Going long and short EUR/USD on two different broker accounts.

lanceippolito said:
Does it make sense?
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Is this amateur night or what? :confused:

You go long and short the Euro at let's say 1.2700

The EUR/USD goes to 1.3000 so you lost 300 pips on the short side, plus spread and/or commissions, but you "won" 300 pips on the long side, so you close the "losing" side of the trade and you keep the "winning" side open, so total so far is zero, excluding the double commissions and/or spreads, right?

Then the EUR/USD goes to 1.2400 and you end up losing at least 300 pips on that cannot-fail trade.

Get it? :cool:

Now, if you are using options and want to bracket the market (because you are expecting great volatility for example) that's a different story...
 
In multiple accounts, even at the same brokerage, you can be long and short FX (double check with your brokerage, though). I like to trade different frames...one direction daily or shorter, the other direction weekly or monthly.

I don't like being pinned to one frame, and often you'll find being in a long term move gives you insight to a shorter time frame n the same instrument. Just my opinion. Flame shield up!
free-fighting-smileys-556.gif
 
xelite777 said:
You go long and short the Euro at let's say 1.2700

The EUR/USD goes to 1.3000 so you lost 300 pips on the short side, plus spread and/or commissions, but you "won" 300 pips on the long side, so you close the "losing" side of the trade and you keep the "winning" side open, so total so far is zero, excluding the double commissions and/or spreads, right? Then...
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... your $3,000 short account is now $0 while your $3,000 long account is $6,000 because price went +2 ticks far enough to wash the bid/ask spread.

Now you place a -30 pip stop on the current long position, it holds and continues upward another +100 pips further. Now your $6,000 account is worth $7,000 net or +$1,000 cash higher than the straddled accounts' dual initial balance.

Of course there are contingencies to that straddle strategy, such as when exactly to initiate trades (some price action conditions are ideal, some poor) and how to deal with markets that stall / reverse right at the liquidation points.

Bottom line it's a simple market "straddle" strat with potential to profit over time, but not free money. There is some thought and efforts involved for it to work.
 
austinp said:
... your $3,000 short account is now $0 while your $3,000 long account is $6,000 because price went +2 ticks far enough to wash the bid/ask spread.
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Say that again?? :confused:

You went long and short the EUR/USD at 1.2700.
The EUR/USD is now at 1.3000
You lost 300 pips ($3,000 per standard lot) on the short side but you won 300 pips on the long side (excluding spread/commissions), so where on earth do you see a $6,000 profit on these two positions??


austinp said:
Now you place a -30 pip stop on the current long position, it holds and continues upward another +100 pips further. Now your $6,000 account is worth $7,000 net or +$1,000 cash higher than the straddled accounts' dual initial balance.
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Why are you assuming that the "winning" position (the long position in this case) will keep winning?? :confused:
 
Why do threads like this only ever pop up on FX boards? The futures/options/equities boards have their fair share of stupidity, but nothing on this order of magnitude..
 
Pippi436 said:
Why do threads like this only ever pop up on FX boards? The futures/options/equities boards have their fair share of stupidity, but nothing on this order of magnitude..
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you've never spent five minutes on any serious options board without seeing this topic repeated many times. Options straddles are as old a trading tactic as option contracts have been listed for trading

the idea is direction bias neutral, you expect a big move to erupt but have no clue as to which way it will go. So you buy a call and a put option at the exact same strike OR you open FX long/short at the same relative price level. JC was describing the FX pairs tactic as a quasi-options position due to the "expiry" (account drain) aspect where max loss is capped while the other side of performance is unlimited.

if/when the expected big move unfolds, one side "expires" worthless while the other side doubles in value AND hopefully more. Get it? That's the tricky part... hopefully more.

I did enough option straddles a decade ago to know it works in high volatility periods and nowhere else. Not something I would do now, just correcting the ignorance (aka lack of knowledge) some posters here exhibit. Straddle tactics are older than any trader here in this forum, that's for damn sure :cool:
 
xelite777 said:
Say that again?? :confused:
so where on earth do you see a $6,000 profit on these two positions??

Why are you assuming that the "winning" position (the long position in this case) will keep winning?? :confused:
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Go back and read the post again... slowly this time. See where I wrote: ... your $3,000 short account is now $0 while your $3,000 long account is $6,000 because price went +2 ticks far enough to wash the bid/ask spread.

What part of that states $6,000 profit?

You can assume some of the straddle positions will keep winning and some won't. Matter of fact, pure statistical odds of probability are that more of the runners (by far) will continue on to some degree of profit (+1 pip to infinity as the potential range) as opposed to any that will halt and reverse to the exact pip of breakeven.

The logic of such straddles is sound... but the actual operation and execution of such is not. Pitfalls include news-driven whipsaws that wash stops on both legs, price reversals after one leg washes out while trader is away from screens to monitor, etc.

Theory and actual execution are two drastically different things.
 
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