Stock position conflicts

S

sulfred

I am new to this forum and trading. I may put this thread in a wrong section or asking an irrational question.

Here is my question. I have an IB account. I have 2 strategies. They will recommend buy / sell stocks everyday. Some stocks are overlapped, so there may be a situation that strategy A suggested to buy Stock Z 100 quantity and later on strategy B suggested to sell Stock Z 100 quantity.

If I put these 2 strategies into one account, it seems that a collision will be happened.

If I separate different strategies into different accounts then I will need many accounts if I have many strategies. Also, how to decide the among of capital for each account?

I would like to ask what is the normal way to due with this kind of situation. Thank you very much.
 
If you're a trader who also has some long-term investments, this kind of conflict happens all the time. But its not an immediate issue as the short trade in Stock Z has a far closer time-horizon than the investment in Stock Z.

If you're pragmatic, you can also make sure your trade strategies don't conflict by using only those with well separated but still short-term time horizons.

But if two well performing and consistent trading strategies recommend opposite actions on the same time-frame, isn't that a good signal to stay out?
 
I'm dealing with a similar thing currently. I've got several sub accounts at IBKR now running different strategies. Sometimes they will have the same stock, sometimes in the same direction and sometimes in different directions.

But now I am in the process of moving all of that money over to Fidelity and will be trading 20+ strategies in one account. What I plan to do is keep a spreadsheet for each strategy. At the end of every day I will record, strategy by strategy, the tickers traded, direction, number of shares and fill prices. This way I can disaggregate the overall portfolio to keep track of how each strategy is performing. There's a bit more work keeping track of the embedded strategies but I like it better than having 20+ subaccounts.

With regards to your question on capital allocation among accounts, base it on correlation and sharpe ratio. If something has low correlation or is more smooth then it should get more allocation.
 
sulfred said:
I am new to this forum and trading. I may put this thread in a wrong section or asking an irrational question.

Here is my question. I have an IB account. I have 2 strategies. They will recommend buy / sell stocks everyday. Some stocks are overlapped, so there may be a situation that strategy A suggested to buy Stock Z 100 quantity and later on strategy B suggested to sell Stock Z 100 quantity.

If I put these 2 strategies into one account, it seems that a collision will be happened.

If I separate different strategies into different accounts then I will need many accounts if I have many strategies. Also, how to decide the among of capital for each account?

I would like to ask what is the normal way to due with this kind of situation. Thank you very much.
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I don't understand why it's so hard to grasp the concept that being long X shares of stock ABC in one account and short X shares of stock ABC in another account is exactly the same as being flat stock ABC. Or any permutation thereof. The only exception to this might be if you're holding one over a period long enough to qualify as long term capital gains, which doesn't sound like your situation.
What you need isn't two accounts or a system to avoid "collisions". What you need is simply an accounting system and the intelligence to track when a flat position is the result of to strategies with opposite positions on the same security that unfortunately don't call entries and exits at the same time.
 
R1234 said:
I'm dealing with a similar thing currently. I've got several sub accounts at IBKR now running different strategies. Sometimes they will have the same stock, sometimes in the same direction and sometimes in different directions.

But now I am in the process of moving all of that money over to Fidelity and will be trading 20+ strategies in one account. What I plan to do is keep a spreadsheet for each strategy. At the end of every day I will record, strategy by strategy, the tickers traded, direction, number of shares and fill prices. This way I can disaggregate the overall portfolio to keep track of how each strategy is performing. There's a bit more work keeping track of the embedded strategies but I like it better than having 20+ subaccounts.

With regards to your question on capital allocation among accounts, base it on correlation and sharpe ratio. If something has low correlation or is more smooth then it should get more allocation.
More...


do you trade automatically or manually on fidelity?
 
Sig said:
I don't understand why it's so hard to grasp the concept that being long X shares of stock ABC in one account and short X shares of stock ABC in another account is exactly the same as being flat stock ABC. Or any permutation thereof. The only exception to this might be if you're holding one over a period long enough to qualify as long term capital gains, which doesn't sound like your situation.
What you need isn't two accounts or a system to avoid "collisions". What you need is simply an accounting system and the intelligence to track when a flat position is the result of to strategies with opposite positions on the same security that unfortunately don't call entries and exits at the same time.
More...

Yes you are right, the holding duration can be different.
 
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