In Forex there are many tactics and trading systems: from the intersection of moving averages to finding patterns on the chart and track Twitter trump.
But there are other tactics. Not very honest. Prohibited. For which you the broker is not exactly a Pat on the head. Their use is likely to lead to the suspension of your account. If anything, I’m not telling you anything…
Introduction
Trading on the Forex market is a trading system or strategy that includes a series of positive and losing trades. This activity is not without losses, the probability of which is increasing over time, which leads to forced optimization parameters or drastic change in the algorithm. Professionals perceive this situation as a normal working routine, but newbies who came to Forex recently or have returned after some time full loss of Deposit, believe in the existence of a “Grail”. Conventionally, so-called win-win strategy trade in the financial markets or profitable trading strategy, significantly covering profits rare losses.
He who seeks will always find, some beginners do find simple and effective ways to fast and safe increase of the Deposit, sometimes requiring the attainment of knowledge about technical analysis of charts. Many of them earn a significant profit in a short time, but “success story” ends “ban account” by a broker or forced deduction of profits. The explanation why this happens and what the strategy is banned in many Forex companies, and this article.
1. Arbitration
Beginners often tend to lose the Deposit, but often blame it on anyone but themselves, in particular, to shift part of the losses to a Forex broker. This causes the novice trader to try their own forces and trade policies in many companies. Some pay attention to the intermittent difference in quotes of the same instrument at different dealing centers. It can sometimes detect, even within one company, if you open an account Metatrader 4 and Metatrader 5. From time to time, especially during news releases, a trader will notice “slipped” the differences in courses currency pairs.
Reasons for courses of the same currency pair at different brokers
The international Forex market is an interbank system that is available to a narrow circle of persons, where the rate of the currency pair is transmitted as a reference value composed of instantly updated data of the latest transactions of trading participants.
Each broker, in turn, can be a participant in this market and middleman, tied to his liquidity provider purchasing volume of its customers. Sometimes, dealing Desk, and does works on the principle of “cuisine” and not take the deal on the real market. In all cases, the current prices are a different path, getting into Metatrader via intermediary banks, Prime brokers, dealers, etc.
In the twenty-first century technology had reduced the lag to milliseconds, but during strong movements or misalignment of the real supply and demand of the liquidity provider quotes different brokers or terminals may differ.
Tactic forbidden by Forex brokers the strategy of “Arbitration”
Study carefully the information on brokers, choosing liquidity providers and dealing centers, opened two accounts and collect empirical statistics of differences courses in a number of currency pairs, computing the most frequent periods of divergence and picking up tools.
When it starts the direct trade opened simultaneously two opposite position (short and long) at the time of the occurrence of exchange differences in the price of the same currency pair with the subsequent closing and profit-taking when comparing rates.
The reasons why doesn’t work the strategy of “Arbitration”
- The blocking of the account or profit of the trader by the broker in contravention of the terms of the Agreement or Contract by the customer.
If the arbitration takes place in one dealing center, the problem will be that the ban on the use of simultaneous multi-directional transactions in the same currency pair, usually spelled out in advance in the terms of service.
- Requotes, slippage, increased spreads, etc.
The broker knows about the problem of lag, so at the time of increasing the update time of the quotes or at the time of news release will not fulfill the order, than many “substitute” the trader, who in another place the order to work without problems. But even in the case of execution of the trading order benefits can “eat” the increased spread or change the execution of a market order.
- The exchange of information between brokers leading to the freezing of accounts in both companies.
Security brokers exchange information about customers double-blind comparison of bases, which allows us to calculate an active account, running simultaneously two DTS. It is an occasion for a detailed joint study of the client’s positions. In this case, the trader may break Agreement in two places at once and lose service here and there.
2. Carrie-arbitration
Positions in trading rollover day, have swap loss/charges, which depend on the correlation of interest rates of national Central Banks. If a trader bought a currency with a larger swap size than the second half of the pair, then each day he will receive a minor plus.
For example, in the case of EURUSD the zero rate of the ECB and of 2.75%, the fed will provide a pair of shorts daily positive swap. To earn while selling to open long on EURUSD from the broker with the “Islamic account” or to connect service “swap free”.
Swap charges are not as high, but the annual profit can reach 30% without any serious risk, so many beginners like the idea of making money.
The reasons why strategy does not work Carrie-arbitration
- If you selected the “Islamic Forex”, you need proof or justification of this choice;
- Swap-free account may provide for the Commission for the transfer or retention position;
- The broker can “calculate” earnings to the swap, reducing or zeroing it for a number of far-fetched reasons;
- If the Security Service “calculated” two active bi-directional account, the trader may be accused of violating the user Agreement.
3. Carrie-arbitrage on the difference in swaps
Theoretically, the calculation of the swap based on the difference in interest rates of the Central Banks whose currencies are used in a pair must be the same at all brokers, but in reality, their importance varies greatly, creating arbitrage opportunities.
