Can you be long and short at same time?

[tar]

BTW Re margins , just remembered something , the SP500 futures full contract = 5 ES , so i asked the CME in the past re the required margin to hold 1 SP and 5 ES and this was their response :

The SP 500 contract and e-mini’s are fully fungible, the margin requirement for a 1:5 position is $1

Regards .

FYI

 

[Shakone]

Probably be a logistical nightmare - we'd both need to be about and probably have to do it via skype messenger or something.

Not a nightmare at all. It's already been demonstrated several times, that he can just always choose to do the same as you do, and come out with exactly the same costs. He doesn't need to be around. If you are long, whenever you enter your short, he exits his long. Whenever you exit your long, he goes short. Always. He just aims to keep the same net position as you, without unnecessary positions.

So the end results of this scenario will be that you have the same P&L and the same costs. You cannot possibly do better, unless he decides not to do the above.

So do this yourself. Do this for as long as you need to, and with a pen and paper or whatever do what is mentioned above until you see that you don't come out ahead.

 

[Hakuna Matata]

Not a nightmare at all. It's already been demonstrated several times, that he can just always choose to do the same as you do, and come out with exactly the same costs. He doesn't need to be around. If you are long, whenever you enter your short, he exits his long. Whenever you exit your long, he goes short. Always. He just aims to keep the same net position as you, without unnecessary positions.

So the end results of this scenario will be that you have the same P&L and the same costs. You cannot possibly do better, unless he decides not to do the above.

So do this yourself. Do this for as long as you need to, and with a pen and paper or whatever do what is mentioned above until you see that you don't come out ahead.

Equally, I could always choose to do nothing, and let his second set of 31 trades do for him what they will - either make or lose him money.

Let's suppose I did do that, and after the 31 days are up, his second set of trades has netted him 310 pips - i.e. the average profit of the second trade over the 31 days was 10 pips each day.

His argument will be "see - by having to take the second trade, I made an extra 310 pips that I might not have made if I'd just closed the position".

The problem with this, of course, is that you cannot say now that the second trades over the coming 31 days will make you a profit. It is impossible to say anything about them at all, other than that they will incur a cost.

Yes, on this occasion, you made an extra 310 pips. Will this always be the case? Can you say that, on average, you will always make more money than you lose? No. What if you had lost 310 pips? would that be an argument for only trading once a day? NO.

is there anything you can say, on Day 0, about the outcome of the next months trades? NO.

It's because of that you should always choose the option with fewer costs - Trader B.

[I think where's he's missing it is that he thinks the P&L of the second set of trades comes in to the equation - it doesn't, as you well know.]

 

[Shakone]

Equally, I could always choose to do nothing, and let his second set of 31 trades do for him what they will - either make or lose him money.

Let's suppose I did do that, and after the 31 days are up, his second set of trades has netted him 310 pips - i.e. the average profit of the second trade over the 31 days was 10 pips each day.

His argument will be "see - by having to take the second trade, I made an extra 310 pips that I might not have made if I'd just closed the position".

The problem with this, of course, is that you cannot say now that the second trades over the coming 31 days will make you a profit. It is impossible to say anything about them at all, other than that they will incur a cost.

Yes, on this occasion, you made an extra 310 pips. Will this always be the case? Can you say that, on average, you will always make more money than you lose? No. What if you had lost 310 pips? would that be an argument for only trading once a day? NO.

is there anything you can say, on Day 0, about the outcome of the next months trades? NO.

It's because of that you should always choose the option with fewer costs - Trader B.

[I think where's he's missing it is that he thinks the P&L of the second set of trades comes in to the equation - it doesn't, as you well know.]

Yeah why not Trader A, B and C. Where Trader B does what you say, and Trader C exactly replicates his net position. Can you keep a record of that Barjon, and then let us know how it gets on?

 

[Hakuna Matata]

If you wanted to test this yourself Jon, it would be quite straightforward. Might take you 5 mins a day. If you're intertested I'll write you up the instructions as to how to do it.

 

[barjon]

Not a nightmare at all. It's already been demonstrated several times, that he can just always choose to do the same as you do, and come out with exactly the same costs. He doesn't need to be around. If you are long, whenever you enter your short, he exits his long. Whenever you exit your long, he goes short. Always. He just aims to keep the same net position as you, without unnecessary positions.

So the end results of this scenario will be that you have the same P&L and the same costs. You cannot possibly do better, unless he decides not to do the above.

So do this yourself. Do this for as long as you need to, and with a pen and paper or whatever do what is mentioned above until you see that you don't come out ahead.

Shaky,

Of course not. That's not what I'm getting at though.

People pooh-poohed the trade I posted on the basis that, like you say here, you could have achieved the same result with an outright short - absolutely correct. The key phrase, though, is "could have" which no-one seems to accept is a long way from "did". Perhaps, since they never had the opportunity, "would have" is the more appropriate phrase for the trade example. It's up to everyone who looks at the example to ask themselves honestly whether they really would have taken an outright short at that point or not (ie: not just because I had effectively gone short there).

Anyway, you're right, it would all be a waste of HM's and my time so I'll scrub the suggestion. So far as pen and paper is concerned, I've already proved to my own satisfaction that staggering exits in my long/short ftse/dow pair trading is effective and no one has yet convinced me that the same should not apply in what we've been talking about here despite all the yaahing and booing.

