timetotrade

This is the TimeToTrade help wiki. Use the TimeToTrade Trigger Trading Technology™ to execute your trades when Price, Candle Stick, Trend Line, Volume and Technical Analysis chart conditions are met - no coding required. Trade directly in the world’s global markets. Backtest your Trading Strategies. Calculate your UK HMRC Capital Gains Tax liabilities. Manage your Investment Club.


Unit Cancellation

Unit Cancellation is part of the Unit Valuation System.

Purpose

Unit Cancellation is typically used if either:

  • you want an expense to be allocated equally amongst club members, rather than in proportion to their unit holding, or
  • you do not want the expenditure to change / reduce the Unit Value.


Whereas, Unit Addition is typically used for non-investment related income (eg 'appearance' fees paid to the club for speaking at an event), in which case the unit value does not change, but instead the number of units held by each member increases.


The Unit Value is calculated as: the total assets divided by the number of units allocated.


Let us use as an example the purchase of stationery for the club. If you deduct this expense from the total club assets, without changing the number of allocated units, then the unit value will decrease. And so in turn, investment performance would appear to decrease. In addition, the expense is allocated in proportion to each members' unit holding, so those members with a higher number of units incur a higher proportion of the expense than those with fewer units. Whilst this is a perfectly fair arrangement for those expenses that are incurred in direct proportion to a member's investment holding (eg stamp duty / brokers' commissions) the club might decide that other 'non-direct trading' expenses, like stationery or room hire should be paid for equally by club members.


And so, if preferred, a commonly used solution is to allocate the expense by cancelling units equally amongst members, such that the number of allocated units is reduced in line with the reduced value of the club assets. The net effect being that the Unit Value remains constant.


Conversely, Unit Addition would result in the number of units increasing in relationship to the value of the income.


If you do not want income or expenditure transactions to change the Unit Value, or you want the transactions allocated equally amongst club members, you can either:


How it works

If unit cancellation or addition is selected when entering a transaction, the number of allocated units are effectively decreased or increased in proportion to the decrease or increase in the overall asset value; the net effect being that the unit value remains unchanged. For investment clubs, each member's units are decreased or increased equally during unit cancellation or addition regardless of the number of units owned by each club member.


For example if your total assets are worth £1,000 and there are 1,000 units allocated, the resulting unit value will be £1. If you add an income transaction of £100 pounds without changing the number of allocated units, then the unit value will increase to £1.10 i.e. (£1,000 + £100) / 1,000 units. Alternatively if you add an expenditure transaction of £100 pounds without changing the number of units, the unit value will drop to £0.90 i.e. (£1,000 - £100) / 1,000 units.


If you select 'add units' or 'cancel units' when entering an income or expenditure transaction, not only will the asset value be increased or decreased, but the number of allocated units will be increased or decreased proportionately. For example if your total assets are worth £1,000 and there are 1,000 units allocated, the resulting unit value will be £1. If you then add an income transaction of £100 pounds and select to 'add units', the resulting unit value will remain unchanged i.e. the assets will be increased to £1,100 and the number of allocated units will be increased to 1,100. If you are in an investment club, all club member unit allocations will be increased equally when you add an income transaction of the type 'add units'. In this example if 100 units are added and there are 10 club members, the number of units owned by each club member is increased equally by 10 units.


Alternatively if you enter an expenditure transaction of £100, the asset value will be decreased to £900 and the number of allocated units will be reduced to 900 units, therefore keeping the unit value consistent. In this example if 100 units are cancelled and there are 10 club members, the number of units owned by each club member is reduced equally by 10 units.


Unit Cancellation or addition, as in 'cancel units' or 'add units', is now commonly used in place of traditional 'Petty Cash' ledgers that were kept outside of the Unit Valuation System. Historically non-trading related expenses where paid out of a 'Petty Cash' ledger to prevent the unit value becoming skewed, however with the introduction of 'Unit Cancellation' all income and expenditure transactions can now be dealt within the Unit Valuation System ledgers. As a rule of thumb Unit Cancellation should be used for all income or expenditure transactions that are to be allocated equally between members.


For an example of unit valuation calculations please go to the "Unit Valuation System" help page.


It has never been easier to execute your trading strategy. Our Trigger Trading Technology ® means you can now automatically execute your trades directly in the world’s global markets.


You need never miss a trading opportunity again!


Do you want to:

  • buy when your technical analysis chart conditions are met? Really buy, not just get an email or sms alert?
  • or sell when a support trend line is broken?
  • or back-test your strategy going back as far as 30 years?


TimeToTrade's Trigger Trading Technology™ is truly game changing. It gives you a trading advantage. The power to take your trading to a new level.


Open a FREE TimeToTrade account today to:


  • Trade UK, US and European Shares - apply now
  • Execute trades when your Price, Candlestick, Trend Line, Volume and Technical Analysis chart conditions are met using the Trigger Trading Technology® - learn more - help video
  • Email and SMS Trigger Trading™ Alerts - learn more
  • Trade Off The Chart - learn more
  • Back Test Trading Strategies with up to 30 years of historical data - learn more
  • Create Simulated Trading Accounts to test your Trigger Trading™ Strategies - learn more
  • Real time Forex, UK, European and US stock market data - learn more
  • 170+ Technical Analysis and Candlestick Pattern Indicators - learn more
  • All the tools you need to set up and run a successful investment club - learn more
  • Manage your Portfolio and calculate UK HMRC Capital Gains liabilities and SA 108 CGT Tax Returns - learn more
  • Create Trading Competitions for you and your friends - learn more
  • Apply for a trading account today to get the Live Account Features - apply now


Apply now to try our superb platform and get your trading advantage.



The information and data provided is for educational and informational purposes only. Interpretation and use of the information and data provided is at the user's own risk. All information and data on this website is obtained from sources believed to be accurate and reliable. However, errors or omissions are possible due to human and/or mechanical error. All information and data is provided "as is" without warranty of any kind. We make no representations as to the accuracy, completeness, or timeliness of the information and data on this site and we reserve the right, in its sole discretion and without any obligation, to change, make improvements to, or correct any errors or omissions in any portion of the services at any times. Past performance is not a guarantee of future results. Trading carries a high level of risk to your capital and can result in losses that exceed your deposits. It may not be suitable for everyone so please ensure you fully understand the risks involved.


All services are provided by TigerWit Limited. TimeToTrade is a trading name of TigerWit Limited (a company registered in England and Wales under number 9479466). Our Registered address is TigerWit, 7th Floor, Augustine House, 6A Austin Friars, London, EC2N 2HA, England. TigerWit Limited is authorised and regulated by the Financial Conduct Authority number 679941.


The trading services offered by TigerWit Limited are not available to residents of the United States and are not intended for the use of any person in any country where such services would be contrary to local laws or regulations. Subscriptions to TimeToTrade products are available if you are not eligible for trading services.


Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading spread bets with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. All clients should be aware that trading involves risk.

Retrieved from "?title=Unit_Cancellation&oldid=31261"