How Not To Lose All Your Money With A Managed Forex Account
Managed forex accounts present a decent opportunity for those who don’t have the time to learn how to trade forex or enough time to actually trade their own forex account to still make some profits from the forex market. They also open up investors to the triple threat of scam, incompetence, and bad brokers.
The first problem is that there are plenty of managed account scams out there. In some ways, these are much worse than forex broker scams or forex product scams. Managed account scammers usually try to get victims to invest as much money as possible, even their entire life savings. Sometimes they suggest taking out a mortgage on the victim’s house or securing other loans so that even more money can be invested. Falling for this kind of scam can ruin your entire life. As if this wasn’t bad enough, even a legitimate forex account manager can still wipe out your account through incompetence.
To avoid the most common managed account scams, you first must learn to differentiate between a normal managed forex account and a pooled account. In a normal managed forex account, the account is in your name, and the money goes from you to your forex broker. In a pooled account, you send your money to the account manager who is then supposed to pool the money from various clients into a trading account that the account manager controls.
Although there are legitimate pooled accounts under management, pooled accounts are MUCH more susceptible to fraud. Anyone with a computer can create fake account statements. With a pooled account, you can’t ever be sure where your money is. Many of these types of accounts guarantee a large monthly return on investment. There is no such thing as a true guaranteed high percentage return on investment in forex, and anyone offering one is 98% likely to be a fraud. The other 2% of the time, the person is merely an over-enthusiastic idiot. Either way, kiss your money goodbye.
But wait! You have a friend who invested and has been getting checks for the guaranteed 10% monthly return on their investment every month for over a year now. It must be legitimate.
I’m sorry, but what you’ve just described is almost guaranteed to be Ponzi scheme, named after the very infamous Charles Ponzi. It works like this:
The account manager gets one person to invest. The amount of money doesn’t matter. Returns of anywhere from a few percent per month to 20 or even 30% per month are guaranteed. Here’s the good part. NONE of the money is ever invested in the forex market. If the account manager promises 10% per month, the money can be hidden in a mattress and the payments maintained for 10 months. You might think this is a foolish way for the manager to make money, but it isn’t. He tells his first victim that by reinvesting half (or more) of that 10%, the account will grow faster. Next, he tells the first victim that if the total amount in the account is increased, the guaranteed percentage of return can also be increased. Of course, this deal is so great that many people will tell their friends and family about it. Some of these account managers will even offer incentives to customers who refer other customers. As long as more money from the existing clients as well as from new clients keeps coming in faster than money is paid out, the account manager doesn’t have to waste one second of his time risking money in forex trades. A well run Ponzi scheme can go on for several years, even while paying pretty good returns to investors. The problem is that the moment there’s any significant drop in new investment, the whole thing will collapse very quickly, that is if the scammers don’t decide to take the money and run even sooner.
Back to our example above where your friend was telling you all about those 10% monthly returns. Ask your friend if he or she has invested even more money since starting to take advantage of the high returns. Ask how many others have signed up based on your friend recommending this miraculous account manager. I’ll bet you a fist full of pips that your friend has not just been throwing more money in, but has also been recruiting others.
Even worse, sometimes, these Ponzi-style scammers don’t even bother to pay out money. Instead, they’ll try to get you to reinvest it all, or offer much higher rates of return with an automatic reinvestment plan. When the time comes to withdraw some of the money, there will have a be a pile of wildly varied excuses for delays in transferring funds, combined with more concerted efforts to try to lure the victims into putting even more money in with offers of better returns in the future. Of course, in this “Ponzi with no payout” scenario, the only ones getting any money are the scammers.
Within the United States, there is one very obvious warning sign of large-scale financial fraud of this sort. Using the US Mail for fraudulent purposes brings a whole lot of additional investigation and extra criminal charges. Sure, it’s nice of the company to use an expensive overnight courier service to deliver important documents, but every legitimate financial company I’ve ever dealt with in the USA sends at least some items by postal mail. If a company absolutely refuses to ever use the post office for even minor items, it almost inevitably means that they are trying to avoid a mail fraud charge.
Another GIANT red flag is if the managed account company only accepts some form of e-currency (excluding PayPal – they do try to investigate scam and fraud claims, many others don’t). Managed forex accounts often involve very large sums of money. You aren’t buying a product. You are loaning them YOUR money to invest. If a managed forex company refuses to accept a check or even a wire transfer, this means that you have no way to know what bank all of your money is going into, or even what country it’s going to. If you want to spend $200 on an EA, you don’t really need to know where someone’s bank is. If you are investing your life savings, you do.
Even if a pooled account does not offer guaranteed returns, it is still a risky investment. You are placing all of your money into the hands of an account manager. Even if the manager is legitimately trading forex and is very skilled, you are counting on this person to not make some kind of colossal mistake with your money. Considering the risks, I would never recommend investing in a pooled account without having an incredibly extraordinary amount of proof that the company is legitimate and the account manager is an amazing forex trader who always follows strict risk management rules. Even then, all it takes is for the good account manager to give into temptation, and all the money can disappear in a day.
OK, so if you’ve taken my advice and decided to avoid pooled accounts, does this mean your money is safe? Not quite.
A normal managed forex account keeps YOUR money in YOUR forex account with a forex broker. You will sign a Limited Power of Attorney (LPOA) granting the account manager the right to trade your account, and have a contract specifying how the account manager gets paid. You will be able to login and see exactly what trades are being placed and what your balance is in real time. This is good, but there are still some serious issues to consider. Do not just give your account number and password to someone or some company without having a contract and signing an LPOA. They might not be able to take money directly out of your account, but they can still send you on a one way trip to a margin call.
There are three ways your account manager can get money out of a normally managed forex account. The first two are obvious. The account manager (or account management company) may charge a flat fee every month and/or a commission based on the profits of the month, and these will generally be taken directly from your account as specified in your contract and LPOA. Either or both of these can be legitimate, and should be clearly disclosed in advance. The third way can turn even a good account management system into a ravenous beast that will eat away at your profits and maybe even your principal.
The third way that an account manager can get money out of your forex account works like this. Some account managers will only manage your account if you sign up through them with their preferred forex broker(s). This usually means that the account manager is also acting as an IB of that broker and getting a cut of the spread or commission charged by your forex brokerage for every trade made in your account (whether by you or by your account manager). The result is that more trades equals more profits for the account manager, whether you profit or not. Under these circumstances, a lot of account managers will make many more trades solely to gain these commissions on spread. In the stock market, this activity is called churning the account. There are some legitimate account management firms that do only trade accounts that they are IBs for, but you need to be aware that the temptation to churn your account will always be there in these cases. If you decide to go with such a forex account management company, discuss carefully with them about how many trades and how big of trades they will place in a typical month. The other drawback to this arrangement is that it restricts your ability to choose a forex broker that is good for any other forex trading needs you might have. It also means that you might get a good account manager, but be stuck with a poor forex brokerage that greatly reduces the profits that should be coming into your account.
