Would this work?

[boxersam123]

Hi,

Say i was to trade on Rio Tinto or another volatile market.

Going LONG and SHORT, with stop loses of say 10 points either way. Hopeing that the market will go hard either way 1st thing in the morning when the market opens?

Is this called something already? Like I said before just a newbie!

 

[foredog]

If you go long and short they will cancel each other out and you will end up paying 2 commissions and the spread.

Try looking up opening range breakouts, same principle but the order is Xpoints away from the open.

or look at infintie yield, the link is in the link in my signature.

 

[ns1000]

Hi,

Say i was to trade on Rio Tinto or another volatile market.

Going LONG and SHORT, with stop loses of say 10 points either way. Hopeing that the market will go hard either way 1st thing in the morning when the market opens?

Is this called something already? Like I said before just a newbie!

Cheaper to leave a stop order to open a position. This would capture the trend you're looking to, and avoid paying double commission.

 

[boxersam123]

Cheaper to leave a stop order to open a position. This would capture the trend you're looking to, and avoid paying double commission.

Thanks for reply, would you mind giving me an example please

 

[tomorton]

Hi,

Say i was to trade on Rio Tinto or another volatile market.

Going LONG and SHORT, with stop loses of say 10 points either way. Hopeing that the market will go hard either way 1st thing in the morning when the market opens?

Is this called something already? Like I said before just a newbie!

Hi boxersam123 - Simultaneous long and short positions are used sometimes. Its a regular feature of traded options strategies, to balance the risk, as getting a short position wrong on a share carries an unlimited risk, as price has no upper limit, whereas the risk on a long position would be that the price would fall to zero. But this is expensive in commissions and spreads.

You could place buy and sell orders above and below current price. This is a bracket trade and is useful if you are determined to trade this market but expect a violent move one way or the other - it isn't worth the risk if price is simply pottering along in its normal way. But if there is a significant event such as results, or some geo-political / economic news expected it could be worthwhile. Also, the occurrence of an NR7 (narrowest range day of the last 7) on the chart suggests to many people that price will move dramaticallly beyond the range of the NR7 day, but in the absence of a trend they cannot see which way. Similarly an ID/NR4 (range is narrowest of last 4 and falls between the previous range's high and low) suggests a dramatic move beyond the estanlished range is likely.

The worst case scenario is that one of you positions is hit, then price reverses and also hits the other.

But, this all seems like hard work with additional risk, trying to trade something that is not in a strong established trend in the hope that it might suddenly start one.

 

[GammaJammer]

Simultaneous long and short = FLAT, with double transation costs. Period. End of. Fact. Anything else is simply untrue.

Tom - what are you referring to when you speak about people being long and short in tradded options. Are you talking about something like a Call Spread say (i.e. different strikes). Please tell me you are.....

 

[tomorton]

Hi GJ - long time since I looked at traded options but I was thinking of a Straddle. I had forgotten about Call Spreads but this would work too, just a bit trickier to calculate.

 

[boxersam123]

I heard of something like 'purse trading'

anyone?

 

[GammaJammer]

Hi GJ - long time since I looked at traded options but I was thinking of a Straddle. I had forgotten about Call Spreads but this would work too, just a bit trickier to calculate.

Well a straddle isn't long and short mate - it's either long or short both a call AND a put, same strike, same date, same size.

 

[tomorton]

Granted. But the effect is the same as being both long and short the shares or SB.

 

[Technically Fundamental]

Granted. But the effect is the same as being both long and short the shares or SB.

But options behave differently.

 

[tomorton]

Granted. It is self-evident that traded options, shares and SB behave differently from each other. But a similar net effect can be obtained in various ways with various approaches, so that whether the price of the underlying instrument rises or falls from the entry point, one of the opposing positions advances into the money. This responds to the poster's original question. My earlier reply would also have suggested this isn't something I would recommend and I would not recommend a newbie get involved in traded options at all.