Avoiding Scams
Ironically Forex is an industry full of scammers, be it brokers, partners or trade leaders (signal providers, fund managers, EA/Robot sellers, etc). We have been in this industry long enough to see so many tricks and amazed that so many people still fell for it. We hope to help investors avoid being scammed by listing the common traits of such scams, or irresponsible trading or whatever you want to call them.
| Beware of Trade Leaders with: |
|---|
| No verified trade history with reputable brokers (manipulated results are common with scam brokers & backtests) |
| Martingale/Grid tactics averaging down on losing positions (one huge drawdown wipe out entire account) |
| No stop loss, claimed hidden SL (lies), SL above entry price, huge SL small TP |
| Top-up money to hide drawdown when losing (followers get margin call & blown account) |
| Demo/Cent/Small accounts (don't trust a trader who don't risk his own money) |
| Excellent profit yet small drawdown using suspicious/unheard-of broker (broker-manipulated results) |
| High drawdown >25% (high risks trading or poor risk control) |
| >90% winning trades (a sign of refusing to take losses, let losses run without SL until it recovers) |
| High/increased account leverage to avoid margin call (followers with lesser leverage blown account) |
| Small TP of a few pips (spread sensitive trading, followers will suffer from slippage & spreads) |
| Trade duration <5min (high frequency scalping, followers will suffer from slippage & spreads) |
| Trade during rollover hours (incur huge spreads/swap/low volume, followers will lose money) |
| Hedging positions (refuse to take loss, incur higher leverage) |
| Many concurrent open trades (artificial high pip returns, high risks/correlation/leverage) |
| High trading activity (letting losses run without SL, high risk exposure to market news events) |
| Myfxbook data using custom start date or hidden deposits (hiding big drawdowns or trading very small account) |
| Undeserved 5-stars reviews (paid/rewarded reviews via refund or other incentives) |
Market Making Brokers
Brokers not offering Straight Through Processing (STP) are usually market makers with a dealing desk, and they make money from the clients by manipulating the price, spreads, and hunting stops. Always choose a broker with STP and no dealing desk, preferably a true ECN or raw-spread broker. Beware of brokers that are unregulated, offer ridiculously high leverage (e.g. 1:1000) or lucrative sign-up rewards, change spreads or swap rates frequently, etc.
Introducing Brokers (IB)
Beware of educational/informational websites with broker sign-up links, they are Introducing Broker that gets commissions or spreads markup whenever they refer a client to the broker. You become their referee unknowingly by clicking the link. You are better off registering directly with the broker, and remember to do so using a new web browser session (or incognito window), otherwise your registered account will still be linked to the IB.