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HOTFOREX PAMM managed accounts are DESIGNED TO MISLEAD YOU - BEWARE!

Discussion in 'Scam Alerts' started by Glowworm, Dec 21, 2013.

  1. Glowworm

    Glowworm Recruit

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    BEWARE OF THE (managed) PAMM ACCOUNTS WITH HOTFOREX!!! They are presented in such a way as to mislead potential investors into believing that their performance is much better than it really is.

    There is a massive loophole whereby PAMM account managers can in fact lose large percentages of their accounts under management, but still have the appearance of trading well, AND being paid handsome sums for it! It's because of how HOTFOREX is set up. The loophole is this:

    Hotforex only graphs closed trades in their performance view of each fund manager, and stipulates that PAMM account managers get rewarded according to a high water system based only on CLOSED trades. So what happens? So many of the 'best' fund managers with Hotforex are actually losing heaps of money, except that they never close all those bad trades - they just let them drift indefinitely, knowing that it is absolutely not in their interest as a fund manager to close them.

    Imagine this: You're a PAMM account manager. You go ahead and blithely place heaps of trades each day without even thinking about their probability of success - you know that later you can close the ones that happen to be profitable for a profit, and just leave all the negative ones to hang indefinitely. You'll be rewarded a fund managers' fee (usually 30%) each month for all the 'money you've made', even though the equity on your accounts has fallen substantially, month over month, ever since you started trading there! Great system, yes? NOT FOR INVESTORS IT ISN'T A GREAT SYSTEM!

    You can go to Hotforex and see all the upward sloping graphs you like. Take the example of their NUMBER ONE RATED PAMM ACCOUNT MANAGER, CO-INVEST:

    Forex Brokers |

    According to the data at the left hand side, there has been $7,853 deposited into the account (taking into account the small withdrawal) and yet, the equity of the account is currently only at $6,122. And just look at that upward sloping performance graph!!! Outlining a whopping "465% time-weighted return gain". RUBBISH!!! The graph is meaningless, misleading, and designed to fool unfortunate investors like myself into believing that the fund manager is much better than they really are.

    The thing is, the fund manager here, CO-INVEST, is still reaping a monthly reward - 30% of all the 'profits' he or she is making. All the while actually LOSING THE MONEY OF THE ACCOUNT HOLDERS through their trading.

    THIS IS JUST PLAIN WRONG, AND WHILE PERHAPS NOT TECHNICALLY FRAUDULENT, IT'S MISLEADING IN THE EXTREME.

    As soon as I placed my money with this fund money, the equity (actual value) of my account went down to some 77% of its original value - I had BOUGHT INTO the bad open trades on the account and was hence sharing in these losses, from the second I came into the PAMM account. And since then, the account equity has continued to fall! Even while the account 'balance', with its pretty graph and lovely figures (based only the closed, positive trades' has risen by about 35%!!

    What a SCAM!!!

    Stay away from HOTFOREX in general. I have been reading about their bonus systems, as some people have raised an issue with this - well, I didn't go in for this area of their business as it didn't make sense to me. But rest assured, THIS BROKER IS OUT TO GET YOU IN MORE WAYS THAN ONE. YOU HAVE BEEN WARNED!
     
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  2. Pharaoh

    Pharaoh Colonel

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    Send an email to HotForex and invite them to join this discussion thread.
     
  3. shogunfx

    shogunfx Sergeant

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    I don't think so.
    The moment you agree TOS you assumed this risk.
    How can you trust somebody you don't know and give him your money?
    Internet is full with reputable fund managers . You must only search on Google.
     
  4. Venelin_HotForex

    Venelin_HotForex HotForex Representative

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    Dear Sir,

    Please note that we disclose all performance statistics including the Equity and the Floating P&L on the respective statistics page.

    For example if you go to the page link you have submitted you can see the following information:

    Floating P/L

    -4842.55

    Equity

    $5421.14

    We always strive to provide the user with all the information they require to make an informed decision and at no point do we endorse one Manager over another.

    Your feedback will be reviewed and if deemed that any additions/changes will make the figures clearer, it will be implemented.

    Kind Regards,

    Venelin Videnov
    Official HotForex Representative
    venelin@hotforex.com
     
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  5. Glowworm

    Glowworm Recruit

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    Hotforex: potential BIG INSTANT LOSSES through LACK of TRANSPARENCY in Terms and Conditions

    I just had an extended chat with Katarina, a Hotforex online help representative. In short, Hotforex make new investors to PAMM managed accounts 'buy into' open floating losses, thus potentially (as did happen in my case) leading to large, instantaneous losses of trading capital, before any trades have even taken place.

    I asked Katarina very clearly to point out to me where on the Hotforex website this habit of theirs is explained, and she was unable to provide it.

