We are often asked whether multiple accounts are needed to support multiple strategies on the same symbol. The logic behind the question goes like this:
It seems counter-intuitive, so let me explain.
Say you have three systems, cleverly named System 1, System 2, and System 3, and they are each trading into a separate account. The systems do something like this:
System 1 shows a profit of $50.
System 2 shows a profit of $105.
System 3 shows a loss of $30.
30 contracts traded, for a net profit of $125 total. Right?
Ok, now lets look at the same trades into one account.
30 contracts traded...
...for a net profit of $125 total.
If you'd like to see these examples neatly laid out in tables, please click on this link, which will take you to a pdf file on our website. The breakdown is a little easier to see on that page.
As you can see, it's just a question of bookkeeping. The money is the same, either way!
TradeBolt
Well, kind of. One long position and one short position in the same account equals a flat position. However, there is no need to have multiple accounts. The profit from the sum of the overall trades will be the same.
It seems counter-intuitive, so let me explain.
Say you have three systems, cleverly named System 1, System 2, and System 3, and they are each trading into a separate account. The systems do something like this:
System 1 shows a profit of $50.
- 1:00 Buy 5 at 1200
- 4:00 Sell 5 at 1210
System 2 shows a profit of $105.
- 12:00 Sell 7 at 1220
- 2:00 Buy 7 at 1205
System 3 shows a loss of $30.
- 12:00 Buy 3 at 1220
- 4:00 Sell 3 at 1210
30 contracts traded, for a net profit of $125 total. Right?
Ok, now lets look at the same trades into one account.
- 12:00 System 2 sells 7 at 1220
- 12:00 System 3 buys 3 at 1220
- 1:00 System 1 buys 5 at 1200
- 2:00 System 2 buys 7 at 1205
- 4:00 System 1 sells 5 at 1210
- 4:00 System 3 sells 3 at 1210
30 contracts traded...
- 12:00 total position -4, price 1220, profit $0
- 1:00 total position 1, price 1200, profit $80 (4 positions closed at $20)
- 2:00 total position 8, price 1205, profit $80 (no profit taken, just more positions added)
- 4:00 total position 0, price 1210, profit $125 (1 position closed at $10, 7 closed at $5)
...for a net profit of $125 total.
If you'd like to see these examples neatly laid out in tables, please click on this link, which will take you to a pdf file on our website. The breakdown is a little easier to see on that page.
As you can see, it's just a question of bookkeeping. The money is the same, either way!
TradeBolt