 

[Shakone]

Jon, it is actually quite interesting. It's a sort of trick on your own mind. So because you know that human nature doesn't like losers, you convert the trade into flat, but you've tricked your mind into seeing two trades, so that if one loses another one wins, which negates the losing effect. For that side of things, I can always see the psychology behind it, and if it works, that's fine. Aside from a few digs and a bit of joking around, the intention has always been good, to point out that if as you say it is worthwhile to do this with your exits, then it is also worthwhile for Trader C to do, and so he should do it.

 

[barjon]

...........The problem with this, of course, is that you cannot say now that the second trades over the coming 31 days will make you a profit. It is impossible to say anything about them at all, other than that they will incur a cost..............

HM.

Forget it - see reply to Shaky above.

So far as the quoted bit of your post is concerned, isn't that true of all our trading? The only trader who can be certain of his profit after 31 days is the trader who makes no trades .

 

[barjon]

Jon, it is actually quite interesting. It's a sort of trick on your own mind. So because you know that human nature doesn't like losers, you convert the trade into flat, but you've tricked your mind into seeing two trades, so that if one loses another one wins, which negates the losing effect. For that side of things, I can always see the psychology behind it, and if it works, that's fine. Aside from a few digs and a bit of joking around, the intention has always been good, to point out that if as you say it is worthwhile to do this with your exits, then it is also worthwhile for Trader C to do, and so he should do it.

Shaky

Well, if it's trick of my mind so far as ftse/dow is concerned long may I stand in ignorance

So far as single instrument is concerned, the example will be my first and last since I normally go to target and not at all interested in trying to wring out anything extra.

 

[tar]

Negative balance protection follow up :
From Forex.com

Additional reassurance with our Negative Balance Protection

FOREX.com provides automatic position liquidation in the event that your account falls below 100% maintenance margin. We do this to protect you from incurring a debt position, however the markets move.

As an additional safeguard, on our FOREXTrader and MetaTrader platform we offer Negative Balance Protection up to a value of 50,000 of the base currency of your account. In the event that an unusually sudden market movement takes your account into a negative balance, we will bring your account back to zero - up to 50,000 of credit.

Security and protection of your funds | FOREX.com UK

FYI

 

[Hakuna Matata]

HM.

Forget it - see reply to Shaky above.

So far as the quoted bit of your post is concerned, isn't that true of all our trading? The only trader who can be certain of his profit after 31 days is the trader who makes no trades .

aahhh, you're starting to get it!!

Answer me this:

Who do you think is more likely to do better in the long run?

a) The trader with the choice to enter
b) the trader with the obligation to enter

 

[counter_violent]

aahhh, you're starting to get it!!

Answer me this:

Who do you think is more likely to do better in the long run?

a) The trader with the choice to enter
b) the trader with the obligation to enter

Me.

 

[Hakuna Matata]

Me.

well eu-furkin-reka

 

[counter_violent]

well eu-furkin-reka

 

[barjon]

aahhh, you're starting to get it!!

Answer me this:

Who do you think is more likely to do better in the long run?

a) The trader with the choice to enter
b) the trader with the obligation to enter

Yeah, I'd go with CV, too

ps: It's often said that those who wish to meet the statistical expectation of their method should take the set up every time it arrives (obligation). If they exercise choice in the matter they may, or may not, improve on that expectation.

 

[Hakuna Matata]

Yeah, I'd go with CV, too

ps: It's often said that those who wish to meet the statistical expectation of their method should take the set up every time it arrives (obligation). If they exercise choice in the matter they may, or may not, improve on that expectation.

That's not quite what we're talking about here though - we're talking about a trader that HAS to get into the market versus a trader that has the option to get into the market only when he sees a trade...

 

[barjon]

That's not quite what we're talking about here though - we're talking about a trader that HAS to get into the market versus a trader that has the option to get into the market only when he sees a trade...

no, we're talking about a trader who is already in the trades and is exiting his positions. The guy exercising choice to enter a second trade can do so. The first guy already has two trades.

 

[Hakuna Matata]

no, we're talking about a trader who is already in the trades and is exiting his positions. The guy exercising choice to enter a second trade can do so. The first guy already has two trades.

No, both traders are net flat!

The first one has the option to enter the market when he sees a trade, the second trader has to enter the market whether he likes it or not...

 

[Liquid validity]

No, both traders are net flat!

The first one has the option to enter the market when he sees a trade, the second trader has to enter the market whether he likes it or not...

I think the argument Jon and tar are putting forward is that
rollover and margin aren't an issue with certain brokers.
Essentially, no harm is done even if you leave the two open
positions (or flat position...) for a few days or more which is unlikely.

What this argument neglects is the cost of trading with the brokers that allow this,
spreads are generally higher, all inclusive so no chance of a commission
volume deal and, it has to be said, none are ECN / STP (correct me if I'm wrong on that).
At least one of the well known brokers mentioned has indeed been fined for dubious
practices within the last few years...

 

[Liquid validity]

IBFX AU doesn't ask for a margin for double positions and i recall some of these MT4 brokers don't ask either , FXCM asks for a margin for just a single position ( although in the demo they didn't ask for a margin for long/short ) , and FXCM is the one with the debit balance protection guarantee :

Is there a debit balance risk? Can I lose more money than I deposit?
Not with FXCM. It is FXCM's policy to credit accounts to a zero balance when debit balances occur as a result of trading.
One of the greatest concerns traders have about leverage is that a sizable loss could result in owing money to their broker. At FXCM, your maximum risk of loss is limited by the amount in your account. All accounts are tracked by our "Margin Watcher" feature. With the Margin Watcher feature, if account equity falls below margin requirements, the FXCM Trading Station will trigger an order to close all open positions.

See above post:
http://www.trade2win.com/boards/dis...-you-long-short-same-time-73.html#post2147544