Back to the monthly fee and commission on profits: Some companies charge only a monthly fee, others charge a percentage of your monthly profits, and others charge both. If the monthly fee is too high, it will eat all your profits (if there are profits). If the percentage of the monthly profits is too high, what’s the point of making any profit? Make sure that any percentage of monthly profit is based on the “high water mark” for your account. This means that if your account drops in value, the account manager doesn’t get a percentage of any new profits until all prior losses are made up and a new higher total amount of money in your account is reached.
What would reasonable fees be? That depends on your account, the skill of your account manager, and your investment objectives. If you have a $10,000 account and are charged $500 per month by your account manager, then that manager needs to average more than 5% gains per month or you will be losing money. On the other hand, if you had $50,000 in the account and still only paid $500 per month to have it managed, then the account only needs to exceed 1% average monthly return to keep gaining in value. For commissions on profits, I haven’t looked at too many managed forex companies, but have seen rates ranging from less than 25% to as over 50%. If the account manager can average significantly more than twice the returns you can get by yourself, then 50% might be reasonable. Otherwise, it’s too much. The calculations get more complicated if you get charged a monthly fee and a percent of profits.
For forex managers who charge a monthly fee, ask if the first month can be a free trial. Also, ask if they waive the fee if there are no profits for one or more months. You are paying them the fee to make profits, not to use your account to practice trading. Any legitimate trader will have occasional drawdowns, but there should be no reason to pay a fee if the drawdowns stretch over several months. Of course, you already know you should get any promises about fees in your LPOA and contract.
If the forex management company is in the US, ask if they are registered with the NFA and the CFTC. For the most part, this is a requirement, but there are a few loopholes to this rule. I would definitely suggest avoiding any US company that isn’t listed with the NFA and CFTC. Verify this by going to the NFA and CFTC websites to check that they are registered, do they have any complaints, and is the registration active or not. DO NOT trust the link from the managed account company’s website – it could be designed to take you to a faked version of the real websites. Wow! I was almost done editing this article and got a message from a friend about a managed account company that showed how safe it was because it was registered with the Securities and Exchange Commission. I had to look very closely at the certificate they displayed to see it was the SEC in the Philippines, not in New York.
For other countries, check the regulators closely. One of the most recent FPA Scam investigations was of a company that also listed a regulator’s website. That site was for a regulatory body that did not exist and only was there to appear to prove that the company was registered. Check the regulators website carefully. How many companies do they claim to regulate? If it’s only a few, that would make me suspicious that the regulator is fake Are there any signs of any enforcement actions against any company? If not, the regulator may be real, but lack any authority to do anything. Run a web search on the regulator and see how many links you get. Any real regulator should have quite a few, and some of them should be from websites belonging to the government in the country it’s based in.
So, you’ve avoided pooled accounts, found your own broker (possibly by using my method of broker selection), verified that the account manager or account management company is properly licensed and regulated, and has no major complaints filed with regulators. Do you feel safe? You are definitely safer, but you aren’t done yet.
Incompetence can erase your forex account balance just as quickly as fraud. Before signing that LPOA, make sure you understand the concept of risk management and discuss how the account manager will control risk. See if you can get a contract that specifies the maximum risk per trade along with the maximum total risk to be taken at any time. This should at least give you some legal leverage if your account is severely drawn down by improper risk management. Even then, login and check your account every few days, if not more often. Your excellent manager might go on vacation and the person who substitutes might not be nearly as good.
Of course, you should have already checked FPA’s Managed Forex Reviews and done a web search on the account management company and/or account manger that you will be dealing with. Remember that a lack of negative information on the web is NOT the same as an endorsement. The scam may be fairly new, so no one may have complained yet. Be wary if the website shows average returns going back years before the website was registered and ask questions about this. Of course, clever scammers may sit on a domain for an extended period or buy a domain that has been parked for years, just so their Whois records will seem properly aged.
When searching for information about the company on the web or in regulator websites, be careful if the names don’t quite match. A company called Perfect Acccounts, Inc may not or may not turn out to be the same company as Perfect Accounts, LLC or Perfect Accounts,Co. Legitimate forex companies often have similar names, and scammers will sometimes try to get a name that’s as close to a legitimate company name as possible in order to borrow some legitimacy.
Lately, I’ve come across some websites that provide comparison information about managed forex account companies. This looked a very useful service, until I checked one of them and found that all the forex account management services listed on the site offered referral fees. There may be some good comparison sites out there, but be aware that others are not there to do anything other that refer you to the company that pays them the highest fee for new client referrals.
If you want to invest your money in a managed forex account, be careful! Investigating before investing will take you a lot of time and effort. Then again, earning all of that money you want to invest also took you a lot of time and effort. Before you tell me that it’s too hard to check out a forex account manager or a forex management company, take a moment to imagine what you would do if your entire investment disappeared, either due to fraud or incompetence. Then come back and tell me if my suggestions are too much effort for you. If you are really thinking about putting your life savings into an account with someone based on them having a nice site on the internet or because your third cousin’s friend told you about them, either do the thorough investigation yourself or consider that it might be well worth hiring a professional investigator to check things out before placing hundreds of thousands of dollars under the partial or complete control of a stranger.
PLEASE do not ask me to recommend a forex account manager to you. I trade my own account and have never used one (but I might think about giving one a try in the future– if I see a solid track record with no hints of fraud). The reason I know enough to write this very basic article about this type of fraud is that I’ve traded stocks for many years before coming to the forex market. Additionally, my father used to be a stockbroker, and I got to overhear tales of investment fraud that were truly amazing (no, he wasn’t the criminal in those stories, or at least he never confessed it when I was listening). The types of fraud found in forex managed accounts are pretty much just repackaged versions of frauds found in the stock market and other trading markets. I also did some more digging around the web after writing about the forex account manager who got a nine year sentence for forex fraud and reading the FPA’s Scam Finding against the Forex Project of Luis Rivas to fill in a few more details about the subject.
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Pharaoh
We don't understand how he does it, but Pharaoh has an uncanny ability to spot scams faster than anyone else we've seen. He claims to have known a number of companies were HYIP scams just by their domain names and that each time an examination of the website proved him right. He's also famous inside Forex Peace Army for warning about Ponzi schemes, even ones run by large and well established companies. He's been in a number of threads trying to warn people away from active Ponzi schemes. In spite of the efforts of shills and those gullible enough to believe in free money to discredit his words, he keeps up the warnings. In each case, the company ended up either disappearing with all client money or being shut down by the authorities.
In addition to investigating scams, Pharaoh has written a number of articles on a wide rage of trading topics, including forex broker selection, risk management, and how to select a good account manager. He's also covered other items of interest to traders, such as protecting wealth and purchasing precious metals.
Pharaoh claims to be a business consultant, but says he makes most of his income by running a globe-spanning hamster smuggling operation. If we are to believe him, he's currently working on a network of hamster tunnels under southern Europe.
