Illegal forex trading strategy that some are still using. Would you?

Summary

In this video, Rafael Zohovic discusses a controversial trading strategy involving two accounts on different brokers with high leverage. He explains how, during volatile market conditions triggered by news, traders can open opposing positions (buy and sell) to capitalize on market movements. Despite the risk of both accounts being closed if the market moves against one, this method can yield significant profits if correctly timed. Rafael emphasizes that while brokers discourage this strategy due to its potential for quick riches, it's not inherently illegal unless both trades are with the same broker.

Takeaways

• 📊 The strategy discussed involves using two separate trading accounts for high-leverage trading in volatile markets.
• ⚠️ This method is illegal according to brokers' rules, but the video suggests it's still possible to use it discreetly.
• 💰 The core of the strategy involves opening opposite trades (one buy, one sell) on two accounts during high-impact news events.
• 📉 One account will lose after a certain amount of pips, but the other will profit significantly due to the market's volatility.
• 💥 The strategy hinges on quick market movements after major news releases, where prices can shift by 100-200 pips.
• ⚖️ To avoid being caught by brokers, it's important to use two different brokers and maximum leverage to capitalize on small movements.
• 🧮 With high leverage, even a $100 account can open a significant position, like a 0.41 lot size, leading to potential large profits.
• ⏳ The key is to let the profitable trade run after the losing trade is closed, maximizing gains as the market moves in one direction.
• 💡 There are risks, such as market volatility causing both accounts to close out, resulting in losses on both sides.
• 📈 The strategy can result in significant profits, but it also comes with a high level of risk and is discouraged due to its illegal nature with brokers.

Q & A

What is the main topic of the video?

The video discusses a potentially profitable but forbidden and illegal trading strategy involving two separate accounts.

Why is this trading strategy considered illegal?

The strategy is considered illegal because brokers do not allow it as it could lead to quick profits for traders, which goes against the broker's rules.

What is the key requirement for the two accounts in this strategy?

The two accounts need to be on massive leverage and should be with separate brokers to avoid being caught.

What role does market volatility play in this strategy?

The strategy requires a very quickly moving market, often triggered by news, to make a decisive move in one direction within a short time frame.

How does the leverage work in this strategy?

With high leverage, a small account balance can control a large position. For example, $100 can control $41,000 with a 1:500 leverage.

What is the significance of the 33 pips move mentioned in the video?

A 33 pips move is significant because it represents the point at which the trade with the losing direction would be closed due to margin exhaustion, while the other trade would be in profit.

Why does the presenter suggest waiting after the initial 33 pips move?

The presenter suggests waiting because the news that triggered the initial move could continue to influence the market direction, potentially leading to larger profits.

What is the potential risk of this strategy?

The potential risk is that if the market moves in the opposite direction after the initial move, both accounts could end up losing money.

What does the presenter mean by 'reinvesting profits'?

Reinvesting profits refers to using the gains from the successful trade to open new positions, potentially increasing overall profits.

Why does the presenter believe this strategy might not be illegal if done with two different brokers?

The presenter believes that if the strategy is done with two different brokers, the chances of winning are 50/50, and the brokers would still make money from the spread, so it shouldn't be illegal.

What is the presenter's final advice regarding this strategy?

The presenter advises viewers to be cautious and not to actually engage in this strategy, as it is merely being discussed to answer a question and provide insight.

Outlines

00:00

🚫 Forbidden Trading Strategy

Rafa Zohovic introduces a risky trading strategy that involves using two separate accounts on different brokers with high leverage. This strategy is against broker rules and is considered illegal because it can lead to quick profits. The strategy requires a volatile market, ideally reacting to news, to make a decisive move within minutes. An example is given using the British Pound and Japanese Yen currency pair, where one account would go long and the other short. The goal is to profit from the market's movement, which can be up to 200 pips or more, using the leverage to amplify gains while accepting the risk of one account being closed due to a small move against the trade.

05:01

📈 High Leverage and Market Volatility

The video explains how to use high leverage to one's advantage in a volatile market. It uses an example where a $100 account with 1:500 leverage can control a large position of $41,000. The strategy hinges on the market moving at least 33 pips to cover the cost of one trade, after which the other trade would be in profit. The video suggests waiting for further market movement after the initial 33 pips to maximize profit. It also mentions the potential for reinvestment of profits and the importance of understanding the risks involved, including the possibility of both accounts being closed if the market moves against the initial trade.

10:03

🎰 Casino-like Trading and Legality

Rafa discusses the legality and ethics of the strategy, comparing it to gambling in a casino where the chances of winning or losing are roughly equal. He argues that using two different brokers should not be illegal since the brokers still make money from the spread and one broker is not favored over the other. However, if the same broker is used, it becomes a zero-sum game where the broker stands to lose, which is why it is considered illegal. The video concludes with a call to action for viewers to like, subscribe, and comment on the video.

