Would someone please tell me the term in English for holding both a long and short position at the same time in a futures contract. I realize this may not be allowed by some exchanges or brokers but is allowed where I am. Thank you.
I believe in the US markets it is called,"wash sale’.’ This is prohibited in US futures markets. Wash Trading Entering into, or purporting to enter into, transactions to give the appearance that purchases and sales have been made, without incurring market risk or changing the trader's market position. The Commodity Exchange Act prohibits wash trading. Also called Round Trip Trading, Wash Sales. 1245
Thank you. But rather than a wash sale one use is simply to enter both sides at an important price level and then exit one position based on the following price movement.
It's mainly used to avoid missing a strong move away from or through such price levels after which there is no reaction on which to enter.
You start with a long/short position. Then you pick one to cover. Why is that different from starting with no position, then buying or selling.
This came up last night in a discussion about trading tactics when a non-native English speaker asked me what you call it in English. I only trade on reactions so I don't know, but as I remember he places a stop loss order for each position which often eliminates missing an entry due to the time that would be needed to place a new order in the direction of the breakout. I can see often getting whipsawed doing this, but he claims it's very favorable on balance.
thx..seems like too much trouble, extra commissions and I have no idea what margin would be. Thanks for the responses. 1245