to avoid when you turn on trading again. You might want to delay restoring trading until enough time passes when this won’t be an issue. A second alternative is to turn off trading for the strategy entirely, then restart it. When you do this, C2 will ask you if you want to “rejoin trades in progress.” You could say, “No,” thereby eliminating the problem of re-purchasing shares you just liquidated.
Finally, as far as your own personal P/L reports, you can edit your personal AutoTrade PL reports. Click the pencil icon next to an individual trade to edit the trade data.
Thank you for your reply!! I really appreciate your time.
Just to respond to your points so you maybe understand from my perspective a bit better as to why this unfortunate event has occurred.
I never disabled AutoSync. The system disabled it when the strategy continued to enter additional trades after the first initial trade, and I didn’t have enough margin to cover the additional units.
I understand the best policy is to never have a margin call 
However, I didn’t anticipate this stock in this strategy would have dropped 46% from the initial time I entered the trade.
I think where I got in trouble is when I went to my control panel and found that AutoTrade had been deactivated (on another strategy I subscribe to), and I saw a yellow yield sign that said click here to re-enable strategy. When I tried to enable AutoTrade on that strategy, it eneded up re-enabling AutoTrade on all of my strategies, therefore using my additional funds that I had deposited to try and sync up, and therefore creating the Wash Sale.
Re: the tip on editing the P/L reports… Thank you!! This would be great if it worked, but I cannot get my changes to save, unfortunately. I tried this both in Chrome and Edge. I click the Pencil icon, change my quantity, and click the save link. No update. I refresh the page to ensure it isn’t cached, and still I do not recognize that the data has updated. Ideas?
