• Just like a client account, an EA (error account) can hold a security, like 100 shares of IBM.
• Just like a client account, it can hold cash.
• Just like a client account, it can hold cash in a short position like negative $1M.
• Just like a client account, it can hold a short position in a security, like -100 shares of IBM.
An error account holds any of these positions briefly. We try to reduce these positions to 0 ASAP, usually within the same day. We flatten the positions and flush the error account.
• If the EA holds cash, we *journal* it out to a firm account
• If the EA is short in cash, we journal cash in, perhaps from a firm account
• If the EA holds a security, we sell it (not sure if we journal that out)
• If the EA has a short position in IBM, we buy it to cover the short position.
