Hello i am wondering if its a good strategy if i think that the markets are going long and i buy a long position and at a certain point if the trend is going against me i will hedge it with the same contract and sell it meaning i do understand that I'm technically flat cause I'm selling and buying at the same time but with market volatility they might be profitable and if not i lose on one one of them at pre decided levels with losses that are not more then 2% of my portfolio what can go wrong in such a trading style ? thanks
You might be confusing hedging with the forex trades allowed outside the U.S. In futures, you are long, short or flat. Longs and shorts in the same contract are added and subtracted to your net position.
Nothing wrong with it at all, it is what I do. It's a real pain in the ass, but it can be done. And the "hedge" you are talking about is a "calendar spread."
The OP is NOT talking about the calendar spread. He is talking about being long and short the same contract at the same time. Once in a while, on a regular basis, posters pop up and suggest that this constitutes a winning strategy.
I don't think you can do it in the same account if its the same strike/expiration. At least with U.S. equity options. ( If I'm understanding what you are talking about). I think I tried it once in one account and it wouldn't go thru... but I have done it in seperate accounts profitably. Depends on the underlying stock and whats going on... obviously.
u can do it in the same account in SPOT FOREX if u have access to that, u do it by trading the commission pair and the none commission pair, u can be long and short the same thing but u dont get margin relief, they are treated seperatly, also i dont see how ur gonna make a profit if volaitility goes up, they usually are identical,,, this is what they symbols look like in my plat form EUR/USD (non comm) and EUR/USD# (comm)
i also see this idea running around sometimes and i would like to know what things can go wrong in such a strategy?