Holding positions on both side of the market

[tradewin]

Hi all --

Slightly strange question... is it possible to hold a LONG and SHORT position on the stock at the same time as a perfect hedge,

eg. LONG 100units in Acme Pty AND SHORT 100units in Acme Pty

I ask because I would want to hold a balanced position and wait until a market movement before entering another trade.

many thanks!

 

[enragedcow]

Hi all --

Slightly strange question... is it possible to hold a LONG and SHORT position on the stock at the same time as a perfect hedge,

eg. LONG 100units in Acme Pty AND SHORT 100units in Acme Pty

I ask because I would want to hold a balanced position and wait until a market movement before entering another trade.

many thanks!

it is on the platform i use

although then you're down 2X where X = spread

why not just hold no position open then open a position you want to open? no position is also a perfect hedge

 

[Mrtan09]

You can on IG index and it reduces your margin requrements.

I've tried it, and have to say it actually annoying and confusing, I've even closed the wrong ones sometimes.

I've switch to another platform and it doesnt let me do it, I actually find it easier to trade and learnt to take a loss better!

Good luck

Hi all --

Slightly strange question... is it possible to hold a LONG and SHORT position on the stock at the same time as a perfect hedge,

eg. LONG 100units in Acme Pty AND SHORT 100units in Acme Pty

I ask because I would want to hold a balanced position and wait until a market movement before entering another trade.

many thanks!

 

[TheBramble]

Slightly strange question... is it possible to hold a LONG and SHORT position on the stock at the same time as a perfect hedge,


I ask because I would want to hold a balanced position and wait until a market movement before entering another trade.

Strange isn’t the adjective I’d use…

It isn’t a perfect hedge. It’s not even a hedge. You’re paying double spread (and commissions and transaction costs as appropriate) to be flat. Nice work.

I can’t imagine why anyone would initiate both legs at the same time. I can imagine why a newbie would initiate the second leg when in a losing trade on the mistaken belief that it’s not a loss if you don’t exit your losing position, you’re just ‘locking in’ the loss. Right? LOL

The problem with that apart from paying double costs is that when you think your trade is back on track and you exit your other leg you may just find Mr. Market heads back again and you’re in for another 2nd leg. And so on.

If I’ve misjudged your intent and you’re not talking about locking in a loss without taking a loss please let us know what your strategy is as I’ve seen this brought up a dozen times and it’s never been anything else.

 

[tomorton]

tradewin - it's cheaper and simpler to just wait for the market movement. If you're afaid you'll miss it, then maybe this sort of entry on a sudden intitiation of movement is wrong for your trading style / lifestyle anyway.

On the psychological front, hedging like this suggests either you're afraid to miss a move, or afraid you'll be wrong and have to take a loss. I don't mean to imply you're a moral coward, it's just that fear is what drives markets and all of us in them. You might look into other techniques that mean you won't miss a great opportunity, or you might take a loss but it won't be significantly damaging to your wealth. But you have to engage with losses from time to time, you can't let your energy be diverted into trying to avoid taking a loss.

 

[Ross Spur]

Sounds like a mad idea to me. The only way it could make sense would be if there was a sudden large movement in one direction and you had a guaranteed stop on the losing trade.