Being both long and short at same time

Discussion in 'Options' started by qlai, Jan 23, 2019.

  1. Overnight

    Overnight

    There is a legitimate way, but perhaps not in the way you perceive. It is a tricky road.

    Sig, sle, Des and OMM are not telling you that you are an idiot.

    I, ME, are telling you that you are an idiot if you simply ignore them and what they say. Meanwhile, just TRY it with live real money trading! Stop with the academic, and give it a shot with your cash!

    Your academia will only get you so far. Just try your methods of long and short, and see how it goes! You have to learn when to listen to the peanut gallery, and when to ignore them. You'll only get that confidence by doing it with real money, man.
     
    #121     Feb 10, 2019
  2. qlai

    qlai

    Well, @Overnight, maybe it's time for me to take up your challenge and post my BS Sim trades :) Below is based on 2/08 9:30-12:50 (auto shut down). Trading via sim - passive limit orders only. "VXXB!" is the short counterpart just to fool my system not to consider position flat) But I could have run this strategy without having opposing positions with same results and risk, so why use up extra bp? You maybe right, I'm not perceiving it the right way. And that's why I'm not letting this thread die. lol


    upload_2019-2-10_22-29-25.png upload_2019-2-10_22-29-25.png
     
    #122     Feb 10, 2019
  3. destriero

    destriero

    Say you want to trade a synthetic short in a cash settled index. You need to short a call and buy the same strike put. You are paying more (over say, futures) but there is utility in the replication. There is no utility in trading flat by holding a simultaneous long and short in shares/futures/spot. It’s an IQ test.
     
    #123     Feb 10, 2019
  4. speedo

    speedo

    As usual in ET. people are arguing from different premises. Of course taking an opposite position in another tf with A hedging B is ridiculous. Having two different trade plans for a different tf or set of tf's is another thing. In the latter, sometimes there will be antagonistic positions (one long, one short), sometimes both long or short and sometimes one long or short and the other flat with non-dependent durations. Given both being viable, profitable trade plans, running both concurrently will provide more profit over a statistically significant number of trades than just one trade plan. In the latter scenario, each operation is independent of the other.
     
    Last edited: Feb 11, 2019
    #124     Feb 11, 2019
    Specterx and digitalnomad like this.
  5. volpri

    volpri

    Theoretically you can but in real trading you (by you I mean anybody) probably can’t. You could if you were able to predict every turning point and every place a trend would start and end and were very flexible psychologically. But since no one can do that (consistently) two accounts can be a sort of hedge if ones judgement on direction were wrong. Anyone can “see” a trend but telling just when it has ended or reversed Or if PA is just a PB ...well by the time a trader makes those determinations he has left money on the table. This is where two different accounts lend to hedging. In the short term account you are betting against your long term because PA is indicating such. But generally you have, at most, a 60% chance of being correct in either account IF you use and possess viable setups. That means that 40% of the time you will be wrong, regardless of your setups. However, when you get a good BO then probability can sail on pass 60% and climb upwards to 90%. Thing is, you don’t know if a PB is going to becomes a reversal and BO in the opposite direction until it happens. Betting on the opposite direction of the longer position account hedges you if the BO does happen. Why? Well in the longer account (single haul 1 RT) by the time you realize the PB is becoming, or has become a reversal, you have given up quite abit of paper profits. What you have given up in that account you made up as you shorted the pb (as setups for PB are different) and once the reversals happens you hang with it and make more and exit the longer account with whatever profit you have AND initiate a new position but this time short. You are already short in the “jumping around account” and you are holding racking up the $ as the BO continues. Bottom line in two accounts you are playing the 40% side as well as the 60% side and capitalizing on when you are wrong and when you are right. There is no reason to have more than two accounts because there is only long and short in the markets. Position size in each account ....well that has to be determined how much money you have to start with and ones appetite for risks.

    Have you every taken a position based upon a setup and it went the opposite direction almost as soon as you were filled? Most traders are not psychologically nimble enough to exit their position and immediately take a position in the opposite direction (in that 40% direction) but if you have a profit by shorting a pb in the (40% probability) account and a paper loss (assuming a bull trend) you will have made up your loss you incurred in the 60% account and will have done so in the 40% probability account which you now are holding during the BO. And you are pyschologically more apt to just get out in your 60% account and reverse positions because you, in actuality, have lost nothing (in the totality of both accounts) and viola find yourself in a BO south. You have joined the BO direction in both accounts and are now humming Dixie Doodle Dandy (if two accounts and from the south) or (There is a tear in my beer) and maybe (If it weren’t for bad luck I’d have no luck at all) if you have one account AND GIVING UP paper profits hand over fist as the BO continues south and you hang in there doing your best to convince yourself “its gonna come back”. LOL

    IN ACTUALITY both accounts have 60/40 on their setups. I just call one 40 and the other 60 for explanatory reasons and to indicate probability of direction.

    The same thing can be accomplished with ONE account but by hedging in another instrument that generally tracks the first instrument but not perfectly. For instance, if on a given day say the YM or NQ is tracking fairly well with ES you may go the 60% setup direction in the ES and hedge in the 40% direction in one of the other instruments. ESPECIALLY (take note of this word ...especially) IF the context indicates a BO may be coming. You won’t know if it is a BO until it actually happens, and has follow thru, but you are ready either way...

    It is not so easy to do this in live trading..one has to practice..but psychologically it is easier to exit a losing position ( even if only a “I had good profit in the bag” that has now become losing my profit position) IF one knows that what he has lost in one account he has made up in the other account or other instrument if trading one account.

    Thus one ends up crying a single tear in his beer out one eye and singing Yankee Doodle Dandy......OR ...Dixie Doodle Dandy depending on ones roots...ROFLMAO
     
    Last edited: Feb 11, 2019
    #125     Feb 11, 2019
    qlai likes this.
  6. volpri

    volpri

     
    #126     Feb 11, 2019
  7. volpri

    volpri

     
    #127     Feb 11, 2019
  8. qlai

    qlai

    Perfect ending to this bizzarre thread. I think what you are talking about is what the guy in the video doing. I kinda like the concept.
     
    #128     Feb 11, 2019