Keywords

💡Trading

Trading refers to the act of buying and selling financial instruments such as stocks, bonds, commodities, or currencies either via financial markets or over-the-counter. In the video, the speaker discusses a trading strategy involving two separate accounts, which is central to the theme of the video.

💡Strategy

A strategy in the context of trading is a plan or method designed to achieve a specific outcome, such as making a profit. The video discusses a particular strategy that involves using two accounts to trade in opposite directions, aiming for significant profits.

💡Leverage

Leverage in trading allows traders to control a larger position than the value of their deposit by borrowing funds from the broker. The video emphasizes the importance of using high leverage for this strategy, which amplifies potential gains but also increases risk.

💡Brokers

Brokers are intermediaries who facilitate transactions in the financial markets. The video mentions that brokers may not allow certain strategies because they could lead to quick profits for traders, which might not be in the brokers' best interest.

💡Volatile Markets

Volatility refers to the rate and extent at which the price of a financial instrument moves up and down. The video suggests that the strategy is best applied in volatile markets where quick and significant price movements can be exploited.

💡News

News in trading often refers to economic announcements or geopolitical events that can cause market fluctuations. The video uses news as a trigger for market movements that can be used to execute the trading strategy.

💡Pips

In forex trading, a pip is the smallest amount by which a currency quote can change. The video uses the term 'pips' to illustrate the potential profit from the strategy, with the speaker calculating profits based on the movement of pips.

💡Spread

The spread is the difference between the bid and ask price of a financial instrument. The video mentions the spread in the context of the cost of trading, as it affects the net profit when a position is closed.

💡Illegal

Illegal in the context of the video refers to strategies that are against the rules set by brokers. The speaker discusses how the strategy could be considered illegal because brokers do not want traders to exploit high leverage in this way.

💡Risk

Risk in trading is the potential for loss. The video acknowledges the risks involved with the strategy, including the possibility of both trades closing at a loss if the market moves against the trader's positions.

💡Consistency

Consistency in trading refers to the reliability or predictability of a strategy's performance over time. The video contrasts the discussed strategy with another that aims for smaller, more consistent profits, suggesting that the strategy's legality and reliability are questionable.

Highlights

Profitable but forbidden trading strategy using two accounts.

Strategy requires using massive leverage on both accounts.

Two accounts must be with separate brokers to avoid detection.

Optimal for highly volatile markets, especially during news events.

Traders open one buy and one sell position simultaneously, regardless of market direction.

Strategy sacrifices one account while leveraging gains in the other.

A 33-pip movement could liquidate one account while producing profits in the other.

After 33 pips, one account is closed due to margin exhaustion, while the other continues to profit.

Waiting for larger market moves post-news can generate more profit, extending gains up to 200 pips.

The strategy becomes illegal because brokers don't want traders using this leverage tactic.

High risk involved, as the market can reverse quickly and close both trades at a loss.

The approach relies on understanding volatile market reactions to specific news events.

Some variations of this strategy involve trading correlated currency pairs like Swiss Franc and Euro.

The strategy can backfire if the market reverses and closes both positions prematurely.

Although illegal with the same broker, the presenter suggests using different brokers to evade detection.

