Can you be long and short at same time?

[tar]

Ok, I understand. It's a psychological flaw.

Perhaps best not to encourage that for others.

In that case don't encourage others to trade either .
Anyway if it has some real psychological benefits to some then its ok who cares as long as their costs are just a fraction of their average points/trade , for example : if Jon's average points/trade is just 6 then this "strategy" will hurt badly ...

 

[barjon]

I have read all of your posts and I am afraid you are simply wrong. This was clear from your early posts in this thread on Monday and it is clear today you still don't get it. I have yet to meet a successful trader who cannot apply pure logic clearly in their head.

You do realise the earth is a sphere Barjon dont you, or do you still think it's flat?

Well, if I'm as dumb as you think I am it's a wonder that after 35 years of trading and day trading for 10 years that I've got a bean left to my name.

 

[barjon]

Ok, I understand. It's a psychological flaw.

Perhaps best not to encourage that for others.

Maybe, but in my mind there is a difference between how you think about exits and how you think about entries. If you think they are the same then I presume you always stop and reverse since, obviously, the good reason you had to exit must be an equally good reason for entry.

 

[Shakone]

In that case don't encourage others to trade either .
Anyway if it has some real psychological benefits to some then its ok who cares as long as their costs is just a fraction of their average points/trade , for example : if Jon's average points/trade is just 6 then this "strategy" will hurt badly ...

I usually don't encourage people to trade. But trading isn't logically flawed.

Yeah it's a comfort blanket for some, and I'm fine with that. Think it was already accepted that it's understood some people believe they gain benefit from various things, like lucky socks for example.

 

[Hakuna Matata]

HM

Yes, I fully understand your earlier piece and I don't disagree one jot except that your conclusion So, the PnL of the two trades is identical is right only IF you are prepared to take the outright short after having closed the long earlier.

Well look, you're comparing Apples with Oranges here. I could equally say that, after being flat, you make another trade that you might not otherwise consider that nets you 1,000 pts , so obviously that's a better choice.

The economics are that, in return for exactly the same exposure to the market, and opportunity for profit or loss, one approach is preferable over the other

Which leads on to your quoted post. You would not lose 9 points because you have a 2.5 point stop which means, barring a bit of slippage, your initial 29 only drops to 26.5.

I repeatedly pointed out that you will be stopped out - thus costing you that 2.5 each time - most times but that, often enough to make it worthwhile, you won't.

In this case, fortuitously, then 9 points gives you nearly another 4 goes at being stopped before you start losing overall.

The sizes of the stops and sizes of the profits are not relevant at all - after long enough they will all cancel each other out, unless the market conditions are different because you are long/short.

Let's say, from your second long/short trade, your average win is 15 pts and your average loss is 5 pts.

For being long/short to be preferable over being flat, you'd have to show that someone who is flat making exactly the same trades only returned an average win of less than 15, or an average loss greater than 5 (or some such combination thereof, you get the gist*).

That is - let me be perfectly clear on this - being long/short instead of flat makes the market move differently!

Do you think that being long/short instead of flat makes the market move differently?

* hmm...

 

[Shakone]

Maybe, but in my mind there is a difference between how you think about exits and how you think about entries. If you think they are the same then I presume you always stop and reverse since, obviously, the good reason you had to exit must be an equally good reason for entry.

Sometimes I do exit and reverse, other times I want to be flat. You create a situation that takes you from being flat, to being net short, yet call it an exit.

Again the logic is a bit iffy with your last statement.

Jon, you also selected to exit the long on your FTSE example. Why not just add a short in there so that you're long 1, and short 2?

 

[tar]

I usually don't encourage people to trade. But trading isn't logically flawed.
Flawed or not , most traders lose which is a fact

Yeah it's a comfort blanket for some, and I'm fine with that. Think it was already accepted that it's understood some people believe they gain benefit from various things, like lucky socks for example.

I don't think this is a lucky socks thing , its a psychological player for some , so if it is really making money - not just a belief - for the trader for some psychological reason , then so be it as long as costs are fractional ...

 

[Hakuna Matata]

OK jon, here's a little thought experiment for you: At A), we've got a postman with a letter to deliver to the house at B).

There are two ways he can get from A) to B) - the green route or the red route.

The Green route involves going East for 3kms, then North for 3 kms.
The Red route means going North for 3 kms and then East for 3 kms.

Naturally, he want's to take the shortest route he can. So, he looks at the map and compares the two journeys:

Is the length of the Green route:

1) Longer
2) Shorter
3) The Same

as the Red route?

 

[Shakone]

I don't think this is a lucky socks thing , its a psychological player for some , so if it is really making money - not just a belief - for the trader for some psychological reason , then so be it as long as the costs is fractional ...

Most traders should stick to demo until they have something - if they ever do. Of course I didn't initially, but then I was naive and arrogant. If I could take my experience back in time, then of course I would do it differently.

 

[barjon]

....................For being long/short to be preferable over being flat, you'd have to show that someone who is flat making exactly the same trades only returned an average win of less than 15, or an average loss greater than 5 (or some such combination thereof, you get the gist*)............

Once again, only if the flat trader made exactly the same trades.

Look, I originally entered into the fray because there was a mass outcry that long/short could never conceivably have any benefit whatsoever and had only disbenefit.

I have tried to show circumstances where it might be feasible - not "advice" or "recommend" or "preferable" or "meritorious" as some would have it - and I have given practical demonstration of that this morning.

