Would this work?

Johnsonr

Newbie
6 0
Hello, this is my first post and I'm also new to spreab betting.

Just a thought. Can anyone advise why the following system wouldn't work?

Open 2 accounts with different firms.
Take the daily FTSE quote.

On account 1 go short and set a stop loss, say, 30 points up
On account 2 go long and set a stop loss 30 points up.

Just after (say a point or 2) either account stops out close the other position for an overall profit.

The only way I see this failing is if the index swings around at the exact level you placed your stop. (which I think is unlikely). Otherwise, your very likely to make a point or two's profit (not much but it would add up)

As there's nothing new in this World - what's wrong with this strategy?
 

FTSE Beater

Experienced member
1,518 4
Hi Johnsonr

Welcome to T2W

The reason it won't work is because the spread of say 7 points will cancel out any profit.

Say the price is 8000 /8007

On account 1 you go long at 8007 with a stop at 7970

On account 2 you go short at 8000 with a stop at 8037


If account 1 gets hit, it's a £37 loss against a £30 gain
If account 2 gets hit, it's a £37 loss against a £30 gain

so either way you are out £7 :(

Using this you might as well put 2 limit orders in, one to buy at 8030 and one to sell at 7970 and hope the price goes through those levels into a profit.

Sorry I couldn't bring you good news. :(
 

JonnyT

Senior member
2,560 22
Hi FTSE,

Your maths is wrong!

The worst case scenario is that both trades get stopped -60
i.e market goes up and then goes down or visa-versa

Now if the market goes 100pts one way you have made 100-30 = 70 points.

The problem is this:

Where do you take profits? Often price could move widely up then swing back down, so the -60 days are going to be often.

On the other hand you will capture trend days.

Worth further investigation me thinks as its not as straight forward as it first looks. I would however thing the winning days need to be 100pts plus to turn a profit...

JonnyT
 

Johnsonr

Newbie
6 0
Thanks.

Chartman - where's your dow report?
 

ChartMan

Legendary member
5,580 46
Under "indicies". Or search for "dow intraday" for all the archive material - about two years worth of dow intraday analysis.... for more recent charts search for the first day of the trading week i.e '16/12'. For older charts search for 'dow this week'. Unfortunately you cannot search for 'ES' as three characters is the minimum allowed......
 

farzin

Junior member
17 0
As everyone else said above, it won't work! Don't lose your money that way. If you have extra money, you can send it to me :) and I will spend it!! (just kidding). But what you can do before trading real money, try some trade on paper and follow the market and see what the result will be. Anyway good luck to you.
 

cassiopeia

Active member
133 2
Johnsonr

On account 2 go long and set a stop loss 30 points up.
(I think you mean set a stop 30 points down)

You are effectively neutral with this strategy (that is you have no net position) until one of the stops are hit. If the market goes up 30 points your short stop is hit and you are then left with a net long position or if the market goes down 30 points you are left with a net short position.

You may as well set a stop to open at 30 points in either direction (one short and one long) that way you will only ever have one position open and pay one spread. This is effectively the same strategy as you described but cheaper.

The problem is if the market zig zags and the position opens when one stop is hit then closes when the other one is hit, you get a net loss of 60 points. However if the market is trending it should yield a handsome profit. But the strategy is still incomplete you need to decide how to eventually close the position if a significant profit is made.
 

Ingot54

Well-known member
403 62
A wise choice of market should be a good companion to brilliant mathematics.

The strategy of setting opening stops in either direction beats the heck out of betting on red or black!
 

SOCRATES

Veteren member
4,966 134
Ingot54 said:
A wise choice of market should be a good companion to brilliant mathematics.

The strategy of setting opening stops in either direction beats the heck out of betting on red or black!
Yes, but the problem is that very few people are "visual mathematicians". This is why most people need a chart of some sort or another to keep a record of what has happened and where the price currently is at.

The task of "clocking" the track of price in your head and retaining where it has been, and for what possible reason, is beyond what is ordinarily encountered but once totally mastered all stops are handled in the same manner too. This is regardless as to whether the stops are opening and closing stops or trailing.
 

Splitlink

Legendary member
10,850 1,233
Johnsonr said:
Hello, this is my first post and I'm also new to spreab betting.

Just a thought. Can anyone advise why the following system wouldn't work?

Open 2 accounts with different firms.
Take the daily FTSE quote.

On account 1 go short and set a stop loss, say, 30 points up
On account 2 go long and set a stop loss 30 points up.

Just after (say a point or 2) either account stops out close the other position for an overall profit.

The only way I see this failing is if the index swings around at the exact level you placed your stop. (which I think is unlikely). Otherwise, your very likely to make a point or two's profit (not much but it would add up)

As there's nothing new in this World - what's wrong with this strategy?

That idea with SB companies is going to be a loser. I think that it is a step towards arbitrage, isn't it? You have to be with brokers for that and, believe me, you are competing with the very big boys. My advice is, stay with us mere mortals!

Split
 
 
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