Forex Account Abuse?
- Thread starter tyrant
- Start date
Quote from tyrant:
tyrant, unfortunately, what you are proposing is not feasible. sellingrich is being facetious... good to see someone finally come out and say it, after 10 posts. Each of the following statements you appear to have taken for granted is generally not true:
"One side wins and the other loses."
"one [account] is bound to be a winner."
I understand that you don't care about overall, combined P&L of the 2 accounts. You only care about having 1 account of the 2 show positive P&L, after a period of time, don't you? As it happens, that's the relatively hard part to pull off... It's, well, an expectancy thing.
Rather than go on and on with long-winded explanations, let me try to help you see it for yourself... you'll get more out of it. (Socrates, eat your heart out... or not.) Think along the following lines of reasoning:
- Let's say, in account 1, you are long EUR/USD @1.20, SL= 1.1970, TP = 1.2060. (2:1 win / loss ratio.) What trade do you put on in account 2? What is its W/L ratio?
- What action, if any, do you take in each account, if euro keeps on dropping? What about if euro keeps on rising? Be specific with price levels.
- Does fading a trade have to do with entry or exit?
- Is P&L driven more by entries or exits? (ignoring all other elements for the moment)
- What is the definition of expectancy, in trading? (Just search ET, for example.)
- Given that, what are the 2 basic ways to go from negative to positive expectancy?
- True of false: a losing trader can transform himself or herself into a winning trader by switching all his trades to a demo account, while fading them (entering opposite trades) in a live account.
- Finally, don't take my or anyone else's word for it. Prove it to yourself... open and trade 2 demo accounts in this way; or even record your trades in a simple Excel spreadsheet (preferably in near-real time...); or, heck, record your trades in an old-fashioned notebook. No need to wait "1-3 years" -- a few dozen trades, at most, should do it. In fact, this is a great exercise for any trader who is not already consistently profitable.
Hope this helps. Now, in terms of your original inquiry... the option to have more than one account with the same forex broker / dealer offers countless advantages. Here are a few:
1) trade more than 1 strategy (setup, entry, trade management, exit)
2) trade more than 1 time frame
3) apply different money management methods
4) let your "itchy fingers" play / knock yourself out in a small account; maintain your discipline elsewhere
5) use no stops in 1 or more accounts; use hedging
6) transfer funds among accounts, for any one of a number of valid reasons
7) automate vs. manually trade 1 or more accounts
8) follow a signal service, chat room, etc. (if you must) in 1 or more accounts
9) experiment with / test / develop / refine new trading ideas, tactics and strategies on real, not demo, price feed. Save demos for mastering new platforms.
Hi late apex,
I know what you are trying to say but I think expectancy or slippage or commissions is of less importance if we keep our trades down to a minimal, say, 3 or 4 times a year or even once a year. The idea is to have the widest fluctuations possible in these opposing accounts. You can even trade different pairs in more than 1 pair of accounts so that over 1 or 2 or 3 years, there is bound to be at least one account with "super normal" returns for the 2 purposes I said earlier. Losses in one account are topped up. No problems - tons of money to launder! I know what you mean by i think you are overcomplicating my questions with expectancy or win/loss ratios etc. I am just wondering how the authorities are going to deal with those money laundering activities , if any, out of these facilities. Track records from forex or other brokerage statements must be taken with spoonfuls of salts, unless enough transactions are done to PERHAPS justify the edge.
Your points regarding advantages of 2 or more subaccounts are good though.