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Long and Short Positions at the Same Time?
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Long and Short Positions at the Same Time?

  #21 (permalink)
virginia
 
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traderwerks View Post
The wash sale rule ( 534 ) is designed to stop people from doing 'bad' things. It is also prohibited by the Commodity Exchange Act.

I comes down to why would anyone want to go long and short at the same time. No matter what you do, at the end of the day, it is still your net position that matters.

...

There is no need to explain why (plenty of threads here and other sites debate on its merit). bottom line, its my money I should be able to buy and sell as I please.

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  #22 (permalink)
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cory View Post
There is no need to explain why (plenty of threads here and other sites debate on its merit). bottom line, its my money I should be able to buy and sell as I please.

Ditto! Besides, if you trade in an IRA like me there's no wash sale rule in effect for this type account.

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  #23 (permalink)
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traderwerks View Post

I comes down to why would anyone want to go long and short at the same time. No matter what you do, at the end of the day, it is still your net position that matters.

.



The original premise was to, say, be in a long macro trade, but scalp the edges of consolidation ranges you
encounter along the way. Which, of course would encompass both long and short trades.

So, at some point, you would have a long contract and a short contract going at the same time.

I think I will still attempt it and see what happens


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  #24 (permalink)
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tlopez51 View Post
Ditto! Besides, if you trade in an IRA like me there's no wash sale rule in effect for this type account.

Different type of wash sale!

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  #25 (permalink)
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SMCJB View Post
Different type of wash sale!

Nice catch! There was a time I traded in both a taxable and IRA accounts and it's definitely a head scratcher.

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  #26 (permalink)
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tderrick View Post
I can't believe I haven't run across this idea until now. It works in Market Replay, but I'm not sure
if the exchanges would allow it....

Is it possible to have an overall long or short position going, but then scalp along the way either long
OR short?

I love to trade ping pong edges in tight consolidation. However, the macro trend may still be valid.

So I guess the question is - Can you have a long contract going then short a scalp along the way,
of course with a separate contract?

How long have I been trading ?

NQ in particular ..

AMP / CQG

grazie

Wait... What the OP describes doesn't seem to match what CME's definition of wash trade is.

CME is looking to prevent traders from giving the appearance like you are really taking a bona fide position, but are not really because you are placing simultaneous hedge trades at the same price.

An example: placing an iceberg (100 contracts) limit order at 100.01 in acct A and then having a marketable order at 100.01 in acct B. This is deemed malicious because you did not take a bona fide position in the market. It might trigger people and algorithms to pull their limit orders and cause the market to move in your desired direction, where you could then enter at a more favorable price.

What the OP I think is describing is scalping an upward support and resistance price channel. He might have both a limit buy order at 99.95 and a limit sell order at 100.05, but they certainly wouldn't execute simultaneously. He is not acting maliciously.

In that case I don't see why you would need more than one account. Am I missing something?

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  #27 (permalink)
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baywolf View Post
Wait... What the OP describes doesn't seem to match what CME's definition of wash trade is.

CME is looking to prevent traders from giving the appearance like you are really taking a bona fide position, but are not really because you are placing simultaneous hedge trades at the same price.

An example: placing an iceberg (100 contracts) limit order at 100.01 in acct A and then having a marketable order at 100.01 in acct B. This is deemed malicious because you did not take a bona fide position in the market. It might trigger people and algorithms to pull their limit orders and cause the market to move in your desired direction, where you could then enter at a more favorable price.

What the OP I think is describing is scalping an upward support and resistance price channel. He might have both a limit buy order at 99.95 and a limit sell order at 100.05, but they certainly wouldn't execute simultaneously. He is not acting maliciously.

In that case I don't see why you would need more than one account. Am I missing something?

...
SMCJB View Post
I believe there is a difference between "having" long and short positions at the same time and "entering" or "creating" long and short positions at the same time. The latter is obviously a wash trade. but the former may not be. Note that the rule you quote references "orders" and not "positions".


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  #28 (permalink)
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long and short same market

Recently I've done an experiment on having both long/short position(SSO/SDS) at the same time to trade the S&P index.
Instead of going completely long or short, I just adjust the ratio of the two position to get a net exposure.

Since I always have a position on the right side(though the strategy could be in -ve territory), psychologically I feel less biased when I have to flip directions, and more importantly , I would have less tendency sticking or adding to the losing positions. Somehow our brains are being short-circuited for X amount of time whenever we have a wrong position and more so when we are completely on the wrong side, and typically that's precisely when traders make irrational decisions, especially intraday.

In terms of commission, it doesn't make much sense but I feel that the psychological advantage is worth more than the comm I paid since I am not a HFT trader.
Most traders wouldn't do this due to comm but to me, the psychological disturbances cost me a lot more than comm historically. so net net still a +.

I am very interested to explore further on whether this practice works for other traders over the long term, especially on equity index ETF. For futures, since the positions got offseted in the same account and comm are also much higher relative to ETFs. I am not sure if it's practical to do it that way.

I did a search after my thread was closed due to its duplicated content, but majority of the discussions were not focused on the psychology side of it / on ETF products.

many thanks in advance.


Last edited by ptcm; January 1st, 2014 at 05:23 AM.
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  #29 (permalink)
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ptcm View Post
Recently I've done an experiment on having both long/short position(SSO/SDS) at the same time to trade the S&P index.
Instead of going completely long or short, I just adjust the ratio of the two position to get a net exposure.

Since I always have a position on the right side(though the strategy could be in -ve territory), psychologically I feel less biased when I have to flip directions, and more importantly , I would have less tendency sticking or adding to the losing positions. Somehow our brains are being short-circuited for X amount of time whenever we have a wrong position and more so when we are completely on the wrong side, and typically that's precisely when traders make irrational decisions, especially intraday.

In terms of commission, it doesn't make much sense but I feel that the psychological advantage is worth more than the comm I paid since I am not a HFT trader.
Most traders wouldn't do this due to comm but to me, the psychological disturbances cost me a lot more than comm historically. so net net still a +.

I am very interested to explore further on whether this practice works for other traders over the long term, especially on equity index ETF. For futures, since the positions got offseted in the same account and comm are also much higher relative to ETFs. I am not sure if it's practical to do it that way.

I did a search after my thread was closed due to its duplicated content, but majority of the discussions were not focused on the psychology side of it / on ETF products.

many thanks in advance.

Instead of going completely long or short, I sometimes go with the cash settled S&P 500 index, SXPL (3x Bull) and SXPS (3x Bear), as well as the non-cash settled SSO (2x Bull) and SDS (2x Bear) leveraged ETF's. As long as your assumption is correct, the levered nature of these products will allow you to realized substantial gains in a short period of time. For a directional play I also tend to go with ES/2x NQ ratio spread.

I am not sure about the psychological effects as I try to leave all emotions out of the trading equation anyways. However, I would assume that the lesser the staying power one has or if quite frequently tend to over position size, the greater the psychological effects can play a major role which, is precisely why traders make irrational decisions to begin with.

Commissions is what you have to pay-to-play so can't see why it would even be a factor.

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  #30 (permalink)
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I have some friends trading forex with a well known german broker - on ONE account -
(and yes - there are several brokers offering this possibility) having a forex position and putting
in the hedge position
of the same size in the opposite direction just to block
their "wins" or "losses" while there were no longer at the computer.
Coming back to the screen they dump the position running in the false direction.

Of course I could never understand this behaviour as the spread and commission part
was not really "HOMO Oeconomicus like"

Anyway - every trader has a different attempt

GFIs1

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