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Long/short same contract


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Long/short same contract

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  #1 (permalink)
North Carolina
 
Experience: Beginner
Platform: NinjaTrader, Tradestation
Trading: es
 
Posts: 644 since Nov 2011

I've been thinking more about the beauty of being able to go long/short at same time the same contract. As well, the ability to clone symbols.

For example, let's say I want to hold a long exposure to the trend but scalp to the short side. I could hold a long position and then open/close the short side only.

However, my broker states this violates CFTC regulation. I can understand offsetting for manipulation but can this really be true that no one can trade say a swing trading system and day trade the same contracts? Would this mean also that if one holds 2 accounts to offset a position in the event of a system error/inability to reach system that such offset would be breaking the CFTC regulation?

"The undersigned should be aware of CFTC Regulation 1.46 regarding the closing out of offsetting long and short positions. Simply put, you cannot hedge a position and be long and short. CFTC requires we offset the position. All FCMs must follow regulation."

I understand that being long/short the same instrument is the equivalent to being flat. But, it is easier to manage with the ability to hold exposure.

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  #3 (permalink)
Legendary Market Wizard
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tpredictor View Post
I've been thinking more about the beauty of being able to go long/short at same time the same contract. As well, the ability to clone symbols.

For example, let's say I want to hold a long exposure to the trend but scalp to the short side. I could hold a long position and then open/close the short side only.

I think you can't do that with a simple ATM, but if you apply an application like e.g. Trade Manager, which is not an indicator but a strategy, you will be able to take multiple trades on the same instrument with different directions, targets / stop losses using only one single account.

You have to apply the strategy to every chart / timeframe you want to trade, so the strategies will work completely independent from each other.

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  #4 (permalink)
Legendary Market Wizard
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tpredictor View Post
I was thinking of doing this via multiple accounts. I'm actually sponsoring a NinjaTrader webinar where the host will speak about how to do this with strategies. So, I'll be interested to hear that but I'm interested in this for discretionary trading.

In this case, strategy doesn't mean any automated trading whatsoever, but only discretionary trade management using a tool which enables you to take multiple trades on a single instrument in one account as well as with multiple accounts, with full (manual) control of stops, targets, etc.

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  #5 (permalink)
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tpredictor View Post
I've been thinking more about the beauty of being able to go long/short at same time the same contract. As well, the ability to clone symbols.

For example, let's say I want to hold a long exposure to the trend but scalp to the short side. I could hold a long position and then open/close the short side only.

However, my broker states this violates CFTC regulation. I can understand offsetting for manipulation but can this really be true that no one can trade say a swing trading system and day trade the same contracts? Would this mean also that if one holds 2 accounts to offset a position in the event of a system error/inability to reach system that such offset would be breaking the CFTC regulation?

"The undersigned should be aware of CFTC Regulation 1.46 regarding the closing out of offsetting long and short positions. Simply put, you cannot hedge a position and be long and short. CFTC requires we offset the position. All FCMs must follow regulation."

I understand that being long/short the same instrument is the equivalent to being flat. But, it is easier to manage with the ability to hold exposure.

Read the following section of our Help Guide ATM Strategy Selection Mode, Understanding the "Display Selected ATM Strategy Only" mode.

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  #6 (permalink)
North Carolina
 
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@All Thanks for this information on ATM strategy. That sounds really cool. However, I still would like an insider to clarify on this rule? What if a CTA or a fund wants to offer multiple strategies? It seems he'd run foul of this rule or what about the trader who wants to subscribe to 2-3 different strategies that aren't connected (i.e from different CTA's system providers, etc)??

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  #7 (permalink)
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what you are referring to is called a "wash sale"

7 USC 6c - Prohibited transactions | Title 7 - Agriculture | U.S. Code | LII / Legal Information Institute

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  #8 (permalink)
North Carolina
 
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@addchild.. I believe your referring to a wash trade.

"A wash trade (not to be confused with a wash sale) is an illegal form of stock manipulation in which an investor simultaneously sells and buys shares in order to artificially increase trading volume and thus the stock price." wikipeida

But, this would not be a wash trade because I would not be conducting the operation simultaneous nor with the intent of manipulating prices. What I need to do is look up this CFTC regulation and see what it actually states.

Experts on this matter appreciated!

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  #9 (permalink)
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tpredictor View Post
What I need to do is look up this CFTC regulation and see what it actually states.

Experts on this matter appreciated!

The link I just posted is the regulation from the commodities exchange act

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  #10 (permalink)
Michigan, Jackson
 
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addchild View Post
The link I just posted is the regulation from the commodities exchange act

I am not sure what the CFTC ruling is concerning retail traders but that is certainly true of professionals.

Ken

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