Say you have an account at a brokerage that doesn't have OCO (one cancels other) order functionality. You own 1000 shares of XYZ @ 10, and want to have a stop order @ 9 and limit order to sell @ 11 open concurrently. Brokerage won't let you tag the limit sell order as a long sale because the stop order is open. Is there any downside to entering the limit order to sell @ 11 as a short sale? Other question is when you unwind the long/short (after your short sale limit order gets executed) can it be done internally by the broker, or do you have to go back to the open market?
In the good old days, we would just cross it "in the booth"! It just needs to be journaled by a margin cluck from Type III(short margin) into Type II(regular margin) and you will be flat. Most platforms will allow you to enter a Sell Stop Limit alongside a Limit Sell simultaneously. Your method works though!
If you end up with a "boxed" position... Long 1000 and short 1000 same stock... Your broker or their clearing firm... CAN just "journal" the position away IF THEY WISH. They don't HAVE to provide this service for free or at all. Also... If you are long 1000 shares... It's illegal to enter two 1000 shares marked as "sell". One of them must be marked "short". But your broker and clearing firm... Do illegal things every minute of every day... So just because someone allows you to do something... Doesn't make it legal or get ** you ** off the hook. rm+ I used to be a US broker-dealer years ago... And have made 1000s of trades that "we not in compliance"... Just between me and my clearing firm. Pick any firm and check their regulatory history online. MOST are dogs with fleas that will do whatever they can get away with.
Ask the NASD or SEC, and see what they say. They extend very little latitude to daytraders, and will (most likely) tell you that you can only enter one sell per long. And, if you enter it as a short, you'd be in violation (of some such rule). As mentioned above, your firm may be willing to bend the rules for you (by correcting the "type" flag on the sell), but if that were caught during an audit, I imagine the regulator would deem it a reason to fine the firm. (I'm speaking from experience.)