Let’s assume that we have 2 forex accounts with 500x leverage. We deposit 50 bucks to each.
What if right before important data comes like todays services data or tomorrow’s NFP, we buy and sell GOLD at the same time with the two accounts? One account gets blown out and 50$ is lost (and negative balance protection saves you from more losses) and the second account is running with a 10-20$ gold spike which with the leverage makes about 4-500$ with 20 mini contracts
Wouldn’t that be guaranteed profit everytime if you trigger buys and sells 30 seconds before the data is out?
In which cases could this strategy cause losses in both accounts?
All opinions and critiques welcome
Edit: I’m aware that in the US some brokers don’t allow hedging, but my broker in Australia allows hedging so I guess this wouldn’t work with US brokers unless you use two different ones
Not sure if there’s more regulations or rules regarding this
I suppose it would fail if it whipsawed you hard enough. So lets say the NFP provoked an upside response but only after a sharp downside in the 30 second lead up window. If the lead up down move was enough to get your Buy side account margin called, you would then lose both accounts and make nothing, or even possibly incur losses. I am presuming you are using no stop losses obviously.
I also don’t know how legal it is or isn’t.
Interesting idea though! Will you try it with NFP tonight?
Yup, gonna try it for sure!
I mainly trade XAUUSD and while I’ve noticed these whipsaws in currency markets, Gold does not seem to react the same way.
If you take a look at the last 2 data spikes yesterday and today it went straight up, no down candles beforehand.
Legal wise, I know its not in the US due to some laws, but my broker allows hedging therefore I don’t see why it would be illegal, it is not like arbitrage trading.
Very interesting. May I ask which broker you use? I am in Australia also. It seems weird to me that they would let you do this if they found you doing it, but maybe you found a loophole.
@chasinpipsfx, 500:1 will no longer be available in 3 - 6 months in Australia… 1:20 will be the max…so you’ll have to try it soon… the market cannot protect itself against hedged positions, hence being outlawed in the USA and stifled by leverage limits in Europe…
The Good… This strategy is not illegal via Australian Brokers (YET)… and can be easily setup…
The Bad… One way to ensure that you do not suffer slippage when you place your order is to specify that it must be filled at a limited price… at market orders will be subject to slippage and will negate or at least halve the result… ie: on a news generated spike up in the XAUUSD, your position will be filled well after the level that you set your entry.
LIVE and DEMO accounts data feeds are different, so this will more than likely be profitable on a DEMO and half the profit or even a loss on a LIVE account… It’s all a game…
@Trendswithbenefits Nice to see your still around, I thought you had vanished for some reason. Been going through your posts one by one over the last few weeks and trying to digest them.
No wont be guaranteed as you dont know how much the market will move. It might close out the sell order after 50 pips by rallying and then reverse. No guarantee it will keep running higher on your buy side. Then you lose both trades.
a whiplash like today’s NFP would def take out both accounts, though if you trigger it 10-15s before then you avoid the whiplash a bit. But with smaller singular data like the ISM this week, we had a clean spike up and in such cases you would maybe let it run for 3-4 minutes just to get any profit above BE. Still kinda thinking of how this could work eventually