    Here is the transcript of our conversation. I'm sorry for the length of it... there is effectively a summary at the very end...

    ---------------------------------------------------

    Transcript:

    Please wait for a HotForex operator to respond.
    You are now chatting with 'Katarina'
    Katarina: Welcome! My name is Katarina, how may I help you?
    Matthew : Hi Katarina, I'm wondering first of all if you could help me see whether any success fees have so far been deducted from my PAMM investor account with C-OINVEST?
    Katarina: success fees will be processed on 2nd Janurayy
    Katarina: January*
    Katarina: or do you mean your success fees in total?
    Matthew : Success fees in total thus far, if I may please
    Katarina: sure one moment please
    Katarina: No Success fee has been paid yet for your account
    Katarina: the deposit came in on 6th December 2013
    Matthew : Okay. Does it seem likely that I will pay a success for on 2 January?
    Matthew : OKay
    Katarina: therefore is any success fee will be deducted, it will be 2nd Januarry
    Matthew : Okay.
    Katarina: as 01.01 is a bank holiday and markets are closed
    Matthew : okay
    Matthew : Does it seem likely that I will pay a success for on 2 January?
    Katarina: yes you may
    Matthew : For certain?
    Katarina: as the current balance is higher then the deposit
    Katarina: I can not say for sure at the moment
    Katarina: as we still have 2 trading days ahead of us
    Matthew : Floating profit/loss is also a rather large negative number
    Katarina: payment of success fees does take into consideration the equity as well
    Matthew : In what sense?
    Katarina: one moment please
    Katarina: In case system detects open floating P/L on the master account account at the time of the payment (2 AM server time, 1st of the month), the calculation is done as follows:
    Katarina: SF generated from closed trades is processed.
    Katarina: Equity < Balance
    Katarina:
    Katarina: In the case that Investor has success fees generated, but part of investor's funds are tied up losing trades, system finds the SF amount which is included in the trades and deducts it from the total amount of the SF which are paid to the Fund Manager.
    Katarina: Example:
    Katarina:
    Katarina: Success fee percentage 50%, profit made during last month 20 usd.
    Katarina: Generated success fee to pay 20*0.5 = 10 usd
    Katarina:
    Katarina: Balance 100 usd, Equity 95 usd
    Katarina:
    Katarina: (Balance - Equity) * SF percentage
    Katarina: (100-95) * 0.5 = 0.25
    Katarina:
    Katarina: Then success fee payable
    Katarina:
    Matthew : And if the floating loss is greater than the total profits?
    Katarina: then the success fee is not paid
    Matthew : Okay
    Matthew : By the way, is there a link to a place on the HotForex website where I can read about such details?
    Katarina: no Matthew, this are internal information
    Katarina: but we can explain anytime
    Katarina: but you can find a lot of information
    Katarina: here
    Matthew : By the way, I was surprised (and dismayed) to find that as soon as I had deposited my money into the trading account with C-OINVEST, the value had dropped by about 30 percent. That is, if I had wanted to withdraw my money straight away, I would immediately lose 30 percent of my investment, even though no trading time had passed.
    Matthew : Yes, I have already looked there, but of course this is by no means the whole story.
    Katarina: well the forex trading is risky itself
    Katarina: and markets are moving very fast
    Katarina: accounts may be a subject of profits but losses as well
    Matthew : may be?
    Matthew : What I'm saying is that as soon as I had deposited my money into the trading account with C-OINVEST, my balance simply disappeared by about 30 percent. That is, if I had wanted to withdraw my money straight away, I would immediately lose 30 percent of my investment, even though NO trading time had passed, and NO trades had taken place.
    Katarina: That is not possible
    Matthew : It happened.
    Katarina: the investor joins open trades of Master immediatelly
    Katarina: when he joins
    Matthew : My returnable investment is STILL currently below what I put in there.
    Matthew : Despite the 'profits' of the fund manager.
    Katarina: that is possible - let me explain
    Katarina: fund manager opens a trade on 01.12.2013 - at certain price
    Katarina: you as an investor join in
    Katarina: the very same trade is open in your account at the time when you join
    Katarina: with the current market price however
    Katarina: not the past price the fund manager open the same trade with
    Katarina: so both of you will have same trades - apart of the opening price
    Katarina: for you to have same opening price as funb manager would be possible only if the fund manager opens the trade when you are already joined in
    Matthew : I have two questions: 1. why should I, a new investor, be immediately subject to the open trade movements which happened before I even joined the account? and 2. where on the Hotforex website could I have read about this and informed myself about this, before joining the managed account?