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1. Is your account manager licensed or regulated in any way?
2. Can your account manage..
That was really a nice advice. Thanks, you saved my day. :)
First a thank you for Pharaoh,for its time and research done on this very interesting thread.
I am keen to find a decent managed forex account,so after surfing the web for days I am coming back to what seems a decent company,(seems to be the only one) and with decent products,specialy the AtlasFX account
OlympusWealth.com
I have been in contact with them and never did they try to "push me to buy",they seemed to care.I doubt that their trader for their AtlasFX account which interest me does churning as I have been told that little activity will take place on the account until mid-november because of low liquidity on the forex market caused by the coming american presidential election.
This company has by the way excellent customer feedback on this site with five stars,even if they are relatively few:twelve of them.
What is your personal opinion on this one Pharaoh?
Let's see... impressive reviews and nice looking website. This shows promise. Let's see what happens if I dig in.
100% of the reviews showing now are from the UK and Spain. I'd be a little happier if they had a few more reviews from other places.
Performance fees are based on high watermark. That's good.
Their preferred brokers are all regulated, but they express a willingness to work with other brokers. That's promising.
The seem to be offering to work with IBs and/or to set people up as IBs. They also offer a demo MT4 account. This seems to be a little odd for a company that should be focused exclusively on money management.
Minimum investment amounts are a little high for a company without a lot of known history. If you do go with them, I'd recommend asking if they could reduce this for a several month long trial period.
They say that trades all have stoplosses. If this is true, that's good. I'd want to see live trading records to back up the claim. Ask for investor access to an account that's been running for some time under one of these plans. Another option - tell them to sign up for FPA Performance Testing.
One thing. I'm deeply worried about the technology of this company. I believe that if they use the technology that they show on their website, they are not actually capable of trading forex or any other market.
Go here...
olympuswealth.com/about-1
Look at the photo next to "Our technology"
Go here...
alibaba.com/product-gs/459667658/PET_precision_air_conditioning_20ton_30ton.html
Scroll down and get a look at the photos.
It appears that Olympus Wealth is trying to place trades from a very large air conditioner. This does not inspire confidence in the company. :p
Your comments are enlightening and I must say that this air conditioning thing has like a cooling down effect.
I will take your advice in consideration,thank you again.:)
(Cold, hard precious metals are also nice :cool:)
By the way I like people who have some sense of humour even in such serious thread where serious dollar matter is involve.
I wish you and those who read you all the best:not a total ruin.
Im ramlanne from kuala lumpur , Malaysia...pls help me to search which forex company in or base at Malaysia, which safe and flexible to apen my forex account ? :confused:
Tq.
ramlanne..
Malaysia is very strictly regulated. I have family members there who informed me of the black listed companies issued by the Central Bank. Just ensure the broker you're with is not in the latest list:
www.bnm.gov.my/index.php?ch=en_announcement
im Tr and im looking for one or more "safer" forex managed accounts mostly in europe. Some friends said that i should try AGEA but their site is a little -hmmm....-strange to me. Any recommendations?
By the way the infos here are really interessting and looking to be very helpfull.
Thanks in advance.
They appear to be unregulated, but say that the follow MiFid requirements. They belong to the Financial Information and Complaint Resolution System, and say that it is an autonomous site. The problem I have with that is the FICRS.org site only seems to deal with one broker - AGEA.
In general, I recommend finding an account manager who is independent of a brokerage. Make sure the broker is fully regulated, and see if you can find an account manager or management firm that is also regulated.
Look at these pages:
This page on the FICRS site:
http://ficrs.org/index.php
This page on the AGEA site:
http://www.agea.com/index.ncre?page=regulation
The wording is identical. It looks like they forgot to delete an old page when they were copying the website from AGEA to FICRS. I'm going to take a screenshot of the pages and attach them just in case someone at the company realizes what they did.
The FICRS contact page even gives you the AGEA contact information. It's not regulation at all, FICRS is just a website made by AGEA so people can register complaints about AGEA.
Personally, I'm amazed that there are still companies that build themselves such an obviously fake regulator.
First of all, thanks for doing yeoman service in the field of exposing fraudulent forex traders. I am from India and whatever currency I am mentioning here has been converted from the Indian currency of Rs to dollars.
I have gone through your post in this thread as well as the one in Ponzi schemes and HYIP’s. There is guy about whom I am really confused, so please help me evaluate him. At the outset itself, let me mention that he has failed your acid test of allowing me to see his live account. He claims to be trading from 3-4 years and when I told him that I want to see the live account and the history of the trades he has been doing he said it was not their policy. When I insisted that he can change the password on Friday night and then back again on Sunday night, he said it was not possible to change the investor password as it remains the same for life and he didn’t want to “expose” the confidentiality of any investor by giving me access to Investor password or the trading password. When I pushed further and told him that I could visit his home (which is also his office) and see the account in his system, since he is staying in the same city as I am, he said it would not help me anyway since whatever the history of trading, the whole account might me wiped out the next day! So, there was no point in going by that. He also mentioned that he could always maintain 3-4 live accounts just to prove it to people like me that he is a good trader, so his logic is that it cannot conclusively prove that he is a fraud or genuine.
And the amount I am planning to invest is to the tune of 130,000 dollars for which I am planning to take personal loan at the rate of interest of 15% per annum. The equated monthly installments for the loan itself will be close to $3000 which is nearly 1.5 times my salary. This itself is too risky and not advised in Investment philosophy but I am depending on the guaranteed returns of at least 2-3% every month. I can manage to take a hit for couple of months but I do realize this is almost bordering at the level of stupidity!
I am totally ignorant about forex except for couple of weeks of research I have been doing through google. Even if someone shows me a live account, I am not sure if I can make out anything!
He basically has three options for trading:
1. Managed account which is directly connected to my savings account from which we share 51-49% profit amount. For example, if I invest $1000, at the end of the month if the balance is 1100$, I take 51 dollars and he takes 49 dollars. That 1% is the guarantee for me, even if the principal slips to $900 for a given month, I will be paid 1% of the actual principal amount of $1000 which is 10$. He says the minimum returns over duration of 1 year would be 36% and maximum can even be 100% if the market is trend bound and very good.
2. Pooled account, which guarantees monthly returns of 3% for amounts <$500 and 8% for >$1000 which is nearly 96% per year which is again impossible according to experts. When I asked him he would have been a multi-millionaire by now if he had really done this, he said he is a millionaire since he started with about $40,000 capital and has property worth 6-7 million dollars. Going by pure common sense, his name should have been all over the media by now and traders should have made a beeline to his place paying him millions to make money. Based on your post in this thread, this option is ruled out for me.