Picking up two brokers with the strongest deviations from the average value of the swap, the trader can get daily charges on one of the sites, even without resorting to an Islamic or swap-free accounts.
Note the table of swaps Forex brokers on major pairs, where the evident options of obtaining best charges for short EURUSD, significantly overlapping for write-off of long position for this pair, if it is open on account in another company. To see this table on the Myfxbook here.
The reasons why strategy does not work misopogon arbitration
Companies know about the strong differences in the size of the swap accounts, so actively “calculate” the long-term position. The trader may face a deduction of profits from the swap, and got “adjusted” the closing position where it will block the amount of the loss.
The broker also may suddenly close the position to limit the term of its retention, and even the size of maximum profit on one lot. Please note strong difference in swaps is found mostly in little-known companies, and if they discover carry trade in the exchange of information with other Forex brokers, they may block the account and charge profit and Fund balance.
4. Trade on spikes — non-market quotes
Traders who trade within the day, pay attention to the frequent occurrence of “pins” — sharp deviations of the price, much higher than the usual trading range.
Such phenomena mainly occur in the period of low liquidity and are found in the peripheral pairs. After a strong change course instantly leveled, and brokers explain this a technical glitch or a big deal, “collecting glass” — all applications on the market Sellers or Buyers.
As these anomalies occur during the period of market calm, they are accompanied by flat — fluctuations within certain price boundaries, without formation of a trend. Therefore the trader sets a pending order for buying and selling at the rate of two or three figures (200-300 points) to catch that movement and take profit are placed within the range.
Why trade the spikes will not bring profits
If we look at the historical chart, none of the quotes do not point to the last spike. Brokers removed the pump, returning money to those traders, whose position was suddenly closed by triggered stop-loss.
Profit earned on non-market deviation is discovered during the proceedings of a spike, brokers write off of the trader “in hindsight”.
5. Bonushunting
Strong competition in the market of Forex services makes brokers perform various marketing for the company. In particular, a large number of clients, the traders can bring no Deposit bonus or offer any additional amounts for the first (or subsequent) Deposit.
If a bonus is involved in the drawdown or require a Deposit, a trader can “take” its size by opening another account with another broker, to simultaneously hold divergent positions on the same currency pair.
Tactic forbidden by Forex brokers strategy bonushunting
The meaning of strategy consists in repeated repetition of the procedure for obtaining bonuses by registering several accounts, and subsequent attempts to “earn”, merging one account and getting profit on the other. This cycle is repeated until then, until the last campaign the no Deposit bonus.
Reasons for not going to work strategy of bonushunting
- The opening of new accounts will require a variety of measures to conceal the ip addresses and bringing party people to supply unique personal data;
- Profit from bonus account it is difficult to extract without the fulfilment of certain conditions – usually require you to open a specified number of trades + the size of the trade turnover, while the second, reverse position would have “merged” and the opening of the new may not be enough time if the offer of the broker is limited on it;
- Bonus almost always available Forex broker on the terms of a possible cancellation at any time.
6. The strategy of earnings on a dummy affiliate program
Forex brokers are willing to “share” a portion of earnings in exchange for attracting new customers, opening the company account. A trader can enter into a partnership agreement to receive part of the profits from the Commission (spread) with each a real bargain given them human.
To convince other traders to open an account on a special link to identify the account as an affiliate and be eligible for a profit – a difficult task. It is much easier to create a fictitious network and to “overclock” the reward of a large number of trades using robots with algorithms for high frequency trading. Theoretically, “merged”, the Deposit will be less than the share of Commission payments.
Tactics earnings is prohibited on Forex brokers strategy fictitious affiliate program
- Find a broker with a minimum set of documents for registration and the high payout percentage of the spread;
- Select for a fictitious partner network accounts with a fixed spread;
- Find and install to the accounts of fictitious traders Advisors with the algorithm of HFT (high frequency trading).
The reasons why will not work a bogus affiliate program
Any Forex broker involves locking accounts and write-off of affiliate fees for fraud. For additional protection from tampering with the affiliate program payments are made after a certain period. Also fines may be imposed on future rewards.
In addition, a Partnership Agreement may provide for the retirement and cancellation of the contract for:
- High frequency of transaction partners – stipulates the minimum time the position and size of fixed profit/stop loss;
- 70% turnover in one of the referred clients;
- The lack of activity for the most part, referrals, i.e., transactions must take place on each account at least 1 time per month;
- Any coincidence of personal data referrals to other open accounts (ip, email, etc.);
- Ignoring referrals control calls the company to confirm the identity.
Profitable trading strategies in Forex, a broker is prohibited
If the above ways of earning were blocked by the broker, for obvious and understandable reasons, the strategy of scalping and news trading is prohibited by many companies is unfair.
“Tradition” is getting rid of profitable traders appeared when the profit of many dealing centers consisted of lost deposits. Trading currency pairs has performed within the company, for which they received the name “kitchen”, so any permanent winning trader perceived by the company as a loss.