    Katarina: 1. answer - this is how PAMM works.
    Katarina: 2. it is listed in T&C - just a moment, I will find it for you
    Matthew : Any luck finding it?
    Katarina: I asked PAMM department directly to find it
    Katarina: they will email it to you within next few minuts
    Matthew : Well, I've looked myself, and I certainly didn't find anything to this effect, or anything about this, in fact.
    Katarina: PAMM department will send you the supporting materials shortly
    Matthew : And as for 'this is how PAMM works' - well, it's actually not very clear how PAMM works from the Hotforex website, and from any materials available normally to investors when they open a PAMM investor account.
    Katarina: PAMM department will send you the supporting materials shortly
    Matthew : I am waiting.
    Matthew : And by the way - these supporting materials - are they available on the Hotforex website?
    Katarina: Thank you, would you mind confirming your email address as well for me
    Matthew : [email address suppressed]
    Matthew : By the way - these supporting materials - are they available on the Hotforex website?
    Katarina: yes definitelly
    Matthew : where?
    Matthew : Please send me the link
    Katarina: PAMM department will guide you
    Katarina: in the email which they send you shortly
    Matthew : Do you not know where the information is available? It seems a little hard to find...
    Katarina: myself no Sir
    Katarina: but PAMM is being notified and will assist shortly
    Matthew : Well, if YOU don't know where it is, then how am I, a lowly investor, supposed to find it, prior to making a decision to join a PAMM account?
    Katarina: SHould you be chatting with PAMM department directly, they would provide it immediatelly
    Katarina: would you like me to get a link for you
    Katarina: rather then email?
    Matthew : Please send the link yes, as soon as reasonably possible!
    Katarina: one moment
    Katarina: here
    Katarina: locating section, please hold
    Katarina: Deposits into the investment account are processed instantly. Trades are opened on the investor account at the current market price
    Katarina: number 2. How do I deposit funds into my Investor account?
    Katarina:
    Katarina: PAMM department inform me now that they can email you additional information on how the deposits / trades are allocated if you wish
    Matthew : Well the thing is, that the trades were clearly not opened at the current market price - because in fact as I explained earlier, I immediately lost around 30% of my deposit at the moment I made the deposit - my deposit was subject to the previous market price (when the trades were opened), not the current market price.
    Katarina: do you trade Matthew?
    Matthew : As for being emailed further information, the point is that I, as a potential investor, need to have the information available on the website, in the terms and conditions as you mentioned, not to be sent later through some special email from the PAMM department.
    Matthew : It's about transparency.
    Matthew : And not misleading investors.
    Matthew : And yes, I trade.
    Katarina: The important information are on the website however
    Katarina: all is listed in the T&C
    Matthew : Again, where?
    Katarina: and short version is also published in the How it Works - F&Q
    Katarina: for any further clarification pamm department is available on skype or via email
    Matthew : I put it to you that in fact, no such information about potentially buying into large floating losses at the time of deposit is made anywhere in the Hotforex T&C, nor in the How it Works FAQ.
    Matthew : If you have any information to the contrary, please point me to the specific paragraph in the T&C where this is made clear.
    Katarina: you may provide your feedback to pamm@hotforex.com
    Katarina: They will provide further assistance in details
    Matthew : Also, you haven't bothered to address the indiscrepancy which I have just pointed out to you - that my opened trades with the C-OINVEST PAMM managed account were NOT subject to the current market price, contrary to what it says in point #2 here: Forex Brokers | Investor Faqs
    Matthew : Katarina?
    Matthew : Katarina, do you have any response to the points I have raised?
    Matthew : Katarina? Please do not run away. I am waiting for your response. I have reasonable questions to a reasonable source, the Hotforex online help. I will also contact the PAMM department but I am surprised that this is so difficult for you. This is an issue about informing potential investors before they make decisions which could potentially lose them a large amount of money instantaneously! It is about transparency. And seeing as you have not answered my questions, have not able to locate anywhere on the hotforex website where these issues are addressed in detail, I can see there is a distinct lack of transparency from Hotforex.
    Matthew : I await your response, as a representative of Hotforex.
    Matthew : Anyway, this is going up immediately onto Forex Peace Army unless you will deign to respond to me.
    Matthew : No response... very well.
     
