I hope people don't mean they are short and long at the same time? 
Why?
Because they (partially) cancel each other out? You're just paying spreads for no good reason.
I like to think I have good reason to pay what I (choose to) pay
Personally, my strategy is not to hold two opposing positions together, at equal amounts anyway... That WOULD be kinda silly.
Yeah, but it doesn't matter if they aren't equal. If you short for 100BTC on one account and go long for 20BTC on another, you might as well pick just one position and go short for 80BTC. That way you are only paying fees over a 80BTC trade opposed to 2 trades equaling 120BTC. Price movements would effect both options the same way.
If fees were an issue at Bitcoinica, I would understand this logic. Zhou makes his money from the spread, which because of its size, it is difficult to jump into a position and immediately start profiting.
Those spreads work the exact same way for the customer, except that they are dynamic in the sense that they are constantly recalculated by the algorithm whereas fees are a set percentage of the price. Either way, as a customer you're not getting as many BTC/USD when making the trade as you would without those fees/spreads. You are paying those fees (spreads in this case) over a lot more BTC if you take multiple opposing positions.
But even if you look at it _without_ those spreads, why would anyone take opposing positions? I can't find _any_ advantage that it might bring. Am I missing something?
The reason I keep another account for opening an opposing position is because on Bitcoinica, I can manipulate my base price. This, combined with the nature of this market (large, fairly unpredictable spikes) and the fact that I am no good at tech analysis makes the strategy utilitarian to me. I can use an arbitrarily small amount of BTC to get the base price where I want, then have the position ready to deposit funds and go all in and begin profiting immediately. As long as I keep my base price somewhere close to where I think the tip of the spike is, it will much easier than seeing on the real-time chart "OH CRAP, A SPIKE!!", then hurrying to open a position, after Bitcoinica's spread has already widened and made my initial losses even sharper.
I think it's just my personal situation that makes this a good strategy for me -- maybe not for most.
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