Counter positions: self-deception or subtle tool? - page 8
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cite where it is proved.
Open two opposite orders and close each of them when it will be in the plus (i.e. at different times). Then you will get a profit proportional to the pips of each order, while at netting you will sit with a bare zero (or in deficit considering the spread).
The probability of this event is not considered as it depends on the specific TS.
Open two counter orders and close each of them when they are in the plus (i.e. at different times). Then you will get a profit proportional to the pips of each order, and at netting you will sit with a null (or in deficit considering the spread).
wrong. When netting, the fully equivalent sequence of trades will be opening a trade at the moment when the first trade was closed in the lock option.
cite where it is proven
Read IMHO on p. 6: there's proof - if you don't like it, it's not my fault... :)
Read the IMHO on p. 6: there's the proof - if you don't like it, it's not my fault... :)
that's the lyric. Pure accounting says it's not ;) Practical example - sequence of transactions
is incorrect. With net, the fully equivalent sequence of trades would be to open the trade at the moment when the first trade was closed in the lock option.
So, the netting function will never give you the equivalent of this situation. Which is exactly what you need to prove.
how is it?
Lock option: buy and sell open with equal lots at point A. Price went up 10 pips in point B - closed buy +10 pips. Then we went down by 20 pips in point C - we closed the sell and made +10 pips again. Total +20 points.
Netting variant. We did not open at point A as we had two opposite positions with equal lots. We opened a sell at point B. At point C we closed it. Total +20 pips.
Any broken system may be rewritten to the netting system. We may even write a universal translation function.
Like what? :)
For example, when an open Sell position in point 2 brings +100 pips, then a Buy position held brings the same minus, and with equal size it is equivalent to simply closing in point 2 and reopening in point 3. So just comparing lengths is not enough ....... I'm telling you, arithmetic rules. ;) :))))))))))
How it is?
Lock option: buy and sell open with equal lots at point A. Price went up 10 pips in point B - closed buy +10 pips. Then we went down by 20 pips in point C - we closed the sell and made +10 pips again. Total +20 points.
Netting variant. We did not open at point A as we had two opposite positions with equal lots. We opened a sell at point B. At point C we closed it. Total +20 pips.
You may rewrite any broken system on a netting system.
It's always smooth on history.
Can you describe the algorithm of two independent TS in one netting system?
For example, when an open Sell position in point 2 brings +100 pips, then a Buy position held brings the same minus, and with equal size it is equivalent to simply closing in point 2 and reopening in point 3. So just comparing lengths is not enough ....... I'm telling you, arithmetic rules. ;) :))))))))))
Due to the fact that buy BC is held rather than reopened, we save on the spread.