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  6. Red Herring

    Red Herring Corporal

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    I would like to ask another issue:
    If someone use skrill for deposit and withdraw funds with you and then if that trader use his master card for deposit and then if he wants to withdraw vis skrill, you do not allow this! You say you have to withdraw via your master card first and this have to be the amount which was first deposited by this card. Why this absurd rule? Do you have any logic behind this?
     
  7. Glowworm

    Glowworm Recruit

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    Had a chat with Venelin from Hotforex - who has endeavoured to resolve the issues I've outlined above. Correct me, Venelin, if I misrepresent any of the following details...

    Finally, yes, there has been an accounting problem with the new PAMM accounts such that open floating losses have been incorporated immediately into the equity amounts of new investors. Venelin assures me that the IT department are now at work to fix this problem. Venelin assured me also that my losses due to this issue would be reimbursed, plus a bit more, which is very decent.

    Also Venelin from Hotforex assures me that in future, there will be a clearer representation of the performance of PAMM account managers - including a graph of actual account equity (net value of the account including closed and open trades).

    And I've also received an email from the Hotforex PAMM department to inform me that they've now changed their Terms and Conditions - although in actual fact I don't yet know where exactly the T&C have changed. I'll write back...

    Anyway, so certainly some signs of improvement from Hotforex, where frankly they were much needed. Good to see.

    Will keep you posted as to how these things are carried out over time - as far as I know it could still take a little time for all the changes to take place. But for sure, these are definite signs of improvement.
     
  8. Sapaha

    Sapaha Recruit

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    Hi

    It seems Hotforex has no done any major changes to their PAMM v2 since Jan 03 2014 post. Profit graphs are still represented without open positions, Monthly Gains are drawn without open positions, DrawDown does reflect at all the real DD with open positions in it, Floating P/L history is not traced or drawn (just current P/L is shown). Ranking system is absolutely crazy and most of the numbers presented there do no correlate real situation.

    I had a brief conversation with HF support about their PAMM V2 system and how to improve it, but reply was a bit cold. I guess they are happy with the current system setup?? Unfortunately there is some really bad behavior happening and some of the traders are using the system flaws to lure money in to their funds just to raise commission without really doing profitable trading.

    Just to give one example from multiple shady funds. Nro .1 ranked trader "KAY- LINK GLOBAL", 112 days trading, Gain 6946%, Abs. Gain 145%, Max DD 5,93%. His current stats: Deposit $220 000, Profit: $320 000 Withdrawals: $38 000, Balance: $500 000, Margin: $64600, Free Margin $-1600 FLOATING P/L -438600. This trader is dangerously close having a margin call. Open positions $-438600.
    TRUE PROFIT (not shown anywhere): Profit vs open position is $320 000 / -438600 = $-118600.

    https://my.hotforex.com/en/pamm/showDetail.html?managerID=1045759
    (just take a look how fantastic his numbers look)



    I´ve been watching from side as this trader basically has been running a ponzy scheme where he was sweet talking money in, just closing winning trades and keeping losing ones open. Investors have dumped more money in after these fantastic numbers and this way fund has managed to grow and cover rising Floating P/L. HF numbers and graphs are showing excellent performance, but in real life this guy did not do single penny profit. This guy has been paid from his "profitable trading" and this is straight out of investors pocket. Of course HF will get their share from his trading. Max Draw Down showing 5,93% as in real life we are somewhere 90% + Real life profit somewhere -50%. Now as there is around $200 000 in danger the be viped out you would think they might consider making a bit more transparent system? Would these investors give such funds if DD would be shown correctly or real profit was shown??? Hard to believe.

    I hope HF does not get me wrong here. I do like their PAMM system and there is few good traders to follow. At their customer support reply they tried to "help me" giving an advice "not to follow traders with big floating P/L". Yes I agree you should not do stuff like that, but unfortunately it is not so straight forward issue. If you show only current Floating P/L it does not tell you anything from traders past. If trader has open positions for -15% is it safe or not to follow him? Unfortunately you can´t know it if you do not know the past. For example there is one gold trader who has at the moment open positions for -15%, but two weeks ago his open positions was -60%, but of course you can´t know this unless you haven´t followed his open positions manually with pen and paper. I´ll bet you will think twice giving him money if you knew he has over 60% DD. HF Max DD shows 25% for this gold trader.

    There is some decent hedge traders that are controlling floating P/L and using it in their strategy, but unfortunately you need to manually track these traders and find out what their true DD is.

    I really hope HF would change their system how it calculates profit, monthly gains, DD. At the moment how HF represent the numbers without Floating P/L is crazy. They have all the numbers ready, but they need to do some fine adjusting to them. How the system is setup at the moment feels like a small scam where you need to navigate manually to find out true numbers. For new HF PAMM V2 investors I would advice finding a trader with zero or very small Floating P/L vs. Profit, start small, trader has been around over 180 days. There is some decent hedge traders with controlled open position strategy, but those you need to find out by daily following their trading.
     
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  9. usmanz

    usmanz Private

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    i am surprised that there are so many threads in scam folder for hotforex, and still they are maintaining 4 star rating in reviews. So people can guess what could be the reason for so high rating.
     
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  10. FxMaster

    FxMaster Lt. Colonel

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    Hey Usmanz, Go ahead and invite them to join the thread. also share your story at their review page and share all of this link to them and ask them to clear the things over here.
     
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