Can you be long and short at same time?

[Hakuna Matata]

Hi Flash,
Whilst I take your general point and agree that your observation would apply to most people, I think there are possible merits in it and am actively experimenting doing just as you describe.

What I'm trying to do is to trade a longer timeframe and, simultaneously, trade any pullbacks in a shorter timeframe. This puts me long and short at the same time on the same - or highly correlated - instrument(s). It's a hedging strategy of sorts, the benefit of which is that I don't need to use stops (other than 'cato' stops) and, I have the potential to turn a profit on the pullbacks as well as the main trend. I admit that putting it into practice isn't as easy as I make the theory sound, but I think the idea has merit and will continue with my experiments on a demo account.
Tim.

Hi Flash,
Potentially, it can be of benefit in a number of ways . . .

1. As I mentioned in my last post, it obviates the need for stops, which are the bane of most traders lives. (Please note: I'm saying this as an ordinary member - not with my T2W hat on. I would not recommend this to newbies for whom stops are essential.)
2. Positions equally weighted on both long and short legs of the trade will protect you from any losses when no clear direction is indicated. As and when the market makes its move, you have the option to adjust your weighting on either side of the scales so to speak. You literally have double the number of options at your disposal, as you can add or reduce your position size on both legs of the trade.
3. It enables you to average into a position without incurring additional risk. I'm loathed to recommend other sites (hope Steve isn't reading this thread or I'll be in trouble, lol) but there's a thread on ET that discusses this in some detail that's worth a gander IMO: Averaging Down

As I say, I'm just experimenting with a demo account at the moment. So far, what I like most about is that it's a much more relaxed way to trade. How many times have we panicked and got out of a trade too soon, or hung on for even more profit and ended up giving profits back to the market? Opening an opposing position gives you time and breathing space without having to close out your main position.

Have a good weekend all.
Tim.

I would just like to point out that this is pretty much a load of old bull****, and just because the author is “content manager” does not mean you should attach any credence to it.

If you have a LONG and a SHORT position in fungible instruments then the two positions net out and you are left with the remaining position. In simple terms, being LONG cable at $10/pp and SHORT cable at $6/pp you are NET LONG cable at $4/pp. Obviously if you are long and short in equal amounts you are LONG or SHORT cable at 0$/pp - FLAT. If you can’t see why this is the case then you should just give up now because you are obviously retarded.

Another thing to consider is that if the two positions are left “open” in the eyes of your broker, you will have to pay to fund them. For example, with a spreadbetter, you will have to finance both trades with the rate differential (which will certainly work against you, twice). Or, for example having opposing futures trades with different brokers, you have to pony up double the margin before you cross the trades. Not to mention the costs of doing twice the number of trades. Bottom line, if your objective is to make money, it’s just about one of the worst ****ing things you can do. It has 0% upside and 100% downside.

If you prefer to consider being “long” and “short” simultaneously to account for your different signals or strategies, then be aware that you are simply paying away money to pay for a psychological crutch.

As for trading “correlated” instruments, these are not true hedges, but transfer your risk into another form – relative value risks. If you “hedge” your long FTSE position with a short SP500 position, you are in fact making the relative value trade that the FTSE will outperform the spoos. Unless you have a reason to suspect this, you shouldn’t put the trade on. This can come back to bite you in the **** when some stock specific (or even industry specific, depending on the indices you choose) event happens in an index (a good example is when VW were bought out my Porsche, and the Stoxx skyrocketed while everything else stayed flat-ish. Lots of people got carted out that day).

The same can be said for trading a future with a different expiry – these don’t remove your exposure, merely transform it. In the case of futures, you are said to be trading the spread – that one expiry will outperform the other. Again, unless you’ve got a theory as to why this might happen (cost of carry, rate changes, div yields etc), don’t furkin do it!

 

[Atilla]

I would just like to point out that this is pretty much a load of old bull****, and just because the author is “content manager” does not mean you should attach any credence to it.

If you have a LONG and a SHORT position in fungible instruments then the two positions net out and you are left with the remaining position. In simple terms, being LONG cable at $10/pp and SHORT cable at $6/pp you are NET LONG cable at $4/pp. Obviously if you are long and short in equal amounts you are LONG or SHORT cable at 0$/pp - FLAT. If you can’t see why this is the case then you should just give up now because you are obviously retarded.