3. He provides training and has two softwares, EA for which he charges about $400 per month for Indians. We can use the software for trading. He says for the first 3-4 months after learning the software and going live, our objective should be not to lose any money, and then the next 3-4 months about 1-2% per month…he said his assistant who has only higher schooling education easily manages about 3-4% every month using his software. The discussion on the software couple of months back are given in the below links. His username is anaidafxworld. He also posted live calls, when someone questioned his authenticity also citing that if the EA really worked as well as he had claimed, he would be paid 100’s of millions of dollars.
forums.babypips.com/newbie-island/42407-let-us-make-trading-simple-profitable.html
forums.babypips.com/newbie-island/42650-live-calls-eu-gu-ej.html
Other salient points:
1. In case of a managed account, I have to sign up with a forex account of his choice, something like 4xp.com, when I checked about 4xp on the net, there were very bad reviews. He is pressurizing me although slightly that they are offering a 20% bonus on the investment if done before April 25th. It’s not like he is calling me everyday to invest but it is kind of indirect like sending me reminders that this kind of 20% bonus doesn’t come that often or after April 25th I will lose the offer, etc.
2. There are people whom he has been paying returns of 4-5% consistently over a duration of 2 years on a large principal amount but as you have mentioned this can be a Ponzi scheme, but can a Ponzi scheme be sustained over a longer duration of time such as 2-3 years?
3. His pooled account offer of 8% guaranteed returns seems to be too good to be true, so that can be rejected but what about a managed account where he claims minimum of 36% per year? This is doesn’t mean 3% per month but he says he can offset the losses by greater profits and manage 36% over a duration of 1 year. But this is not exactly feasible for me since I have to pay the monthly installments of the personal loan every month.
4. If he really wanted to fool people, he could have promised 10% or 25% guaranteed returns every month on a pooled account but even when I asked for 9% he refused. He could have posted a much rosier picture than he is right now. I can’t make up my mind either way about his trustworthiness.
5. He is not licensed or regulated in anyway, since he is a retail trader, he says he doesn’t need it. Within the Indian legal framework, I cannot do anything if my account is wiped out even with a legal agreement which is equivalent of LPOA.
6. He also does commodity trading in India using the official Multi commodity exchange.
7. When I asked him about his risk management strategy, again based on your post, he says he always uses a leverage of 100:1, which set my alarm bells ringing. When I questioned him on why is he taking so much risk with the leverage, he said it depends on the skill of the trader. And the maximum amount he says he will expose from my account is about 42% when the market is doing too well and close to 30% on an average, he said it can come down to even 1% when the market is doing bad.
8. I also questioned him on why the 8% returns per month on a pooled account but only 36% per year on a managed account. He said for the same percentage of 30% of the account size he can take far more risk on the pooled account and make more profit than on my individual account.
9. And this might seem really stupid to ask but since he is just and individual trader with a few assitants, what happens due to an unfortunate incident he is incapable of trading? In a pooled account, my money is gone but even in a managed account I might still lose money even though I can withdraw in case the balance is less than what I had deposited initially!
10. I can also make out that he would prefer me to invest in the pooled account rather than the managed account. He is saying things like I am liable for all losses in the managed account just in case my whole balance is just wiped off if the forex brokerage like 4xp simply shuts down!
11. And then this is this whole question of the legality of trading in foreign currencies in India apart from the Indian currency. From whatever I have checked with him, he has covered his tracks very well but you never know when the long arm of law will catch up with you. In a pooled account if he is arrested my money is gone, with a managed account even I can be arrested! Although, the regulating authority of India, the Reserve Bank of India has clearly sent circulars that foreign currencies are not allowed to be remitted based on forex. Only certain pairs like INR/USD or INR/EUR are allowed.
Below are some of his posts from Babypips:
What made me tick and make consistent profit in Fx trading.
1. Got the basics of trading right- Trade demo like Live and trade live like demo
2. Water tight money management - I always .. all ways trade ONLY ONE LOT SIZE. I never risk more than 30% of the total account size, with all the total trades that are opened. Aim for practical profit, not imaginary. Have a fixed plan how much i can loose on a particular trade / particular day and what profit / Risk & reward ratio i hope to make for for the loss that i might incur. Stick to that, trade in trade out, session in session out and day in day out.
3. Emotional Discipline - Nirvana kind of detachment. I trade as a source of income, without any emotional attachment with the market. I trade to make money, not because i have a live account. I Trade...do not gamble. Always convince yourself with reasons to enter and exit trades.
4. Trade when market has lot of liquidity and movement - UK and US market, predominantly.
5. Trade higher TF's - allow market to support your trade, over a period of time. Try to be with the trend as much as possible.
6. Wait, wait and wait for a proper entry signal and make profit than take a trade and wait, wait and wait for the trade to be lost, account to be wiped out.
7. FA helps to gain knowledge ... TA is what makes one earn
These are the few things i follow as THE RELIGION, AS MY TRADING PHILOSOPHY.
HAPPY TRADING
FEW THINGS ABOUT AnEx
1. By no way, AnEx is a HOLY GRAIL SYSTEM (its man made after all).
2. Once you get used to this (you should not take more than 7 trading days to understand), it will keep giving you 75% + success ratio CONSISTENTLY / 100 trades. So, if you always trade ONE PARTICULAR LOT
SIZE, you will make profit session in session out, day in day out, month in month out.
3. I do AGREE AND ACCEPT that AnEx does give wrong signals. But, the loss you incur because of the wrong signal is negligible, compared to the profit you make out of the right signals. For example, whenever AnEx
gives wrong signals, you might loose only 6 - 12 pips (IF YOU ARE WITH THE TREND). But, when you AnEx gives right signal, you will certainly make 18 - 45 pips / trade.
4. Always try to be WITH THE TREND. Go long when the candles are above the EMA and go short when the candles are below the EMA.
5. Always use higher TF's, 30M and more, to give the market that much more time to support your trade.
6. Irrespective of how many winning trades you have / 100 trades, stick to one particular lot size.
7. Trade to make profit, not because you have a live account. Trade, do not gamble.
8. Respect the demo account like a live account and treat the live account like a demo account. Do not have attachment with the market.
9. Have a realistic profit making expectation, not imaginary one. Be prepared to loose.
10. Every industry has lot of over head expenses like packaging, transportation, advertising, so on and so on and every one tries to cut down the expense to maximize the profit. The only expense that Trading has is
the loosing trades. Try to cut down the loosing trades to maximize the profit.
11. Stick to one trading strategy over a period of time to get the success formula. Digging well at several places will not give water anywhere. The martial legend Bruce Lee once famously quoted - "I'M NOT WORRIED
ABOUT AN OPPONENT WHO KNOWS 100 KICKS. BUT, I ALWAYS WORRY ABOUT AN OPPONENT WHO HAS PRACTICED ONE KICK HUNDRED TIMES". ITS APPLICABLE FOR US AS WELL.
Happy trading
> And the amount I am planning to invest is to the tune of 130,000 dollars for which I am planning to take personal loan at the rate of interest of 15% per annum. The equated monthly installments for th..
