First thing first: you can visit our Myfxbook portfolio by clicking here.
Now let’s get on to the guide. To evaluate a Myfxbook portfolio, you simply need to check a few points.
1. Track Record and Trading Privileges Verified: Must be Green Tick
A green tick at ‘Track Record Verified’ means: Myfxbook was able to verify the info provided by cross-checking them with data provided by the broker’s server. Some information that are verified here are:
> Account is actually Real, not Demo. Note that without this verification Myfxbook couldn’t know if it’s actually real or demo.
> The account is actually on the said broker, using the said platform, and use the said leverage.
A green tick at ‘Trading Privileges Verified’ means: Myfxbook was able to verify that the portfolio creator is actually has access to trade in the said trading account. This means a person can’t just steal/acquire an account along with its investor password somewhere then make a verified Myfxbook portfolio.
Note that at the moment it’s mandatory to verify both these points before someone can publish their portfolio.
2. It has to be Real account
This one is self explanatory. If you’re going to follow the trader and trust his decision, you need to know that he also trust in his own decision when handling his money. If he trades on Demo then following him would be a very questionable decision on your part.
3. An Actual Broker Name need to be Displayed
On the screenshot above, you can see XM as the broker. Be careful when you see “Other (MT4)” or a broker name you never heard of before. “Other (MT4)” means that his broker is not available on Myfxbook list when he added the portfolio.
Why? These days it’s quite easy to create a broker server by simply registering to a white label program or setting up a broker at offshore regulation. If you see a broker’s name that you never heard before (or a broker that even Myfxbook doesn’t know), it’s a good idea to spend extra few minutes verifying the said broker’s regulation and reputation. Remember, Myfxbook only shows data from the broker server, if the owner has access to the broker server he can put in any data he likes.
4. Updated Recently
The account owner can choose to stop updating Myfxbook by simply turning the EA off. An account might make a big gain in 1 month then got burnt out afterward but if the owner turn off the EA after the big gain, no one will ever know. So if you see someone offering investment service in 2020 based on a Myfxbook portfolio that last updated on 2019, you know what to do.
5. Gain and Absolute Gain
There are “Gain” and “Absolute Gain”, the following are a bit explanation about both
- Gain: gain is calculated by disregarding cash flows, be it in or out. This means it only factors initial deposit on profit percentage. The calculation is a bit more complicated but to put simply if my initial investment is $100, then I made another $100 deposit, then gain $100 profit, my percentage would be 100%. This is because the system only use initial deposit to calculate.
- Absolute gain: all deposits made are calculated when generating the profit percentage. This means if my initial investment is $100, then I made another $100 deposit, then gain $100 profit, my percentage would be 50%. This is because the system factors all deposits made when doing calculation.
For our purpose, the “Absolute Gain” is much more reliable because it’s more thorough. The “Gain” can be gamed by putting a small initial deposit then depositing larger 2nd deposit before start trading, this way the gain percentage would always be high because system only factors the first deposit.
6. Healthy drawdown
Drawdown shows how much a trader is willing to risk his capital for a trade. Around the number 20% or less is considered safe. However if you see up to 70-80% drawdown constantly, it means the trader likes to engage in high risk trading. At this point you need to consider whether the profit justify the risk.
7. Vital information should be displayed
Myfxbook gives freedom for portfolio owner to lock some of his information provided. While privacy consideration is understandable, if you plan to follow this particular trader some information MUST NOT be locked:
- Balance/deposit. A lot of brokers provide very minimum deposit criteria or cent account. Obviously you don’t want to follow someone who only risk USD 10 or USC 1000, it doesn’t make sense.
- Equity. This show the account actual current status, it’s very important because someone can just hold all losing positions and close only the profitable ones. Doing this will keep the graph and gain healthy while the account is minutes away from blowing up. Luckily even if the owner hides it, Myfxbook still display it in percentage. Below is a good example of an owner trying to cover up his actual account status:
- Based on the image above, the Abs. Gain is 279% which is impressive but unfortunately he reached it by holding on floating loss and only closing profitable one. For example if his balance is $1000, his equity is on $87 now. It’s a precarious condition you definitely don’t want to be in.
General tab: Start date of the account. Knowing the start date would give you information if this is an account created yesterday or 3 years ago. This in turn will give you enough information about the account’s survivability.
- History tab (further below on the page) needs to be visible. While it’s impossible to make good call on every trade, the history should provide transparency about the general trading style. Does he likes to utilize risky strategy for huge gain? Or does he keeps it safe, getting however much he can while keeping the equity on safe level?
- History also important if you’re trying to verify a claim by a signal provider. If they claim to made 100 pips profit trading GBPUSD yesterday but there is no GBPUSD trade on yesterday’s history, your conclusion should be clear.
8. Make sure no information is purposely omitted to make the portfolio look better
The most common way to mislead viewer is by only showing a part of the portfolio during a certain good period. When this is the case, Myfxbook will display warning above and inform you the way to see the statistics based on its entire history. By clicking “custom analysis” and setting the date range to cover the entire account range, usually you will immediately notice a few things: the abs gain, daily, monthly, and drawdown won’t be the same. Most likely they will go down or even go to minus. This is why it’s very important to be able to look at the whole picture.
Paying attention to this small thing will save you from making poor decision and follow an untested trading system.