A brief explanation of why it is not feasible to achieve asset movement on OKEX through a contract hedging strategy

Recently, OKEX currencies have become game coins, and many of bros are considering whether it is feasible to transfer the “game coins” out by contract hedging to realize losses and profits at the same time.

It is not practically feasible. I answer this question by two points.

First of all, the assumption is that there are two exchanges, a and b. The assumption of this strategy is that after a certain number of transactions, the assets of Exchange A can be steadily reduced and the assets of Exchange B can be increased.

From the assumptions it can be simplified that there must be 2 exchanges, realizing that the assets of one exchange decrease and the other increase.

Then there is a loophole in this assumption. That is, if such a strategy exists, then it is possible that exchange a does not actually trade and only exchange b trades. That is, exchange a is not required.

The exchange a is not required, it contradicts the assumptions. Therefore, the strategy is not feasible.

The logic proves that it doesn’t work, and the next let’s talk about why the strategy doesn’t work actually.

Many of the users may have read similar news that a user’s account was stolen on Binance and the hacker bypassed the login verification or used a Trojan horse to obtain some information about the user, but he could not withdraw the currencies due to the two-step verification and other problems, so it ended with losing the service charge by means of counter knock and trade the currency to the hacker.

At this time, we usually choose small currencies with poor depth, because this means that we can provide high price orders that are difficult to deal with through one account and buy from another account. Then we provide the base price list that is difficult to clinch a deal, and sell it in another account to check. In essence, account b has taken advantage of the excellent depth provided by the loss of account a. That is, loss making in account a brings profits to account b.

That is, such a strategy must be in the same market and it must ensure that account b can take the depth offered by account a in order to be profitable. It’s obvious that 2 different exchanges do not have this possibility.

Therefore, it is not feasible.

On the contrary, if you can learn the pricing formula of OKEX contract, for example, OKEX contract is 0.5 of Huobi price + 0.5 of Binance price, then you can manipulate the price of OKEX by a large amount of money to increase or decrease the price. Sometimes, OKEX may have its own depth and also cause failure. Now it happens that the trading volume is small, you can do this.

However, there is also a problem that the profits are made on OKEX. You still cannot withdraw it to your own account.