Okay, suppose I only trade one market, so I am always either IN or OUT. And anytime I am in, I am either LONG or SHORT.


At occasional moments, I get either a BUY LONG or a SELL SHORT signal, meaning at those moments I have an expectation that the market will move enough up or down to cover a commission and a slippage.


Given that there are no other marketplaces competing for my margin dollar, but assuming I am averse to volatility, is it ever rational for me to be OUT?


Meaning, given that when the market goes random (a signal runs it course) I am left LONG - and therefore the next signal is just as likely to be BUY LONG or SELL SHORT - under what conditions would it be rational to exit a long position (and incur commission/slippage), but to not at the same time enter into a short position?


Meaning, if there is not a strong enough short signal to cover the entry/exit costs of a new short entry... well, please explain the situation


eLROY