Identifier: C5T5L4 · Revision: 2026-10-26 · Classification: domestic

Decision and objectives

The practical task is to write a decision record with a baseline and falsifiable assumptions. Make the decision reproducible: name the exposure, time horizon, cash requirement and comparison baseline before selecting a product.

Objectives: Write a decision record with a baseline and falsifiable assumptions; Reconcile forecast error with execution and funding costs; Separate outcome quality from process quality.

Prerequisite: C5T5L3; completed Classes 1–4 and the Stock Market School foundation or Forex School foundation. Every example is hypothetical. Prices, dates, rates, fees, contract factors, policies and tax schedules are supplied teaching inputs, not current offers or legal parameters. No live account is needed.

Mechanics

A decision record states the objective, investor/access facts, timestamped evidence, baseline, chosen route, quantities, expected normal/adverse cash flows, costs, funding reserve, residuals and exit/review conditions. It should be readable by someone who did not share the original conversation. Retain the version used at the decision; later market information belongs in the review, not a rewritten forecast.

A profitable trade can have an unsound process and an adequately reasoned hedge can lose money while meeting its protection objective. Review performance against the stated objective and a feasible baseline rather than judge skill from the sign of one result.

Price and return drivers

Forecast-to-realized bridge = forecast gross result + market/model deviation − extra execution − extra funding − other unexpected costs, with originally forecast costs accounted once. Evaluate base-currency cash on actual dates. If the baseline also has costs or market changes, calculate it independently using supplied facts.

Worked case

Hypothetical record forecast gross hedge-package gain TRY 12,000, execution TRY 1,000, funding TRY 2,000: expected net TRY 9,000. Realized mark-based gross is TRY 5,000 because the reference basis moved differently; actual execution including slippage totals TRY 2,000 and funding TRY 3,000, leaving zero net. Bridge from forecast net: 9,000 − 7,000 gross deviation − 1,000 extra execution − 1,000 extra funding = zero. A feasible unhedged baseline in the supplied scenario loses TRY 18,000 after its own costs, so the hedge package improved the result by TRY 18,000 while missing its original forecast.

Adverse case

If the actual hedge required TRY 50,000 more cash than the committed reserve and survived only through an unplanned asset fire sale losing TRY 4,000, include that cost: net becomes −TRY 4,000 and improvement over the baseline TRY 14,000. The positive relative improvement does not erase the funding-process failure. Conversely, a provider's favorable accidental fill does not validate an otherwise unauthorized or undocumented route.

Practical use

Preserve confirmations, source versions, custody records and dated cash transfers. Note what was forecast, observed, inferred and unknown. Use the review to change specific assumptions or execution/funding rules, not to add speculative complexity. Check actual tax once the investor/year/lot facts are known; do not retrofit a favorable fictional tax rate to make a past decision look successful.

Use permitted domestic access routes and the actual instrument documents. Verify intermediary authority, investor eligibility, order/redemption terms, settlement, custody and executable size before implementation. Reconcile spread and commissions, funding, collateral, custody, product expenses, conversion and exit charges; an amount already embedded in a fill or fund unit price is not deducted again. A published mark or product description does not promise an executable price or liquidity.

Tax is excluded unless a numerical schedule is expressly supplied as hypothetical. For actual rules record income year, residence and individual/corporate status, instrument and acquisition/contract dates, taxable event and rule effective date. The GIB investment-income guide, checked 2026-10-26, covers 2025 individual income; its 2026 publication date alone cannot settle a 2026 liability.

Decision boundaries

Retain a strategy only if its objective, access and funding logic remain valid under evidence. A justified no-trade decision is evaluated against its recorded reason, not a later price rise alone. Decline a new implementation until a material data or funding defect identified in review is fixed.

Practice and references

Exercise: hypothetical expected net TRY 5,000. Realized gross is TRY 2,000 below forecast, execution TRY 700 above and funding TRY 300 above. Solution: realized net 5,000 − 2,000 − 700 − 300 = TRY 2,000. If the feasible baseline is −TRY 4,000, relative improvement TRY 6,000. Both absolute and comparative results belong in the record.

Takeaway: Separate outcome quality from process quality with the cash dates, costs and remaining risks stated.

Product card: portfolio-decision-record. Formula: Forecast-to-realized net bridge. Glossary: Decision record, Forecast error. Next lesson: C5T7L1. Topic test.

Sources checked 2026-10-26:

Shared reference guide | Class examination