That's well past the border of stupidity. :p
NEVER EVER UNDER ANY CIRCUMSTANCES TAKE OUT A LOAN TO FINANCE TRADING!
NEVER PUT MORE MONEY INTO ANY TRADING ACCOUNT THAN YOU CAN AFFORD TO LOSE!
Think about it. What happens if the broker goes bad? What happens if the trader goes bad? What happens if the market goes into an unusual phase and your trader stops trading? In the first 2 cases, you lose EVERYTHING. In the third case, you can't afford the payments.
Now on to the flaws.
1. No one should pressure you to make an investment right away. That sort of "invest NOW NOW NOW!" is a sure sign that someone will make money, but that person is unlikely to be you.
2. Accepting bonuses is a dangerous thing. Most come with many strings attached. These can sometimes block you from withdrawing profits for an extended period. If this happens, how will you make payments?
3. An account at a broker in your name is safe from direct theft and Ponzi schemes. It's not safe from the trader taking super risky trades in one direction on your account and the opposite direction on another person's account. One of you gets wiped out. The other pays fees for the profits and gets matched up opposite someone else next month.
4. If the trader is also your IB, he can just churn your account to death. Hundreds or thousands of quick trades with no regard to profit or loss, but instead focused on getting a small pip rebate into his account for each trade.
5. He pays you in event of loss? EVERY time I've seen ANYTHING like that, it always ended with the trader being scammed.
6. So his claimed returns are "only" 36% per year. Bernie Madoff only promised 10%. Since this is in your own account, he can't ponzi it, but he can lie.
7. He's only going to risk 30-40% of your account many times each year to get you that claimed 36% return at the end of the year. Go to a casino and play the slot machines. The odds are a lot better.
8. A pooled account without the strictest regulation is always an open invitation to being a Ponzi scheme. Refusing to go above 8% month just shows he's trying to pretend to not be a HYIP.
Let's do the math. 8% compounded monthly means your money increases about 2.5 times each year.
A $100,000 investment would become nearly 6 Billion in 12 years. Keep running the math and you'll find that you will own the world a few years later.
Many traders can make 8% in a month. No trader can make 8% each and every month for years on end. If there was such a trader, he would already own the world.
9. He refuses to provide live proof of his trading skills. That alone should be more than enough proof that he's up to no good. If his managed system is so good, he'd be managing at least one account for himself to be able to show off the results. The pooled accounts should be in his company's name, so there would be no privacy issues with showing those results.
My best advice for you: Take your money and run away from this as fast as you can. This offer screams fraud and scam on so many levels.
Thank you for your prompt and exhaustive reply, I think you just saved me $130,000! People like me subconsciously want to believe these kind of Ponzi schemes because of the deadly combination of greed and ignorance!
He did send me emails with the live account statements for 3-4 days which his assistant has traded but like you have posted, it could easily be fudged, and with just 3-4 days of trading, nothing can be evaluated for sure.
I found another trader with the website
http://gkfutures.com/
who seems to be more genuine. He is also prepared to show me a live account which he has been trading for a year.
1. Just because the trader is ready to show the live account doesn’t necessarily mean he is genuine, does it? I am sure there is some catch there too! I have never seen a live account before in my life, what should I look out for apart from the obvious parameters such as consistent profits or low risk trades or his risk management strategy?
2. What is a reasonable profit percentage that can be expected in a year if a month is too short a duration? It makes sense when you say that no trader can make 8% per month every month for years together but you have always mentioned what is not possible but how about letting us know what would constitute reasonable genuine returns assuming that the trader is pretty highly skilled? If I am not mistaken, you have many posts on how a fraudulent trader can be detected but What are the parameters based on which I can trust a trader with reasonable certainty?
You have mostly mentioned two parameters, one on whether the brokerage is regulated and affiliated and second whether the trader can show live accounts. Are these enough?
3. This trader doesn’t have any pooled account schemes and his terms and conditions are given below:
Min Investment - $10000 USD
Profit : 5% to 20% Per month.
2% Risk Per Trade.
Risk Factor: 10% Risk Only. Your 90% equity Safe.
Account opening and deposit money in your name.
You can withdraw money and cancel managed account service at any time.
Safe and Standard Income.
You have also 100% Account Control.
We have low risk trading strategy, So first we focus your account capital safe and regular income. You have also master password and you can watch your account anytime and change your master password at anytime. We have 3 years experience in this field. After Investment we will explain you our trading system and forex business strategy.
Profit Sharing:
Profit will be shared in the following ratio:
Investor: 70% and GK Forex : 30%
4. He does the trading himself and has about 25 clients currently. He himself said that he is an IB for Liquid Markets and that he recommends that broker but I also have the option of opting for any other broker that I want. Lqdmarkets was previously called Tadawul fx and is regulated by CySEC.
5. They don’t use any e-currencies or money booker accounts. I open the account directly with the broker and give him the password and he does the trading.
6. Is it sensible to take a small loan for forex investment? Instead of taking $130,000 I can take maybe about $10,000 the payments for the loan may come to about 30% of my salary. This will cause damage although not severe in case I lose the entire amount. If I don’t have surplus wealth to invest in Forex how do I generate it without taking a loan?
Let me know your thoughts…
Are you sure it's gkfutures.com? I can't get the website to load. It was re-registered in January after a long drop.
Answers in order:
1. A live account can be reassuring, but look at it closely. How long is the trading history? Is it still being traded? Is it at least a few thousand dollars, or are they trying to get you to invest large amounts of money based on a cent account? is there always a stoploss set on each trade? How much risk is being taken on each trade?
2. A reasonable percent is difficult to define. It depends on the risk. Many account managers will try to tell you otherwise, but return and risk are inversely related. 10% a year is certainly achievable, but there will be at least some risk of losing.
As for the broker, you want it to be well-regulated. By that I mean to be registered with a regulator that's willing to nail a broker with big, painful fines and that has the ability to order a broker to repay clients. The NFA qualifies, but restricts leverage and hedging. The FSA in the UK just got reorganized under a new name, so I don't have a lot of info on how it's new incarnation protects traders.
As for affiliated - my strongest recommendation is that the account manager not be an IB or other affiliate of the broker. This means he makes money per trade even if it's a losing trade. Some will disagree with me on this, but I've seen too many of these IB/Account Manager combinations end very badly for the trader. Payment should be based only on a percentage of the high water mark.
3. With a 10K initial investment, I'd want to see at least 6 months of history (preferably a year) in an account trading at least 5k (preferably 10k). I'd want to sit down with copy of the statement and check to see if they really only risk 2% per trade (as defined by the trade immediately hitting the stoploss) and never have more than 5 trades open.
4. I'm not deeply impressed by Cysec as a regulator, but they are better than some. Reviews for LQD don't look too bad. If you do go with them, don't open the account via the IB link.
