This is a warning to all those who are thinking about or have just purchased FX Phantom. I cannot call FX Phantom a scam because I have not purchased it nor intend to do so. I hope this article will also serve to help prospective purchasers of EA's and other systems better evaluate the validity of the product before purchase.
The EA/trade copier is offered for a one off fee, then a monthly subscription. I studied the promotional website which includes a copy of a live statement and noticed the following:
1. Only the EUR/USD is traded and all gains are very small, averaging about 3 pips. Such small gains are acceptable with EA's which trade during the (normally) quiet Asian period, so I checked the times of trade and found that trades were being made at any time of the day. This was the first point that alerted me.
2. I checked the size and number of losses. I could find hardly any losses and those that existed were tiny. Hmmm... too good to be true, or is this much sought after ATM?
Now I am alerted even more.
3. Suspecting simple fraud I noticed that the website includes a letter of declaration of the validity of the statement from FinFx. if this is fraud, then the letter is probably fake. I contacted FinFX, and no, the letter is genuine. They have indeed verified the account as real. Now I am puzzled but very suspicious.
4. Hmm...,let's take a closer look at that statement then. Suddenly I find lots of anomalies with trades that I do not like - E.g. Trade opened 2012/04/19 closed 2012/05/03, ie. trade was open for 14 days. The result, a gain of 1.4 pips while the drawdown in this period was 180 pips! Does that sound like a good risk/reward ratio to you ? Risk 180 pips to make 1.4 pips!
Note, although actual profit/loss is shown, drawdown is not mentioned at all - funny that!
There are many more examples, some much worse, in the account, and I urge you to check it out and to train yourself to search for these anomalies yourself.
As I say, in this case the product cannot be called a scam as such, but you need to pay attention to the fact that the test period is only a couple of months, and you also need to ask yourself what would happen if one of the anomalous trades did not turn around!
Could you sleep at night knowing that essentially the EA is opening trades then crossing it's fingers!
When you look at these product websites please study evey detail very carefully.