At that time, the novelty of the subject of Forex has led to a large influx of new clients, including actually making money was a few percent of traders. The broker was easier to get rid of these accounts, despite the risk of reputational loss. Later, with the goal to minimize them, profitable strategies have been identified and prohibited in the Client Agreement.
7) Pipsing or scalping
Transactions with short duration of stay in position with the fixation of the loss or gain of a few points (pips) are called scalping or as. Numerous resources on trading, often “bred” these concepts, but the distinction between the definitions of the strategies high-frequency trading is quite flexible.
It is believed that scalping can be carried out not only on the minute, but also 15-minute candlesticks, then as Pipsing are exclusively trade on ticks – second price changes with each new transaction conducted by any trader in Forex.
Strategy high-frequency trading – is quite complicated and emotionally, with a high threshold of negative results, no “right to error” which can deprive a trader of the whole day, and already low net income. Therefore, for its application requires serious preparation and training.
The reason that broker does not scalping is a trading strategy “to guide”. As in the case of arbitration, the trader quotes the Prime broker with faster movement rate changes in the terminal broker.
By calculating the time lag, measured in ticks, and using the one click trading or expert Advisor that allows you to set the orders with automatic stop loss and take profit in few pips, you can enter prior to the movement of quotations in the dealing center. As the result of trading will be known in advance because of the advancing movement of currency pairs from the Prime broker, strategy will make a profit on most deals.
The reasons why Pipsing will not bring profit many Forex brokers
Forex broker specify the time of transactions or the number for one session, so the profit will be deducted for violation of the Agreement. If a trader continues to develop the conflict — he can block the account.
8. News trading
Publication of important economic indicators are always associated with a surge in volatility – the advent candles with abnormally high price range. Switching surge allows a trader to place two opposite orders with predetermined take profit. If the levels of profit fixation is set up correctly, most of the orders placed on this tactic, closed with a profit.
This tactic allows you to work without a forecast of the market reaction to the news. In more detail, the system described on the website in the article “How to trade the news.”
The reasons why Forex brokers work news trading
- Short time holding position may violate the terms of the Agreement with the broker;
- At the time of the news release in the terminal growth of spread will open trades with slippage;
- They delay the auction for a few minutes during the period of publication of news;
- Cancel a deployed or closed orders without giving reasons or under the pretext of technical failure.
9. Trade volatility with the maximum use of leverage
Trading strategy volatility is one of the tactical response of traders to the prohibitions of Forex brokers to trade news.
To get a guaranteed profit regardless of the movement of the currency pair, selected volatile instrument, for example, USDJPY. A trader opens two accounts, selecting the conditions of providing maximum leverage 1: 1000. Further exhibited two opposite positions on the same currency pair before the release of news or the publication of a significant political events, the opening of the European session (strategy London explosion), etc.
Pre-calculating the take profit that cover the loss from the sink of one of the deposits, are equal, the trader earns (usually +100%) on the pulse rise of the quotes on one account, while the second is reset. This is possible due to the large size of the shoulder.
The reasons why Forex brokers are not works trade volatility
- A broker may be prohibited from trading on the entire amount of the Deposit at high shoulder level;
- At the moment the news of price movements in the two accounts may vary in different directions;
- Broker may withdraw the profit because of the alleged incident of technical failure;
- The trader can catch the opening of the opposite position in another company and block both accounts.
10. Fishing gap — “gaps”
The mixed strategy of trading in two accounts at different Forex Brokers, gives leverage of 1 to 1000 for catching gaps — price gaps that occur in the first minutes of market open.
This is a rare occurrence for the major currency pairs, which can only be seen on Monday if during the weekend occurred important events. But for many of the national currencies with a weak economy or a short working day gaps are constantly accompanying attribute.
A trader uses the tactics already described in the trading strategies volatility, with the only difference that the mixed position is opened in the last seconds before the end of the session.
Emerged at the opening of the next day the price gap “kills” a deal generously covering the loss of profit on another account.
The reasons why Forex brokers are not working “catching gaps”
Quite difficult to find a broker that allows to trade with high leverage “peripheral” currency pair. If the company agrees to such terms, then it limits the opportunity for 100% of the Deposit. In the absence of this constraint a trader can fall into the trap — the position will disappear from the terminal, if you plan to geo in a positive way. To calculate its direction a few hours prior to the session is easy, so the broker purposefully cleans premarket.
Conclusion
To avoid blocking of the account or to cancel the profit earned, the trader should avoid strategies that use compliance or any other obvious “holes” in the servers of the broker. If the company are unable to cover these loopholes technically, they are closed on the legal level. Therefore, you should carefully read all clauses of the Contract with the Forex broker and to achieve the full clarification of unclear provisions.
Profitable strategy that will work on the discovery of algorithms that are best implemented in partnership with major and leading brands, which allow you to use scalping special conditions. Find news trading without requotes and slippage more difficult because this problem occurs when trading in any markets.