I will leave it there - for those of you who think the penny has not dropped, so be it. I leave you to pour scorn on anyone who thinks the idea is worthy of consideration and debate.

 

[cablemonster]

note to self: If the whole world thinks I am wrong then pay attention.

 

[Hakuna Matata]

Nononono, please wait.

I am - genuinely - trying to help you.

I'm not giving you abuse or calling you names, I want to take you through it so you - and others - can understand it.

 

[Vasco da Banana]

I have read all of your posts and I am afraid you are simply wrong. This was clear from your early posts in this thread on Monday and it is clear today you still don't get it. I have yet to meet a successful trader who cannot apply pure logic clearly in their head.

You do realise the earth is a sphere Barjon dont you, or do you still think it's flat?

Blimey, I'd just got my head round the idea of making unnecessary trades, now you're telling me the Earth isn't flat?:-0

 

[robster970]

Most traders should stick to demo until they have something - if they ever do. Of course I didn't initially, but then I was naive and arrogant. If I could take my experience back in time, then of course I would do it differently.

God, I would say most of us did this at the outset until we got fed up losing money.

 

[Hakuna Matata]

Once again, only if the flat trader made exactly the same trades.

Look, I originally entered into the fray because there was a mass outcry that long/short could never conceivably have any benefit whatsoever and had only disbenefit.

I have tried to show circumstances where it might be feasible - not "advice" or "recommend" or "preferable" or "meritorious" as some would have it - and I have given practical demonstration of that this morning.

I will leave it there - for those of you who think the penny has not dropped, so be it. I leave you to pour scorn on anyone who thinks the idea is worthy of consideration and debate.

You see, the thing is, if we accept that:

i) we trade to make as much money as possible

and

ii) we should try to do that

then it isn't feasable at all. It is a sub-optimal decision. There are better ones.

Say your great Aunt calls you up and offers you a christmas pressie - no strings attached. You can have either $500 or $501. You want to have as much money as possible. Which do you choose? $500? NO! You choose $501!!

The principals here are precisely the same.

 

[Atilla]

OK jon, here's a little thought experiment for you: At A), we've got a postman with a letter to deliver to the house at B).

There are two ways he can get from A) to B) - the green route or the red route.

The Green route involves going East for 3kms, then North for 3 kms.
The Red route means going North for 3 kms and then East for 3 kms.

Naturally, he want's to take the shortest route he can. So, he looks at the map and compares the two journeys:

Is the length of the Green route:

1) Longer
2) Shorter
3) The Same

as the Red route?

Is that map to scale?

I was wondering if the long and the short routes are in close proximity he could take both. Left foot takes the longer route and right leg can take the shorter route.

Ofcourse it all depends on the route and the postman's inside leg measurement. :smart:

 

[Hakuna Matata]

Is that map to scale?

I was wondering if the long and the short routes are in close proximity he could take both. Left foot takes the longer route and right leg can take the shorter route.

Ofcourse it all depends on the route and the postman's inside leg measurement. :smart:

Don't take the p1ss, I was gonna introduce a toll on the green route, and then switch the postman and house for positions.

The key point is that he thinks that the trader who is flat is, in some way, "missing out" on something that the trader who is long/short has. The fact is that there is nothing to choose between them - any profit or loss that one trader may make can equally be made or lost by the other. The only difference is that one incurrs higher costs.

If, by being long/short, the markets behaved differently, then there could be an argument for that. But they don't, because nobody knows or cares whether you are "long/short2 or "flat". All the mkt knows is that you've bought and you've sold.

I mean, let's say you have to choose between investing in two trading systems - the "blue" system or the "green" system. You are never going to know the rules of each system, they could be the same or they could be different. All you know is that the "green" system has higher costs.

Which do you choose? The "blue" system, obvioulsy, right? With nothing to choose between them, pick the one with least cost.

That's what we've got here.

 

[Hakuna Matata]

I'm also pretty cheesed off that, after pwning the discussion with my badass logic, everyone who though it did have merits has just f*cked off without a "thanks, I get it now" or "yeah, OK. You were right all along".

EDIT: Well, actually just timsk. Where's he gone? He was giving just as good as he got. I think - after finally getting it - he's got his tail between his legs and keeping schtum. ******.

 

[tar]

Its funny how everyone on the net is willing to give his wisdom about trading , when in reality most traders lose if not 95% of them , and one of the main reasons why traders lose is that they blindly follow the conventional wisdom and advice they find on the net !

 

[Vasco da Banana]

Don't take the p1ss, I was gonna introduce a toll on the green route, and then switch the postman and house for positions.

The key point is that he thinks that the trader who is flat is, in some way, "missing out" on something that the trader who is long/short has. The fact is that there is nothing to choose between them - any profit or loss that one trader may make can equally be made or lost by the other. The only difference is that one incurrs higher costs.

If, by being long/short, the markets behaved differently, then there could be an argument for that. But they don't, because nobody knows or cares whether you are "long/short2 or "flat". All the mkt knows is that you've bought and you've sold.

I mean, let's say you have to choose between investing in two trading systems - the "blue" system or the "green" system. You are never going to know the rules of each system, they could be the same or they could be different. All you know is that the "green" system has higher costs.

Which do you choose? The "blue" system, obvioulsy, right? With nothing to choose between them, pick the one with least cost.

That's what we've got here.

Bit like walking across a full carpark. You can convince yourself one route is easier/shorter, but they're really exactly the same