Another thing to consider is that if the two positions are left “open” in the eyes of your broker, you will have to pay to fund them. For example, with a spreadbetter, you will have to finance both trades with the rate differential (which will certainly work against you, twice). Or, for example having opposing futures trades with different brokers, you have to pony up double the margin before you cross the trades. Not to mention the costs of doing twice the number of trades. Bottom line, if your objective is to make money, it’s just about one of the worst ****ing things you can do. It has 0% upside and 100% downside.

If you prefer to consider being “long” and “short” simultaneously to account for your different signals or strategies, then be aware that you are simply paying away money to pay for a psychological crutch.

As for trading “correlated” instruments, these are not true hedges, but transfer your risk into another form – relative value risks. If you “hedge” your long FTSE position with a short SP500 position, you are in fact making the relative value trade that the FTSE will outperform the spoos. Unless you have a reason to suspect this, you shouldn’t put the trade on. This can come back to bite you in the **** when some stock specific (or even industry specific, depending on the indices you choose) event happens in an index (a good example is when VW were bought out my Porsche, and the Stoxx skyrocketed while everything else stayed flat-ish. Lots of people got carted out that day).

The same can be said for trading a future with a different expiry – these don’t remove your exposure, merely transform it. In the case of futures, you are said to be trading the spread – that one expiry will outperform the other. Again, unless you’ve got a theory as to why this might happen (cost of carry, rate changes, div yields etc), don’t furkin do it!

How does this butterfly business work then?

 

[Hakuna Matata]

How does this butterfly business work then?

what butterfly business?

 

[timsk]

HM,

I would just like to point out that this is pretty much a load of old bull****,. . .

. . . in your opinion.
Please accept that I'm entitled to mine - just as you’re entitled to yours. If you attack and belittle the poster rather than the post, with comments like “Timsk sh1ts all over anything that’s remotely interesting” then, effectively, you're imposing a form of censorship on the forum and stifling debate. The reason being that that person (me in this example and other subscribes to the thread) won't risk posting contentious ideas for fear of members like you ripping into them. That’s completely unacceptable. If that is allowed to happen, nothing new gets posted and the discussion 'envelope' contacts rather than expands. It's in everyone's best interests that this thread exists, so that members can read both sides of the debate and make their own minds up.

. . . and just because the author is “content manager” does not mean you should attach any credence to it.

Absolutely agree. I hope you'll at least credit me with the fact that I've never said anything otherwise. Indeed, on the 'official' output that I've penned, I've made a point of advising new members do exactly as you recommend.

The bottom line is that everyone has to accept and respect the views of other members – no matter how daft – or amusing they think they are. By all means offer constructive criticism of the message conveyed, but please don’t resort to personal attacks on the messenger.
Tim.

 

[Liquid validity]

Same size, same instrument - you are paying extra comms to close a position and be flat.
Different size, same instrument - you are paying extra comms to reduce exposure.
Either way, commissions increase with no benefit, its just a psychological placebo
that increases costs.

 

[the hare]

HM,

. . . in your opinion.
Please accept that I'm entitled to mine - just as you’re entitled to yours. If you attack and belittle the poster rather than the post, with comments like “Timsk sh1ts all over anything that’s remotely interesting” then, effectively, you're imposing a form of censorship on the forum and stifling debate. The reason being that that person (me in this example and other subscribes to the thread) won't risk posting contentious ideas for fear of members like you ripping into them. That’s completely unacceptable. If that is allowed to happen, nothing new gets posted and the discussion 'envelope' contacts rather than expands. It's in everyone's best interests that this thread exists, so that members can read both sides of the debate and make their own minds up.


Absolutely agree. I hope you'll at least credit me with the fact that I've never said anything otherwise. Indeed, on the 'official' output that I've penned, I've made a point of advising new members do exactly as you recommend.

The bottom line is that everyone has to accept and respect the views of other members – no matter how daft – or amusing they think they are. By all means offer constructive criticism of the message conveyed, but please don’t resort to personal attacks on the messenger.
Tim.

The problem is Tim, its not an opinion, its undisputed fact

I appreciate that some people just can't see it. i'll be honest, initially didn't understand it either, but once the penny drops, its hard to understand how you couldn't have seen it.

There's a great deal of stupidity discussed here daily, what are people supposed to do, are they supposed to challenge and try to educate, or simply stand by and allow it to continue ?

This is a zero sum game, and its in my interests that people remain ignorant, so I should be thanking you and t2w for helping to protect my edge, but is also a trading site, with allegedly an objective to inform and educate,

Anyone who really wants to understand this particular nedging argument would be well advised to read the thread over at your competitors forum, I won't mention which, but googling the term should find it.

