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# TradeBolt Did You Know August 31

Discussion in 'Automated Trading' started by TradeBolt, Aug 31, 2006.

1. ### TradeBoltTradeBolt, LLC

We are often asked whether multiple accounts are needed to support multiple strategies on the same symbol. The logic behind the question goes like this:
Well, kind of. One long position and one short position in the same account equals a flat position. However, there is no need to have multiple accounts. The profit from the sum of the overall trades will be the same.

It seems counter-intuitive, so let me explain.

Say you have three systems, cleverly named System 1, System 2, and System 3, and they are each trading into a separate account. The systems do something like this:

System 1 shows a profit of \$50.
• 1:00 Buy 5 at 1200
• 4:00 Sell 5 at 1210

System 2 shows a profit of \$105.
• 12:00 Sell 7 at 1220
• 2:00 Buy 7 at 1205

System 3 shows a loss of \$30.
• 12:00 Buy 3 at 1220
• 4:00 Sell 3 at 1210

30 contracts traded, for a net profit of \$125 total. Right?

Ok, now lets look at the same trades into one account.

• 12:00 System 2 sells 7 at 1220
• 12:00 System 3 buys 3 at 1220
• 1:00 System 1 buys 5 at 1200
• 2:00 System 2 buys 7 at 1205
• 4:00 System 1 sells 5 at 1210
• 4:00 System 3 sells 3 at 1210

30 contracts traded...

• 12:00 total position -4, price 1220, profit \$0
• 1:00 total position 1, price 1200, profit \$80 (4 positions closed at \$20)
• 2:00 total position 8, price 1205, profit \$80 (no profit taken, just more positions added)
• 4:00 total position 0, price 1210, profit \$125 (1 position closed at \$10, 7 closed at \$5)

...for a net profit of \$125 total.

If you'd like to see these examples neatly laid out in tables, please click on this link, which will take you to a pdf file on our website. The breakdown is a little easier to see on that page.

As you can see, it's just a question of bookkeeping. The money is the same, either way!

TradeBolt

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