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LCS trading 40% halves for 90%
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<p>[QUOTE="Argenteus Fossil, post: 2002462, member: 71478"]It's a hassle because I'm trying to see the spread of 90% vs the spread of 40%. That gives me the spread of 90%, but I still do not know the spread on 40%.</p><p> </p><p>The reason for me asking is this: If you traded 40% for 90% then 90% back to 40% and repeated rapidly, you would most likely lose money. Now I know you would not continually trade back and forth all day, but there is a reason I'm asking. Going which direction would lose the most money per transaction? That is the position you want to be opposite of. If you can trade 90% for 40% for a better value than if you traded 40% for 90%, then you <b>want</b> to be in 90% (because holding 40% to trade up loses the most money). However, you <b>have</b> the position of 40% already and thus should not trade back up as that is where you suffer the greatest shrinkage. Entering new dollars, you should purchase the position of 90% as it is the preferred position in this equation.</p><p> </p><p>I know this is really confusing. It's relating opportunity costs, game theory, etc into something so simple as a trade... I should just stop.[/QUOTE][/QUOTE]</p><p><br /></p>
[QUOTE="Argenteus Fossil, post: 2002462, member: 71478"]It's a hassle because I'm trying to see the spread of 90% vs the spread of 40%. That gives me the spread of 90%, but I still do not know the spread on 40%. The reason for me asking is this: If you traded 40% for 90% then 90% back to 40% and repeated rapidly, you would most likely lose money. Now I know you would not continually trade back and forth all day, but there is a reason I'm asking. Going which direction would lose the most money per transaction? That is the position you want to be opposite of. If you can trade 90% for 40% for a better value than if you traded 40% for 90%, then you [B]want[/B] to be in 90% (because holding 40% to trade up loses the most money). However, you [B]have[/B] the position of 40% already and thus should not trade back up as that is where you suffer the greatest shrinkage. Entering new dollars, you should purchase the position of 90% as it is the preferred position in this equation. I know this is really confusing. It's relating opportunity costs, game theory, etc into something so simple as a trade... I should just stop.[/QUOTE][/QUOTE]
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LCS trading 40% halves for 90%
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