Maybe it wasn't fair to describe the view as bull**** (it was accurate) but its a quality post, and practically every line is 100% true.

The real problem of course is there's a massive conflict of interest due to someone who essentially earns his living from broker spreads supporting this kind of nonsense. Of course its in your best interests financially, but certainly not in the interest of any t2w member who's punting.

I'm sure you'll twist my comments as some sort of anti t2w rant, but seriously, take some time out, read the thread over on the gay forex forum, and you might learn something worthwhile.

 

[Liquid validity]

Buy To Cover Definition | Investopedia
They don't say buy to hedge...

 

[timsk]

Hi the hare,

The problem is Tim, its not an opinion, its undisputed fact.

I'm not disputing the factual elements of what HM states - or those posed by Lord Flash and others throughout this thread. However, in my humble opinion - which is no better than that of any other T2W member - I still believe the idea has merit for the reasons given by those of us on this side of the fence. Note that I'm not the only one! No point going over old ground again and again, the pros and cons have been debated in full throughout the thread.

There's a great deal of stupidity discussed here daily, what are people supposed to do, are they supposed to challenge and try to educate, or simply stand by and allow it to continue ?

As I stated in my reply to HM, by all means highlight the stupidity as you perceive in the views expressed by others - so long as you do it politely and confine yourself to the message and don't resort to attacking the messenger. I welcome such posts - that's why this place exists.

The real problem of course is there's a massive conflict of interest due to someone who essentially earns his living from broker spreads supporting this kind of nonsense. Of course its in your best interests financially, but certainly not in the interest of any t2w member who's punting.

Tehe - very funny!
No point in me responding to this as you're the only person that believes it (if you really do - which I very much doubt) and you know full well what my views are.

I'm sure you'll twist my comments as some sort of anti t2w rant, but seriously, take some time out, read the thread over on the gay forex forum, and you might learn something worthwhile.

You - anti T2W rant. Never!

I'll happily take a look at the thread you mention. Would you do me the favour of PMing me the link please - as I've got my weekend lazy hat on!
Cheers,
Tim.

 

[the hare]

PM sent

Now lets address this conflict of interest stuff. Lets take this real slow

Are you employed by trade 2 win in the capacity of content manager (or any other capacity) ?

 

[Hakuna Matata]

HM,

. . . in your opinion.
Please accept that I'm entitled to mine - just as you’re entitled to yours. If you attack and belittle the poster rather than the post, with comments like “Timsk sh1ts all over anything that’s remotely interesting” then, effectively, you're imposing a form of censorship on the forum and stifling debate. The reason being that that person (me in this example and other subscribes to the thread) won't risk posting contentious ideas for fear of members like you ripping into them. That’s completely unacceptable. If that is allowed to happen, nothing new gets posted and the discussion 'envelope' contacts rather than expands. It's in everyone's best interests that this thread exists, so that members can read both sides of the debate and make their own minds up.


Absolutely agree. I hope you'll at least credit me with the fact that I've never said anything otherwise. Indeed, on the 'official' output that I've penned, I've made a point of advising new members do exactly as you recommend.

The bottom line is that everyone has to accept and respect the views of other members – no matter how daft – or amusing they think they are. By all means offer constructive criticism of the message conveyed, but please don’t resort to personal attacks on the messenger.
Tim.

Of course you are entitled to your opinion. However, that does not change the fact that what you have said is just wrong. Wrong wrong wrong wrong wrong.

As for censorship, let me say this: had your post been written by someone new to the forum, I would have (or, more lkely, someone else would have) explained the flaws in the thought process, and hopefully the OP would understand where they were getting themselves confused. On the other hand, when someone who has been here 10+ years posts it, they shouldn't expect to be treated with kid gloves. Moreover, when someone who is responsible for managing the content of the site produces such bile, they should expect to get a bit of stick for it.

Time and time again I have run into issues here where interesting content is stifled by mods or admin because it goes over their heads, or threads die off because lulz are suffocated. Here we have a situation where material is being produced by said mods/admin that is de facto crap - why don't you censor that?!

 

[Liquid validity]

Hi Flash,
Whilst I take your general point and agree that your observation would apply to most people, I think there are possible merits in it and am actively experimenting doing just as you describe.

