The Art of the Forex Scam (Part 1)

[AshFX]

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 sand portals, 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 – you don’t have to buy the EA in the first place, remember? 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.

Does this mean you should never buy an EA that has good forward tested results? No. There ARE some EAs that aren't scams, and there are some people trying to master automated trading. These people should be commended for making that effort. The key thing is to do your research. Ultimately, only you can decide for yourself whether you should try an EA.

Fortunately, there are some honest people doing some honest testing of certain Forex commercial products on the market. Please see our new EA section for the latest testing by John.

[fmfx]

Well, some people that is greedy enough would always be scammed by those 'fantastic' EAs. Mostly newbies, as you mentioned. After all, we need to read to know a lot. And we need to know a lot to know which are scams and which are not. Thanks for this insights, btw.

[dantebreath]

MAy be the beginner trader are use same EA but he does not know trading rule for thats EA or does not use proper trading rule for this EA, for example..EA scalper is best when trade in sideway market, usually after closing US session. If thats beginner use this EA in london session maybe he will suffer a lot of loss

[mlawson71]

People lose a lot of money to these scams, unfortunately. The best way to avoid that is to work with properly regulated companies.