Hi!
I had an idea this week that seems too good to be true. So let me explain it. Imagine I have 150$ to invest. What do I do? I deposit 50$ with a broker who is offering me 100% on any deposit. I get 100$ trading margin. Wait for a big news and trade with maximum leverage (preferably 1:500) in the chosen direction. That is approximately 100 pips (because it’s a major news) or even more. 600$ for me. Thank you and goodbye. See you when I need the money? Of course broker must offer also negative balance protection if the reaction is opposite. If I don’t guess right I just try again. Statistically it would happen 1:1. But I know that reactions not always in just one direction. But even if I miss 12 times, I’m still at zero. I have done it once and it worked pretty good. Already spent it on some cigars and whiskey Tell me what you think so we can discuss it here.
I think there’s a very large number of reasons why this is extremely unlikely to work, of which the most relevant and common few are …
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Reading the small-print of the exact terms of those “deposit bonuses” will clarify how many trades you’d need to do before ever being allowed to withdraw any of the profits
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“Brokers” who make offers like this (and there are a lot of them), without exception, aren’t genuine brokers: they’re [I][U]all[/U][/I] counterparty market-makers whose business model revolves around attracting a particular type of customer, whose lack of experience they know will make such offers appear attractive to them, because they understand very clearly that they’ll almost never actually pay out at all, on such offers, because (a) their system is more or less rigged, overall, to make it close-to-impossible for the customers to win in the long run, [I]because that’s how they make their living[/I], and (b) that’s the potential customer-group their research has correctly identified as the one [I]least[/I] likely to be able to trade profitably over the medium-term anyway - in other words, the odds are stacked [U]hugely[/U] in the “brokerage’s” favour
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It involves “trading the news”, which is absolutely fraught with dangers, and the “brokers” making these offers will always turn out to be exactly the ones who can’t/don’t manage to execute stop-losses in fast-moving markets, of which the overall effect is that (given the frequency of “spikes” in both directions) it’s quite common for customers to get the overall direction [I]right[/I] and [U]still[/U] lose money
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They’ll mostly be “brokers” who [I]don’t[/I] offer negative balance protection, and/or they’ll be regulated in a variety of “offshore” places, such as Cyprus, where they’ve deliberately chosen to be regulated for reasons that suit themselves very nicely but - to put it mildly - are [U]far[/U] from in their customers’ interests (in other words, they’re “brokers” one perhaps shouldn’t trade with, anyway)
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It’s a huge distraction from gaining meaningful, helpful trading experience of the type from which a small minority of forex traders benefit enough eventually to go on to become steadily profitable, overall
With apologies for the disillusioning tone, thousands of others have also had it, and it [B]does[/B] turn out to be “too good to be true”.