5. That's how it should be, but with one more thing. If there isn't a signed LPOA as part of the deal, don't give away the password and report him directly to the broker. Letting someone else trade your account without an LPOA is a violation of the terms of service at almost all brokerages. This can make all the trades subject to being cancelled and your account could be locked down.
6. I'll stick to my prior advice. There's a reason banks don't make loans for people to invest in the markets. Either learn to trade for yourself or find an account manager who will accept a smaller starting balance. Start saving as much of your salary as you can - aim for 30%. That way you'll get to experience exactly what your life will be like if you take the loan and the account gets wiped out.
That way, if market goes my way, I stand to make a pile of money...if it doesn't, well, at least I had a 50-50 chance which is much3 better than what I would get in my "guaranteed so-and-so % returns managed account" as most times it is a scam.
You are pretty self-effacing, I am sure there have been 100's if not 1000's of people who have seen your posts and decided not to invest their money on a fraudulent scamster...Your words sure saved me helluva lot of trouble, I would have been on the streets by now with my aged parents had I invested all my money with the fraud, I am grateful from the bottom of heart for your advice. Please keep up the good work..I am sure someone somewhere will definitely benefit from your precious words..and at the least you are getting a lot of good will!
The website is gkfutures.com but I guess it is very recent and new, they are migrating from the older website of gkforex.co.in from Coimbatore, India . The site was probably under maintenance when you were opening it.
1. I am just thinking aloud, is it worth taking so much risk for an average of 10% returns every year...I mean we have fixed deposits in India which are absolutely safe which give 9.5% guaranteed returns every year, it is 0.5% more if I invest it in my parents name since they are senior citizens. Of course the returns are going to be taxed and hence the savings will reduce. Even equity or stock markets give more returns. I may be mistaken but my interest in Forex was generated only because of the high percentage of returns relative to risk..or is it just a myth? It is the leveraging that is the advantage compared to other markets, isn't it? But it is a two-edged sword, can destroy you as well. Personally, I don't see any point in going for forex, if it can't give me more than 20% returns every year, it's just not worth the risk.
2. The account manager himself told me that he is an IB but he is also ok with opening an account with any other broker that I like. What exactly is the high water mark? Assuming I invest $10,000 with the trader, the percentages are based on this amount. Is this fair? Below are his conditions:
We are provide fund management services with secure and consistent income. We manage your trading account with low risk trading strategy as well as good risk management system. We will explain our trading system and show you our live account statement for your reference.
General Details :
Account Size : 2,000 USD and above
Returns Per month : 5% to 12%
Risk : 20% (Your 80% of capital is safe and can withdraw at anytime.)
Profit Sharing : 80:20 profit on returns (80% to Investor and 20% to GK Futures Ltd.,)
Agreement:
An agreement will be signed between the investor and GK Futures Ltd.
Terms and conditions:
1. GK Futures Ltd. will review and approve the client's application.
2. Once application is approved, the client should sign the agreement with GK Futures Ltd.
3. Client shall provide the Trading A/c User ID and Master Password.
4. It is acknowledged that the maximum risk on equity will not be more than 20%
5. Net profit will be shared in 80:20 ratio.
6. The sharing is only on net profit i.e. if the account becomes $9000, it means $1000 loss, then there is no fees/charge in that month.
7. In case 20% is lost, then client will be informed on the same. If the client agrees to continue further, then he has to sign a new agreement as usual, effective from that date as a new equity.
******
Your advice makes lot of sense, saving a part of salary and then investing it would probably teach me a few good lessons rather than just taking a loan and risking it all. Thanks, once again!
Is there any way to get those companies bring under law enforcement?
High water mark works like this: You open the account with $1000. After 1 month, you've got $950 - a $50 loss, so no payment. The next month, you gain $150, putting your balance to $1100. The account manager gets a percent of the $100 that's above the previous high of $1000. To keep the example simple, let's say the agreement is for 50%. This leaves you with a new high watermark of $1050.
Itkraze,
If you put the money into a brokerage account (with a trustworthy broker, not some unknown broker the account manager referred you to), then the account manager can't "run off" with the money. Of course, he could still churn your account to death if he's your IB.
Whitesnake,
Not everyone has time to learn to trade successfully. Still, people need some basic training in trading before deciding if they want to trade themselves or have a managed forex account. If a person does opt for managed forex, that person needs to know enough to be able to evaluate potential managers and to understand if the selected manager is doing a good job or is taking high risks for little return.
High water mark works like this: You open the account with $1000. After 1 month, you've got $950 - a $50 loss, so no payment. The next month, you gain $150, putting your balance to $110..
Agreed that not everyone has time to learn trading but if its for their benefit and they can spend some time, i feel that its really worth the time spent because we will be able to make the income from our own knowledge and then no need to be dependent upon other traders.
Not everyone has the time or inclination to trade for themselves. Otherwise, there would be no account managers.
Still, even if you do use an account manager, you need at least some understanding of trading - at least enough to be able to tell if the account manager is attempting to lie to you about the risks being taken with your money.
Good stuff!
I'm very new to the world of forex investments (1 week) and currently in the research stage. I have subscribed to this thread and your other thread on selecting brokers as part of my learning process. I'm particularly interested in Managed Forex Accounts because I do not have the time to trade on my own. But I would also like to learn the ropes of forex trading to understand what is actually being done by traders in a managed forex account.
I am currently looking at Olympus Wealth Management (olympuswealth.com). You have reviewed their website 2 pages back wherein you commented on their "Our Technology" section showing a picture of an air conditioner. I think they saw your comment because I don't seem to find the picture anymore. Only from reading what they have on their website, this company seems legit to me. But since I'm a newbie at this, I am not confident at my assessment. That's why I would like to request for you to look into this company again if you have the time and also help me in my questions below.
From the Downloads section: olympuswealth.com/downloads/Olympus_Wealth_Management_-_Corporate_Profile.pdf
On page 12 of the this file, it is stated that:
Before a new product is released for investment it will have gone through at least six months testing with a proven track record under live conditions using our capital to test it.
Olympus Wealth Management are not regulated by the Financial Services Authority. All our traders however are fully licenced and regulated by the Commodities Futures Trading Commission (CFTC) as a commodity trader advisor (CTA) and all our traders are members of the National Futures Association (NFA).
All the products offered by Olympus Wealth Management are fully audited once a month by the National Futures Association.
1. Is there a way to verify the first statement?
2. Is "not regulated by the FSA" a problem or is this compensated by the fact that all traders are fully licensed and regulated?
3. How can I verify that all traders are fully licensed and regulated and that all products are audited by NFA?
I am particularly interested in their ZeusFX managed account with $10,000 minimum investment. Here is the Executive Summary of that managed account from the website's Downloads section: olympuswealth.com/downloads/Olympus_Wealth_Management_-_ZeusFX.pdf
On page 7 of this file, it says that:
ECN Spread
Additionally (to the performance fee of 35%), Olympus Wealth Management makes 2 PIP ($20 per $100,000 traded) rebate through the spread of each currency pair traded.
