It does help obfuscate your trading. Lets say you have margin for 500 minis and your desired position is 300. (and remember margin is only applying to what you carry overnight...intraday governed by the position limits agreed with your clearing firm) You are long 500 in one account and short 200 in the other, net 300. You are going to be running a loss in one account for 200 contracts and several points / hours. That firm won't know your strategy or that you are actually net long, all they will see is the short position you hold with them, and the fact that you run losses. Which will likely make them think you are "getting away with it" and will blow up. Equally, it is harder to reverse engineer your system as they think your system has given sell signal when in reality it has given the buy signal. Sure, both (or 3, 4, 5 etc) accounts will be net winners over time. But it will be less obvious how accurate your strategy is and how much you make, which is what MTrader was asking for. And when you sell 300 to go flat (against the 500 you own in that account), it may be that you give back a big portion of your "unrealised gains" on the net long 200 and they do not know that you are offset elsewhere and the loss is reducing in the other account as the market falls. If you were reversing, you could even sell 300 in each account, changing from +500/-200 to +200/-500...and the first firm would see that you gave back a big portion of your gains on a partial position and the second firm would see that you let a position run big against you on 200 lots and then added to a big loser. It is going to look more like gambling/getting lucky and less like following an accurate system. There are a fair few wealthy people who gamble a few hundred (or more) contracts on the futures markets and quit after losing low 8 figures. I think this multiple account idea is well worth doing.
Accounts A/ B +500 / -200 Net long 300. Market moves up 6 Sell 300 in A to go flat. +200 / -200 Market moves up 2 Account B has been short 200 for 8 points. Sell signal. Can sell 300 in B to make +200 / -500 Now market falls 4 points. Clearing firm A see that you gave back a big part of unrealised profits so do deduce that your system knew to go net short. Clearing firm B see that you ran a big loss and then doubled up, and this time it came back to even for you. If you do all of these trades at one firm who know which way around you are positioned, and you are trading within 3 points of top and bottom of ES day in day out in size you are going to attract attention. At the very least they can prove that you have accurate system.
Brokers front running some clients accounts...its illegal but does happen once in awhile. Some have been caught and fined for such. Many example stories online via a Google search. Most of the stories involving such involves rogue employees giving favoritism to specific clients. Yet, I doubt they can determine the details of your strategies especially if you're a profitable discretionary trader that has a trade method involving many things besides just a trade signal strategy.
Yes. It's not quite as rare as one or two posters above seem to imagine. And (contrary to some of the opinions expressed above) not illegal at all, unless they fill their own trade before yours - that would be "front-running", which is illegal in some countries. It's because of the facility to do this that some counterparty market-maker "brokers", especially of spot forex, keep some regularly winning clients on their books, because (as you rightly suspected when you asked the original question) it can be an additional profit-source for them, regarding the accounts of clients they've known well enough and for long enough. Not in countries with proper regulation. Which is another reason (as if anyone needed one) to avoid "brokers" regulated in places like Cyprus, Russia and Mauritius, whose reasons for choosing to be regulated in those countries are typically not ones in their clients' interests. However, as also mentioned above (and in this case rightly), this isn't something that's in any way relevant to 99% of traders. My guess is actually 99.9%.
Its worse than this. If you are too phenomenal you run the risk of getting chloroformed. If you are that good mix it up with some bogus trades and don't get greedy.
if you scan through their yearly performance numbers, you will see that their highest returns were from 'cascade' news events. So you can surmise what they are doing.
a defacto dealing desk at fx bucket shop does this. Since most loose, why not be the counter party to the other side of the trade.
If "most lose" then aren't they gaining far better information from that amazing fact then they would taking the other side of their losing trades? I mean if you showed me a strategy that reliably picked the opposite direction that a currency or stock actually moved, I'd have a gold mine on my hands!