What I'm trying to do is to trade a longer timeframe and, simultaneously, trade any pullbacks in a shorter timeframe. This puts me long and short at the same time on the same - or highly correlated - instrument(s). It's a hedging strategy of sorts, the benefit of which is that I don't need to use stops (other than 'cato' stops) and, I have the potential to turn a profit on the pullbacks as well as the main trend. I admit that putting it into practice isn't as easy as I make the theory sound, but I think the idea has merit and will continue with my experiments on a demo account.
Tim.

What you are doing here is not only increasing comms,
but also trading counter trend on a smaller TF...

You would be much better off using the longer TF for directional bias,
then only trade the shorter TF in the same direction as the longer TF bias.
Lower comms and greater probability.

 

[Atilla]

what butterfly business?

Google 'butterfly trade'.

Uncle Bob's Money | How to trade a Butterfly

Butterfly Strategy Description:

A Butterfly works by Selling 2 contracts on the Strike near the current Market price with the current Expiration Date, and then Buying 1 contract on either side, approximately 1 Standard Deviation away with the same Expiration Date. The 'wings', the positions we buy, must be the same distance away from the Short strike, otherwise it will create an uneven Butterfly with a Maintenance requirement.

We can do Butterfly trades on PUTs and CALLs, and we generally only stay in the trade for 17 to 20 days.

A Butterfly Spread is a DEBIT spread: we pay to enter the trade and there is no maintenance requirement. The value of our Long positions will always cover any potential loss from the Short positions. Therefore, the maximum amount of loss possible on a Butterfly trade is the amount we pay for the trade.



In similar fashion one can buy gold and short silver. Same can apply to currency pairs or any other inversely related instrument that deviates from some ratio.

Buy AUDUSD
Short Gold

Buy EURUSD
Short GBPUSD


As Timsk tries to explain it is sad to see the adamant view held by some on these blogs that still insist with the crap attitude. imo the attitude displayed is utter dick headed crap.

Trade the same time frame or different one makes no difference.

Personally - I place limit and stop orders at various levels outside of BB and in big swing days they can all get hit. Some win some lose. I also place different time frame trades in opposing directions in the same instrument too. Is this rocket science that some of you can't get your heads around. I'm really shocked and stunned people don't get it after all the explanations.

AND there is NT going on about intelligence quotients and what level of IQ traders should have.

Point here is yes I appreciate the point you guys make about it being a zero sum game and paying extra spread fees but it is a 'judgement' call as in everything else that each trader does.

If it works for you - that's well cool.

If it doesn't then don't do it. :|

 

[Hakuna Matata]

Google 'butterfly trade'.

eh? what are on about? Iknow what a butterfly is, I just don't see it's relevance here...

 

[Liquid validity]

Atilla

No one is talking about spread trading or closing part of a position.

This is the issue:
Same instrument.
Same size.
Opposing direction.
Equals flat (extra comms, no point).

As Timsk tries to explain it is sad to see the adamant view held by some on these blogs that still insist with the crap attitude. imo the attitude displayed is utter dick headed crap.

Arguing anything else and getting annoyed by that says more about
the d1ck headed crap you often spout

This was the original question.
http://www.trade2win.com/boards/dis...can-you-long-short-same-time.html#post2119458

Not hard if you actually read the thread...

 

[Hakuna Matata]

Google 'butterfly trade'.

Uncle Bob's Money | How to trade a Butterfly

Butterfly Strategy Description:

A Butterfly works by Selling 2 contracts on the Strike near the current Market price with the current Expiration Date, and then Buying 1 contract on either side, approximately 1 Standard Deviation away with the same Expiration Date. The 'wings', the positions we buy, must be the same distance away from the Short strike, otherwise it will create an uneven Butterfly with a Maintenance requirement.

We can do Butterfly trades on PUTs and CALLs, and we generally only stay in the trade for 17 to 20 days.

A Butterfly Spread is a DEBIT spread: we pay to enter the trade and there is no maintenance requirement. The value of our Long positions will always cover any potential loss from the Short positions. Therefore, the maximum amount of loss possible on a Butterfly trade is the amount we pay for the trade.



In similar fashion one can buy gold and short silver. Same can apply to currency pairs or any other inversely related instrument that deviates from some ratio.

Buy AUDUSD
Short Gold

Buy EURUSD
Short GBPUSD


As Timsk tries to explain it is sad to see the adamant view held by some on these blogs that still insist with the crap attitude. imo the attitude displayed is utter dick headed crap.

Trade the same time frame or different one makes no difference.

Personally - I place limit and stop orders at various levels outside of BB and in big swing days they can all get hit. Some win some lose. I also place different time frame trades in opposing directions in the same instrument too. Is this rocket science that some of you can't get your heads around. I'm really shocked and stunned people don't get it after all the explanations.

