Forex signal providers entice you to join their service by providing “proofs” of their credibility. These proofs are usually where most of the scam is going on.
Now ideally proof should be hosted at a 3rd party portfolio site such as Myfxbook or MQL5 where the provider has little control over what shown there. However some providers do able to get away without giving their portfolio at 3rd party site.
I. Big NO NO: No Portfolio at 3rd Party Site
There are 3 types of providers who’d try to push their service without tangible proofs.
1. No Proof At All (duh)
This seems straightforward and no brainer but people DO fall for this. All it takes is a page long of persuasive words along with some pictures of generic smiling professionals and subscription button at the end. Needless to say, just close the site if you see this kind of offer.
2. Rely on Screenshots, Tables, and Testimonials
Screenshots, “testimonials from satisfied members”, and tables shown on the site can be taken for informational purpose but SHOULD NEVER be used as decision making basis simply because THERE IS NO WAY TO CLARIFY ANY OF THEM. Screenshots may vary from history shown at MT4, statements from broker, growth chart they made themselves, and so on. Tables are usually displayed to show results from supposedly day to day trades.
You probably also see “proven at Myfxbook” with a screenshot but no link. This is pointless. Remember that Myfxbook page exist to prove the point so having screenshots without a link defeat the whole purpose behind it.
3. The Defensive Freakout (Yes, It’s a Thing)
In my experience, some people will act offended when asked about portfolio or investor password. They would act upset and say things to make you feel guilty for asking such. DON’T. It is 100% your right to ask since they expect you to risk your money based on their advice. Their act came from fear of being found out, so don’t feel guilty, don’t be uncomfortable, don’t apologize. Just walk away.
II. Provides Portfolio at 3rd Party Site
Having portfolio at 3rd party site is a step toward the right direction but this doesn’t mean they can’t game the system. This can be done by providing incomplete information or misleading data that would fool anyone who doesn’t know what to look for. I will use Myfxbook as an example on points below.
1. Using Demo Account
This should be self-explainatory. If they’re not confident enough to risk their own money on their advices, why should you? If the signal/trades is as good as advertised, there is ZERO reason not to trade on real account, after all it can only grow right?
Trading at Demo Account shows no confidence and very high chance of deception. It is very easy to run several demo accounts without risk, see which one ended up generating highest profits, then publish that one. You see a profitable accounts showed without knowing 5-10 accounts that stopped out behind that.
2. Using Real Account on A Suspicious Broker
These days it isn’t that difficult to own an MT4 server, you can simply have it via white label or pay a sum of money at an offshore country. When you ‘own the broker’ you can feed whatever data you want to the server. Myfxbook and other portfolio sites will show exactly what they read from the server but if you’re paying attention you won’t be easily fooled. So next time if you see Mr X deposited 500K USD at ABCbroker and racking wins after wins, it’s a good idea to check the broker site, regulation, reputation, and credibility.
3. Track Record or Trading Privileges is Not Verified
Verified Track Record means Myfxbook is able to verify all data from the broker directly using investor password, thus eliminating the chance for data manipulaton.
Additionally, Verified Trading Privilege means whoever creates the Portfolio have actual access to the account by proving that he can change the investor password. This eliminates the chance that someone got account and investor password somewhere then claiming it as his own.
Both status shown in red cross or green tick up top so it should be pretty easy to check. Nevertheless, both must be on green tick.
4. Custom Start Date
Myfxbook allows portfolio owner to show a specific date range as default display when it’s viewed by public. This will allow the owner to show only a period where his trades yield the best result while hiding other periods where it was on poor performance. However, there will be notification above that shows that the account using custom date.
When you see this, click “custom analysis” link on the upper right corner to show the all time actual performance.
5. When was it last updated?
Updating data requires action from the account owner. If the owner choose to stop sending data to Myfxbook after a good month, the portfolio will stay on good statistics/growth forever. This is deceptive because users can’t know how the account fares over the months or years. It might already stopped out for all we know.
On below’s example, the account start on November 2018 (over a year ago), trade for a month with good result (68% growth) then stopped updating. However, the owner still market his services based on this portfolio up until years after that last update.
6. Balance, Equity, History are Locked? Check the Equity Percentage
Myfxbook allows user to set certain data to private including balance, open trades, history, equity, and so on. This bring some concerns:
- Some brokers allow deposit as low as $5. While it still a real account, it opens many possibilities, including opening many accounts and only show the one that makes profit.
- Myfxbook only counts closed positions on growth chart and data so in theory someone can hold lose positions so it won’t affect the data. If you can’t see the equity you cannot know if this is going on. The little saving grace here is Myfxbook still display equity percentage despite covering the actual number. So if you see a fantastic portfolio while showing 8% equity, think again before making any decision.
There are several other 3rd party portfolio sites that can be used including MQL5 and FXBlue but the basic is the same. Look for these signs so you can minimize risk and able to save both your money and your time.
III. Hides Behind Cleverly Made System
What if their pitch is sooo good that you decide to join anyway without ticking the boxes above? If you decide to skip the portfolio checking entirely and join in based on hunch (because the one with portfolio is so hard to find) you might stumble upon this. You join the VIP channel, follow every signal rigorously. Then the summary day comes and their list is on fire. You look at your account and it doesn’t looked like that at all.
Intrigued, you spend a bit of time cross checking all their signals with their results, all seemed checked out so technically they did not lie. So what just happened? I shared my experience in blog post titled “I tested VIP Service of One of the Biggest Signal Providers Around and Here’s What I Found” that will answer that question. You can read the post here.
90%+ of traders failed to achieve self-sustainability from their trading activities but forex industry these days is jam-packed with signal providers and fund managers. There are so many options that it becomes an overwhelming task to find one that genuine. This reality in itself should be self-explanatory: most of these providers/managers are excels more in their sales/marketing skill rather than their trading skill.
Now if you find the tips in this article too complicated, just use these 2 filter: a) need to have portfolio, and b) portfolio need to be real account. Simply with these 2 criteria the options pool will shrink considerably and it will increase your chance to find the genuine one.