1. What does this statement mean? Does this mean that the managed account is susceptible to churning?
London Capital Group is their preferred broker but they are willing to work with other brokers/banks.
1. What is the risk if I go with their preferred broker?
2. Can I use my bank where I have my current/savings account as broker (BGL BNP Paribas - Luxembourg)?
3. Minimum investment is in USD. Do I lose/gain on forex if I insist to keep my broker account in EUR?
It appears that ZeusFX is new which just started in April 2013.
1. Is this a bad or a good thing?
2. Should I wait and observe for a few more months?
I would really like to do a thorough due diligence on this company before I decide to jump in or move on to another one. Some tips on what else should I should look into would be most welcome.
Looking forward to your feedback.
Christian
The reviews at the FPA are very good. This is encouraging.
However, I'm still not ready to leap in. Here are their results for Atlas:
olympuswealth.com/atlas.php
And here's the FPA's Performance Test of the same product:
forexpeacearmy.com/forex-strategies/873/atlas_2_0
I think they need to update their figures for June. I also see that the FPA test has an owner note stating that this product isn't ready for the general public, but the Olympus website shows claimed results dating back to September of 2011. The Olympus Wealth homepage calls it their flagship account. From the FPA test, it looks like the ship already hit an iceberg.
Before putting any money with them, I recommend contacting the UK FCA (FSA's replacement) and asking if a firm like this needs to be registered. I also suggest contacting the NFA and see if the company itself needs to register.
I also recommend contacting Olympus and asking for the NFA IDs of all the traders involved in any fund you are considering investing in. Further, ask to see a live account that's done those trades instead of just a list of claimed percentage gains and losses. If the record isn't at least 6 months old, wait. If it is, check the trades carefully. Are hard stoplosses used? What's the largest losing trade as a percentage of the account size?
Atlas does very poorly on those 2 questions. In the short time the account at the FPA has been running, no hard stops were used, and there are multiple very large losses in proportion to the size of the account. One of the last trades blew out more than 10% of the maximum balance that the account ever achieved.
I already sent verification emails to FCA and NFA.
Will post the update here in this thread and discuss this further with you when I have more information.
While waiting for FCA and NFA to get back to me on my verification of Olympus, I continued my search for Managed Accounts where I can invest my hard earned money. This time, I came across Managed EA Accounts (tulipfx.com/how-to-join/).
TulipFX's KangarooEA has a high rating here in FPA but it was pulled off the market on Dec 2012 and TulipFX offered the EA under their Managed Accounts (MAM) products.
TulipFX is owned and operated by VOC Tasman Ltd. but I can't find where it is regulated.
The brokers preferred are FinFX and ICMarkets which are both regulated and has high ratings in FPA.
As usual, I would like to get your expert feedback and advice on this. Additional due diligence tips are certainly welcome.
Christian
Note that allowing an EA to trade accounts via MAM may not require the same level of regulation as having a human to make trading decisions. It's sort of hard for a piece of software to apply to be a CTA. Yes, this is discriminatory, but until the robots decide to fight for their civil rights, that's the way it is. :p
Ask to see current, live, verifiable trading records. This is a must for any and all managed accounts services.
MAM and PAMM accounts are generally a much safer bet than anything where you send your money to the manager instead of depositing it with a broker. A manager may wreck the account, but there isn't an easy option to pocket your cash and walk away.
Check the broker's TOS regarding letting a manager trade your money very carefully. I have heard of a few cases where an LPOA on a MAM account can't be terminated unless all open trades are closed. Do NOT sign an LPOA with a broker that has this policy, since all a bad manager would have to do is leave one tiny trade open to hold your account hostage indefinitely.
Thanks again.
Mi cuenta era administrada y gestionada por un trader de Portugal, el trader que gestionaba mi cuenta de forex, realizaba las operaciones y yo no podia retirar el dinero hasta que el tuviera todas las operaciones cerradas, a mi no me dejaba cerrarlas, el sacaba el dinero de los beneficios a final de mes, pero yo no podia retirar dinero sin su consentimiento, a mi me hizo perder 9000 dolares, yo no entendia las operaciones que el realizaba, todas con perdidas, pero, él trader que gestionaba mi cuenta de forex, retiraba los beneficios de mi dinero invertido, al final yo tuve que llamar directamente a la mesa de operaciones del broker para poder cerrar las operaciones con perdidas, el trader que gestionaba mi cuenta no queria cerrar las operaciones.
The site is managedforexhub.com showing trading activity dating to 2010, but their domain registration is 8/2012. (Great tip from OP.)
On their managedforexhub.com/about-us/ About page, they list some credentials, based out of New Zealand. However, there are a variety of inconsistencies. If you search the referenced database, first off, you won't get a hit if you use the claimed parent business name, APC. If you enter their license number, you will get the Atlantic Pearl Limited entry (app.companiesoffice.govt.nz/fsp/app/ui/fsp/version/searchSummaryOtherFSP/FSP283525/6.do), which doesn't even quite match the 'APC' acronym. (Another tip in OP.)
It's registration date is October, 2013, again trades starting 2010?
Atlantic Pearl has a New Zealand street address, but the country of origin is listed as Dominica. It happens that I've been to Dominica, it's a tiny little (gorgeous) island in the Caribbean.
Next down their About page is the Financial Dispute Regulation Scheme (drs.org.nz) that they allegedly belong to. Enter their license number in the search on that site and you get no results.
Finally, if you just google their domain name, you get almost no results other than their own website. There's no listing or mention of them here at all (well, until now). If they've been in business for several years they've done a stellar job of remaining under the radar.
I'm not sure where to post this, please let me know if I should move it. I didn't add under managed forex reviews as I didn't actually create an account, so not sure I qualify to put it there.
-Tom
Add in the relative age of the domain against the age of the claimed (and unverifiable) returns, and this one doesn't look tempting at all.
A very good day to anyone who is active on this thread and could lend a helping hand to a (complete) newbie.
I have recently gained interest and started learning a little about Forex, however as I am working (very) full time I am initially drawn towards a Managed Forex account type. As commonly occurs I heard about this particular company through a colleague who has invested with them and is seeing returns consistent with what they promise. He does not want to recommend it to me, just let me know how it is going for him.
Unfortunately I am based in Dubai, (company claims to be based out of Abu Dhabi) so I do not know how to find out if the company is correctly registered and licensed. Very little information regarding this is available on their website, tadawulme.com.
I have agreed to meet with a TadawulME rep to have a presentation during which they will show live trading and iron out details, I already have quite a few questions however I would greatly appreciate a small list of the things I really cannot afford to not ask if anyone has the time to spare.
Meeting him this Friday 14th Feb .....Romantic much??? Ha ha ha
*****Also as a long shot if anyone has previous knowledge or experience with this company their views would be welcomed, Please note its Tadawul ME, not to be confused with Tadawul
Will update once I have met with them.
