Archive for the ‘Forex Education’ Category
The Art Of The Forex Scam 3
Today, and over the next few weeks, I’m going to give you a few tips on how you can avoid getting scammed by those who make a living, not from trading, but from marketing a defunct product or service. I’ll also be discussing in more depth concerning the different types of scammers out there.Today, we’ll be focusing on the no stop loss scam.
The first thing everyone is taught in forex trading, is to always have a plan. Have a plan to trade, and trade that plan. And it doesn’t even necessarily have to be a fully fledged system, but at least, have a clear indication what is the basis of your trading methodology. How to enter, how to exit. When to enter, when to exit.
You may have heard many times from other traders, that the exit is the most important part of trade. Entering is the easiest part apparently. Well, frankly, they’re both very important, and depending on how you trade, one could be more important than the other. However, one thing can’t be denied… new traders most often struggle when exiting a trade.
part of trade. Entering is the easiest part apparently. Well, frankly, they’re both very important, and depending on how you trade, one could be more important than the other. However, one thing can’t be denied… new traders most often struggle when exiting a trade.
And whenever there’s a sense of struggle, the forex scammer immediately smells the opportunity to “help” the struggling trader.
The scam artist tempts the noob. Why bother with exiting a trade? There’s no need to learn how to master an exit of a trade if you have a system that dismisses the whole concept of exiting, right? No need to put in the hard work if all of your trades are winners. Surely a winning concept!
Except of course, what the scammer won’t inform the noob, is that his equity is his stop loss. This information never gets passed on to the new trader. All that the new trader sees is winner after winner after winner. Not a single losing trade. Doubling the account in less than a month. Remarkable stuff.
For those of you who aren’t aware of this scam, honestly, that’s all there is to it. The scam artist uses no stop loss. And he uses a small profit target. For example 3 pips. So as soon as the trade goes his way, he closes out for a win. But when the trade goes in the opposite direction, he just waits. And waits some more. Still going the wrong way? No problem, just be patient! It will eventually turn round and you’ll make your 3 pips!
(Please note, there is a difference a trader not using an initial stop loss yet exiting based on discretion or changing circumstances, and between a bad trader who never exits a trade until it’s a winner.)
Based purely on probability, it’s not unheard of to have hundreds, even thousands of winners in a row, for weeks and months on end. New traders would think they’ve hit upon a gold mine!
Unfortunately for the new trader (well, for every trader), eventually a trade without a stop loss will go bad. By bad, I mean, the entire loss of your account. So, a bit more than just bad. Utterly disastrous.
Many a new trader fell for this scam in the earlier days of retail forex trading. And many a scammer had earned some dirty metal for their unethical practices. However today, fortunately, the “No Stop Loss” scam has gone into near
extinction, thanks to the vast amount of useful information posted in FX forums and portals.
Previous Post: http://www.forextrainingcourses.net/basic-education-how-forex-market-operate/the-art-of-the-forex-scam-2
Provious Post: http://www.forextrainingcourses.net/basic-education-how-forex-market-operate/the-art-of-the-forex-scam-1
The Art Of The Forex Scam 2
Today, and over the next few weeks, I’m going to give you a few tips on how you can avoid getting scammed by those who make a living, not from trading, but from marketing a defunct product or service. I’ll also be discussing in more depth concerning the different types of scammers out there.Today, we’ll be focusing on the repainting indicator scam.
When Metatrader really became mainstream, during the middle of the last decade, it helped spawn a whole new breed of new forex retail traders. There were so many people jumping on the forex bandwagon, thinking it was a slick way of making a lot of money. Internet forums were buzzing with many new methods. Call it a second wave if you like. And Metatrader was the platform which helped fuel that wave. Metatrader 3 was popular, but by 2006, it was pretty much obsolete, and Metatrader 4 was the most popular trading platform.
Suprisingly, it still is, to this very day.
But what Metatrader did for the birth of new wannabe traders, it also did for new wannabe scammers. And I’m not talking about EAs. A lot of scammers realized that even though noobs were suckers for an awesome looking backtested EA, advice was being given across the net to “trade manually”.
So what better way to convince new traders to trade manually, yet still make a thousand pips a month? The repainting indicator. Except of course, they didn’t call it that.
For those of you who don’t know what exactly is a repainting indicator – typically, it’s one which, when applied to a currency chart, displays buy and sell arrows. So, when you scroll back in time through the chart, you’ll see where the indicator would have told you to buy, and where to sell. The most fascinating aspect of all of this is, every one of the historic signals turns out to be a winner. Picking tops and bottoms now could never be easier! Forget your robot EA which might go belly up at any time. Now, you the trader is in control. You press the buttons. You click on Buy Eur/Usd, you close that beautiful Cable trade. Manual trading at it’s best.
Unfortunately, unbeknownst to the new trader, those arrows were not the same arrows you would have seen in real time. They “repaint” the past, redraw history. If you weren’t even aware of the concept of repainting, you would quite probably think you could make serious pips. Alas, many fell for this trap, especially over at eBay, where scammers sold “super accurate arrow indicator” to make you into an “overnight super trader”.
But hang on, at just $29.99, this couldn’t be the case, surely?
Well, it surely could be, if you looked at how many the scammers have been selling. And what’s even worse, the noob then fails to leave a negative feedback, through fear of himself receiving negative feedback from the seller, or through embarrassment.
Today thankfully, the repainting scammer has almost gone into extinction, thanks to the hard efforts of forex forums, and those experienced forex traders who expose these scammers.
The Art Of The Forex Scam 1
Everyone knows how bad forex scamming has become, especially in the past few years.
Today, and over the next few weeks, I’m going to give you a few tips on how you can avoid getting scammed by those who make a living, not from trading, but from marketing a defunct product or service. I’ll also be discussing in more depth concerning the different types of scammers out there.
Today, we’ll be focusing on possibly the most seductive type. The 1000pip a month EA scammer.
You’ll find that perhaps the main breed of scammers are those who churn out product after products, claiming their EA is the next best thing since sliced bread. Of course, newbies often fall for this, because everything seems legit.
Lets look at the main reasons why new traders fall for this old-skool classic, the 1000pip a month EA.
- They have amazing feedback over at eBay.
- They have awesome (sometimes video) testimonials on their website.
- They have smashing backtested results.
- Even better, they have awesome forward tested results.
- Now this is getting amazing – they even have LIVE tested results.
- They sometimes even give you their investor password so you can see for yourself
In the old days, Forex scammers had to rely on backtesting as a way of selling their EA. Now, thanks to valuable forums such as ForexFactory.com and others, most new traders know that, backtested results are a definite no-no. But forward tested, live results? How can anyone argue with that?
Here’s a classic trick. They’ll use multiple accounts, trying multiple strategies. Purely by the laws of probability, there’s going to be a couple of accounts which will look pretty spectacular. But of course, they’ll never tell you about those failed accounts. So the new trader (and yes, even some more experienced traders), believe that this EA has to be the real deal.
What’s more is, they’ll even offer a money back guarantee! I mean, seriously, you can’t get better than that, can you?
Well, actually, you can – don’t buy the EA in the first place. It is statistically proven that a significant percentage (significant enough to fill the scammers pockets), will NEVER claim a refund within the required period. Why? A number of reasons. They’re too lazy (sad but true), they feel the EA needs more time, they can’t admit they bought something so terrible, they didn’t even try the EA until the refund period is over. And many more reasons. But the point is, you avoid all of these scenarios if you don’t buy it in the first place.
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