AND there is NT going on about intelligence quotients and what level of IQ traders should have.

Point here is yes I appreciate the point you guys make about it being a zero sum game and paying extra spread fees but it is a 'judgement' call as in everything else that each trader does.

If it works for you - that's well cool.

If it doesn't then don't do it. :|

Right, because you’ve been here since 2006 and have racked up over 8,000 posts I’m not gonna go easy on you either.

I don’t see why butterflys are relevant here, because you are not trading fungible instruments – you can’t replace a December future with a March future, or a 99 strike with a 101 strike. Not fungible.

Futures Fly – involves trading futures on the same underlying with different expiries, in the ratio +1:-2:+1. In this trade, you are speculating that, for whatever reason, the middle contract will over/under perform against the other two – for example, someone has bought the sh!t out of December ’14, and because of the volume/liquidity imbalance it’s got out of line with September 13 and March 14. Or, say, you are speculating when monetary policy changes will happen, and commentary from a member of the FOMC changes your opinion.

Options fly – involves options on the same underlying, with the same expiry, but with different strikes, again in the ratio +1:-2:+1. Here, you are speculating that the price of hedging the options will be less/more than the market expects, for example by underestimating volatility. I’ll leave that alone, there is another thread where this is mentioned (or search for Howard Cohodas’ thread where people far smarter than me explain it fully).

Now, moving on to the examples you give (lol)...

JESUS CHRIST!!

In similar fashion one can buy gold and short silver

Yes, you can, and you are making the relative value trade that one will outperform the other.

Buy AUDUSD
Short Gold

So you are selling Gold, receiving USD, and exchanging them for AUD. In this case, you are speculating that the AUD against the USD will appreciate faster than the Gold does. Why you might want to do this I will leave aside.

Buy EURUSD
Short GBPUSD

Here you are doing the following: Buying EUR, Selling USD, Selling GBP, Buying USD. Assuming you do the trades at the same time and in the same amounts, your net position is then Long EUR, Short GBP, and you have no USD exposure. You have just legged in to a long EUR/GBP trade. If you don’t understand any of what I have said, after 6 years and 8k+ posts, I’d just give up. In face you should probably give up anyway, because it’s elementary stuff and you should understand it intuitively.

 

[tar]

Here you are doing the following: Buying EUR, Selling USD, Selling GBP, Buying USD. Assuming you do the trades at the same time and in the same amounts, your net position is then Long EUR, Short GBP, and you have no USD exposure.

As a side note : If you trade same lot size ( e.g : short 10000 GBP/USD and long 10000 EUR/USD ) then you will have some exposure to the USD .

 

[Hakuna Matata]

As a side note : If you trade same lot size ( e.g : short 10000 GBP/USD and long 10000 EUR/USD ) then you will have some exposure to the USD .

For example...

GBP/USD trades 1.6, so 10,000 USD = 6,250 GBP
EUR/USD trades 1.25, so 10,000 USD = 8,000 EUR

Your trades are then:

+10,000 USD
- 6,250 GBP

and

+8,000 EUR
-10,000 USD

which nets out to:

+8,000 EUR
-6,250 GBP
0 USD

or long EUR/GBP at a price of 8,000 / 6,250 = 1.28, which, funnily enough, is 1.6/1.25.

 

[tar]

For example...

GBP/USD trades 1.6, so 10,000 USD = 6,250 GBP
EUR/USD trades 1.25, so 10,000 USD = 8,000 EUR

Your trades are then:

+10,000 USD
- 6,250 GBP

and

+8,000 EUR
-10,000 USD

which nets out to:

+8,000 EUR
-6,250 EUR
0 USD

or long EUR/GBP at a price of 8,000 / 6,250 = 1.28, which, funnily enough, is 1.6/1.25.

When u trade forex the lot size is referred to the currency on the left ( the primary currency ) not the secondary one , so when you say i am short 1 mini EUR/USD at 1.3 , then you are short 10 K Euro and long 13K USD .

 

[Hakuna Matata]

When u trade forex the lot size is referred to the currency on the left ( the primary currency ) not the secondary one , so when you say i am short i mini EUR/USD at 1.3 , then you are short 10 K Euro and long 13K USD .

sure

... Assuming you do the trades at the same time and in the same amounts...

 

[tar]

sure

Same amounts is 1 mini for example right ? then you trade 1 mini GBP/USD long , and short 1 mini EUR/USD , still have exposure to the USD .