First and foremost, you want to see a live statement pulled directly from the broker. They can hide the password while logging in, but you need to verify that the account is live, that stoplosses are used, and that there's not some large floating loss that conveniently never gets mentioned while profits from closed trades are bragged about.
Don't trust a spreadsheet or any other claim of pips or percentage of profit. It doesn't matter if the Queen of England signed off on it's authenticity. Only an unfiltered live statement pulled directly from a broker proves anything.
You should ask why they haven't bothered to post their claimed results on the website since July 2013. I never trust results like that without confirmation, but find it strange that they would just stop updating them for 6 months. Make certain that any live account you check goes back until at least the beginning of July 2013, so you can check the pip and percentage gains against what's claimed on the website.
They don't say what brokers are acceptable. If they won't manage your account with your current broker, make certain to research the broker or brokers they use. Beware if they want you to sign up via an IB link. Even if there's no spread markup, they'll get a cut of the spread. This means they would get money whether the trade wins or loses.
A $500 annual fee? Sorry, but for a simple managed forex account, the ONLY compensation should be a percentage of the profits. If they really make as much as they claim, why would they bother with an annual fee?
They claim they aren't network marketing, but reduce their cut of your profits based on you introducing more clients. This doesn't inspire confidence.
Do they get their cut via an LPOA agreement? If there is no LPOA, then allowing them to trade your account will violate the TOS of almost every forex broker out there.
Is this company licensed anywhere? I don't see anything about this on the website.
I've never heard of TadawulME, so I decided to dig in a bit. Their logo is part Nokia wallpaper (project-dna.org/todays-nokia-lumia-windows-phone-retrofit-nokia-n8-wallpaper) and the website is unprofessional with spelling errors, broken links, and a blank Testimonials page. Nothing damning though.
However! I find that their address and phone number are the same as exentialgroup.com which makes me believe they are the same company. They say there is a required LPOA on their licensing page.
I couldn't find anything said about either companies either good or bad. So, no red flags, but that doesn't mean they're legit.
Don't send them any money you aren't willing to lose.
That's the best possible advice for almost every category of investment.
Hi. I'm a newbie. Is there a thread or a link for this please? I wanted to check the scam list so I wouldn't waste both time and money spent.
https://imagicon.info/cat/3-9/vbsmile.png
What I wrote was in response to the post by Xenxo49. If you click on his name in his post, one of the choices is to view his profile. That opens this link:
forexpeacearmy.com/community/members/xenxo49.104053/
From there, you can click on links to show all threads he started or all posts he's ever made at the FPA.
You can also send him a private message from the profile.
Even a good account manager can later fall into the same traps that wipe out new traders. One way this can happen is that the account manager breaks a rule regarding risk, and the trade turns around and is profitable. This leads to overconfidence plus more and more violations of what were excellent risk management rules. Then, when the market goes to far against the open positions, the stops that would have limited damage are either missing or are set too wide, resulting in major losses.
Similarly an account manager can turn to the dark side by developing a refusal to let go of losing trades. This is more common if you use a manager who doesn't use a hard SL on every trade. After all, price HAS to come back eventually, so there's no harm in letting the trade run, right? Maybe this is right 90-95% of the time, but other times this can kill an account.
If the account manager is your IB, so is getting paid a share of the spread or commission on each trade, there may be no churning of the account for years. This doesn't mean the temptation isn't always there. When the mortgage is due, the kids go off to an expensive university, and those high watermark profit percentages don't quite pay the bills, a few extra trades resulting in breakeven or perhaps a few pips profit would be an easy thing to do. Then a few more and a few more, until the manager is getting paid more for pressing buy and sell than for generating profits for you.
You don't need to be an expert trader to let someone else manage your forex account. You do need to know enough about trading to spot the changes in behavior that show your trusted account manager is beginning to slip. If you don't, you could wake up one morning and find your account balance significantly lower than you left it the night before.
I would like too invest in a managed forex account provider, I can say I whole heartedly know completely nothing in this type of investing instrument.
Could you recommend any of these providers, please
regards
and keep up the good work
Next, use the article I wrote at the beginning of this thread to evaluate potential account managers.
You can also use what you learned in Forex Military School to help you evaluate Managed Account Performance Tests at the FPA (forexpeacearmy.com/forex-strategies?c[]=13&). As mentioned above, look at the risks taken. Realize that trades with no SL set are very risky.
This is the performance for the last two months: myfxbook.com/members/hoangduy2601/fxtm25k/1688949
Can you give me some advices? Thank you in advance and sorry for my bad English.
More red flags - the MyFxBook account keeps a lot of critical info private. No closed trade info, so you don't know if most if the profits came from a couple of big news trades. You also don't know if SL's are used. The total amount of time it's been running is very short too.
My recommendation - follow the MyFxBook account for a few more months. If performance holds up, get in touch, ask about whether there's a domain name for the company. Ask about getting access to some detailed trading records.
Thank you for your kindly advice Pharaoh
How Not To Lose All Your Money With A Managed Forex Account
by Pharaoh
Managed forex accounts present a decent opportunity for those who don’t have the time to learn how to trade forex or enoug..
thank you! is help a lot!
The IB pretended running a team of highly expertise currency Traders, hum, plus a Geneva Broker, sounds good.
Pffff, 3 months later the balance was way up and equity 50% DOWN of initial deposit, in fact equity never made it to the positive side, but still he took his monthly profit based on winning trades.
Next move was a FAX to the Broker, cancelling LPOA…END OF IB MANAGED ACCOUNT STORY !
Took weeks to get this account to the deposit level, no fun besides dangerous BS, however fund withdrawal and closure of account, three days, no problem. Swiss remain good Boys !
Best, trade yourself, one less risk :)
(never even checked if this IB had an authentic license, for sure one more Joker, I should had filed a criminal complaint :eek:)
I trade for myself but have tried at least half a dozen of these in the past with no success.
"Be very mindful of Incentive-caused bias when working with a buffer. Depending on the arrangement, your buffer’s priorities may be very different from your own.
For example, real estate agents act as a buffer between the seller of a property and potential purchasers. If you’re looking to buy property, it’s often useful to work with a buy-side agent, provided you’re aware of how they’re compensated.
Agents are typically compensated on a commission basis, so it pays to be wary if you’re using them on the buy-side of a deal. The agent is compensated if and only if a Transaction actually occurs. Accordingly, their first priority is to complete a deal-any deal-regardless of whether or not it’s actually a good deal for the buyer.
If at all possible, work with a Buffer who is willing to accept a flat fee in exchange for services rendered, whether or not the deal happens. If your buffer will be paid regardless of what happens, their interests will be more closely aligned with getting you the best deal possible, which enhances their Reputation."
From: books.google.com/books?id=_DZ_AMDl5yUC&pg=PT180&lpg#v=onepage&q&f=false
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