It's absolutely hilarious how some against any better judgment and advice from more seasoned traders still insist their approach is optimal. No wonder most brokers are so lame and lazy when they have so many customers who so blindly and willingly fork over commission dollar for dumb trades. I find it hard to believe that OP with such intellect would even be able to complete a bachelor degree. Just outright bewildering.
I once met a newbie trader. She was using a spread betting account which allows you to 'force' open a position against an existing position in the same account (eg long and short same instrument at the same time) She was taking a huge loss in the long FTSE index but rather take the loss, she had decided to force a short position against it. This a perfect example of loss aversion and wanting to be right, not wanting to admit you are wrong and take a loss. No idea how and when she closed out both positions in the end, never met her again.
I don't understand the below sentence you wrote. And I think this is the key confusion beginners fall prey to. Obviously someone does not know beforehand that one is about to experience a large unrealized loss (else one would not keep the original trading position on in the first place). If one lacks conviction of the original desired direction markets ought to trade towards then one should not have a position in the first place. I really don't know how to put it in simpler terms.
My post is most probably unrelated to what the OP is trying to do. My story about the newbie trader is something i was reminded of by this thread. Rather than admit she was wrong and sell her losing long position, she decided to open a short position against it in the same account. She just could not bring herself to book the loss at that point in time. You might have misunderstood me, she did not put both long and short at the same time. Long first. Then a few weeks later the short.
I did understand you correctly. But sorry if I was not more precise in saying that I do not understand the thought process of someone doing such kind of thing. I understand you were reminded and recalled the story.
U guys don't seem to understand.... By doing this it gives the OP / trader the option of adding more contracts, on both sides to the original hedge. So by doing this the original "fully hedged" trade can then have equal the amount of contracts added to it to make it more secure. For eg: if you are long and short 1 lot of EURUSD then you can buy 1 lot and sell 1 lot simultaneously on top of this original trade. So now you are short and long 2 lots for EURUSD. You can lose money very quickly so the ability to hedge your already hedged trade means that you are now more secure..... Like a double hedge. I'm surprised no1 has mentioned this. . Glad to be the first to say it.
Thanks for your double commission dollars. The more I read about people like you the more I want to really register as broker dealer. I start to understand why there are so many fx bucket shops out there. The economics seem to be better than being a drug dealer.
It's incredibly hard for me to believe those people are serious. This must be a joke. It can't be real.