set a long position with a profit taken ceiling set at 2R and a stop loss of 1R, then at the same time
a short position with the other broker - at the same price - with a stop loss at 1R and take Profit ceiling at 2R.
Once the market goes beyond either stop loss (for example the long position stop loss), the short position will be in overall profit (admittedly a small profit - as you have to subtract the cost of the long position stop loss).
I believe with this strategy, the only risk is that price variability could potentially take out both stop losses, but I would imagine this is a relatively rare occurence. Wouldn’t this strategy be profitable most of the time, require little in the way of market or price analysis or have I missed something here?
If it was overall profitable, you would from time to time have to move funds from one broker to the other but not sure I can see any other drawback. But I am a Forex newbie, so any please do point out any glaring naivety.
It’s your lucky day. I’m going to save you so much time and heartache. This does not work. It’s one of the earliest systems I used when i first started.
Firstly yes both positions can hit SL and its not rare, you’ll find it happens a lot. Secondly, you’ll be paying commissions or spread on both accounts which eats into your profit. Plus theres slippage and not being filled.
However you’re free to test it. Please do it on a demo for 3 months. Dont use your real money.
Its a logical conclusion to the problem of selecting a direction in which price is more probably going to travel, but finding that the market then takes the less probable direction. The method falsely appears to be a guaranteed way to eliminate risk.
The practical difficulties of bracket trading in this way are that you need r to be a relatively large number of pips away from entry, otherwise both the bullish SL and the bearish SL will be hit due to volatility, for a loss of 2r. However, if r is too large, price takes excessive time to reach either TP.
You would need a high win rate to stay ahead because essentially your R:R is 2:1.
Example; You’re risking $200 to make $100.
Say you succeed in your first attempt. Your SL is set at $100 and your TP is $200. You lose $100 with one SL, which means when it hits your TP then you’re $100 ahead. Nicely done.
However, on your second attempt both SL’s get hit, now you’ve lost $200 and are down $100 overall.
Always think about what you are risking as opposed to what you could make, because more often than not this is how it turns out.
It is not. Just find a good trader or long time user of this forum and ask them for recommendation. The old brokers with good record are better to start with. I use Tenkofx, more than 7 years running and still a good option.
There are three positions that a trader can be in this market.
You are either net long, net short or flat,
Dont put any money into a trading account untill you can understand this,