Transcripts

hello fellow traders it's rafa zohovic

and welcome to my channel in this video

i will discuss with you a very

profitable yet forbidden and illegal

strategy you can still do it but

remember that it's against the brokers

rules they don't want you to do that

because you would get rich too quickly

i'm inspired by one of the comments

made by

one of the subscribers who said

hi rafael i know someone using two

accounts for trading and yes this

strategy is based on two separate

accounts

and he always takes small profits

without losing but don't tell anyone

how he do this thing can you help us

with that i think it should be with two

accounts he don't tell anyone how he do

that so now that that's why you have me

here i will

tell you most likely uh how he do that

it might be a different strategy because

the one the strategy that i will tell

you about is not about small profits

about big profits so that's a little bit

uh

different

okay two accounts you need to have two

accounts

rule number one

rule number two

they both need to be on a massive

leverage

rule number three

they both need to be in separate brokers

otherwise you would be caught

rule number four you need a very

um

quickly moving market so you need to

need some news

the strategy is clearly for

for the very volatile markets

that will make a decision and it will go

in one choosing direction within

one minute let's say

so the news is the perfect

moment

how do you do that

here is the thing

we are on british pound of japanese yen

this is a five-minute chart you can see

that's eight o'clock if you look at the

bottom eight o'clock in the morning

there are some news

on the market and the market is reacting

to the news it's reacting and going over

in one move it's going over

100 pips if

we continue

this move further on

we can see that this move is

at the end of a day

four hours you've got already 170 pips

and later 200 pips so imagine you can

make 200 pips

but

how do you know which way the market

will go

here is the thing with two accounts you

don't need to know that

so you might be thinking like okay so

what you open one buy one sell so later

here are you winning there you selling

so you are on zero minus the

spread so you're basically losing

not if you are clever about it not if

you use the high leverage account

let's

jump into the leverage talking let's say

your account is one hundred dollars that

you are willing to sacrifice one hundred

dollars for the strategy

let's say your

currency is a british sorry it's a usd

so american dollar and the currency pair

as on the previous example

is british pound to japanese yen so with

leverage of one to 500 this is the

merging calculator

on 100

you can open

a 41 000 in units so that means

0.41 lot

and now let's have a look

if we go to the pip calculator how much

is worth one pip when we are trading on

41 000 so

0.41 and one pip is exactly three pounds

three dollars i'm sorry so what does it

mean

let's go back to our previous

charts

and let's remember three

pounds per pip

it's

and we traded

at this point at eight o'clock there was

a news

and we open an account open at two

trades one going

a

buy one going sell so after 33

pips

at this point

three times

33 it's 100 dollars

we are out of the buy trade about by

trade our margin is exhausted we don't

have any more money the broker is

closing our

account completely closing the trade you

don't have a trade anymore but the other

one

at this point

is

100 in profit

and growing and because this is the news

you are not closing after 33 pips

you are waiting because you know that

this news

is

is making new sentiment on the chart so

the movement the continuation of the

movement will be in hours maybe even in

days depends of what kind of

movements we are talking about i mean

what kind of news we talking about so in

this place here after 100 pips

so this is basically 2 4

6 7 35 minutes after 35 minutes you have

already 300 dollars minus 100 that you

on the other account minus 100 dollars

that you put on the other account

so you've got 200 in profits should you

decide to wait longer you remember later

on it was 200 you would have times three

six hundred dollars

lost

100

profit

600 dollars so

let's recap

two hundred dollars 100 in one account

100 and other accounts

maximum leverage that you can get

33 pips that's enough for the move

and then bang you are making quick money

if with this case quick money you can

even wait for the pullback like here

and then

reinvest it again reinvest your profits

and see what will happen if the movement

will be

going for longer you could make even

more money that way

so yeah it's illegal because

as i said the brokers

don't like it they give you the leverage

but they don't want you to use this

leverage in this clever way

they just want you to you know blow your

account hopefully trading one to five

hundred

but if you do it right if you use this

leverage in a in a right way

then

this is what it is

i think

referring to the comments that

your friends

he might be using either this strategy

or

there are another strategies as well for

like differences between two similar

currency pairs like swiss franc

with euro and

you can do some tricks over there as

well on two different accounts and make

small profits so each time you are

taking small profits and you are

building it's quite consistent

it's maybe less risky because in this

strategy you could lose as well in the

one that we

we this guy we discussed as well because

imagine that there is a high

volatility

so

for example we have something that

first the market makes a move of 33

pips

you acted too quickly something went

wrong

there was an initial reaction 33 pips it

closes your account

then it goes

another way

so triggers

another trait

and blows the second one as well

and then comes back in this direction in

the in the right direction so first it

would go the right direction

then it will go so it will close the

the buy the buy would be closed at this

point

later it will go again

up

it will close

the cell or opposite at the beginning it

can go up

close the cell and then

the buy would be in profit but then it

will retrace and it will go

lower close the buy and you will have

both

trades close so remember you need to

know what you are doing

plus i'm not advising you really to do

that

and this is just to answer the question

this comment

and

just to talk it's it's always it's

always interesting you know all this

all these strategies it's like in casino

you know there's like a little

percentage and if you take proper

advantage of it you can

um

you can make money especially that i

don't really think that it should be

should be so illegal if you are using

two different brokers at the same time

because if you think about that

you have 50 50 your chances of the

market going up or down is a toss of a

coin it's 50 50. so that means

that one time the bro this broker a a

will win

another time broker b will win because

there is no

no reason for you always to win with one

broker you don't know which one will win

so the brokers at the end of the day

they would have money from the spread

from your activities

so it shouldn't be legal it should be

legal if you are using

the same broker so

that's what they actually mean so for

example

me and you

we make a deal that i will put 100 you

will put 100 we both open in the same a

broker

the same trade i mean opposite trades at

the same time and then whoever wins

which we split the

the profits then the broker is losing

money it's like disadvantages for him so

that's that's why it's illegal but in

the other way

in my opinion nothing wrong with that

okay if you like this video please

watch one of these videos i'm sure you

will like it subscribe to this channel

thumbs up

leave me the comment i love your

comments guys even if it's a short one

it always

makes me happy so leave the comment and

until the next time

take care bye