Good morning to all.
After reading various threads on this board, it has come to my attention many (mostly newbies) are easily being conned (yes that is the right word) in to subscribing to various shoddy signal providers despite there being ample evidence from the very start that the signal provider is only interested in making short-term fees and knowing full well that their system will blow up eventually resulting in the subscribers losing money.
I have therefore decided to start this thread to outline the basic things every potential subscriber to any signal provider should be looking out for together with the types of questions they should be asking.
Hopefully other readers will add to this list and if this helps even one person from subscribing to a shoddy signal provider, it will have been worth it.
I have refrained from mentioning any signal provider directly, am sure they will identify themselves in the below. I will just list the obvious deceptive methods they employ.
Anyway, the absolute basics one should look out for:
1 A real and verified account which is a minimum of 6 months old.
Do not be put of by such excuses such as MyfxBook wont let me verify
Do not make do with screen shots.
Do not make do with back tested results.
Do not be taken in by those who only allow you to view their account via a password/pin (like FXBlue)
2 Make sure the verified account is with a reputable AND acknowledged broker.
More experienced users will know MT4 can be hacked and together with a shoddy bucketshop operator, trades falsified.
3 Make sure the verified account has started with a good deposit, $5000 is a good starting point.
Anything less, the psychological aspects of the provider is not being tested.
A signal provider who does not risk their own money, amongst other things has no faith in their own trading.
A signal provider who does not risk their own money, should not be charging $300+ a month.
4 Make sure that nothing (except the open trades) is hidden on the verified account.
A reputable provider will not hide trade history, equity, balance or any other aspects of their trading and be happy to let a peer review of their performance.
By letting other more seasoned traders on ie. FF review their trading performance, any weakness and issues with the signal provider ie grids, not cutting losers, excess lots etc will be found out and mentioned.
Remember, by letting others see the basic information on ie. Myfxbok, it is not the equivalent of asking the signal provider to give away their "trading secrets".
5 Make sure the returns are realistic.
Anyone who shows 5%+ gains in a day is likely to be trading huge lot sizes and/or huge volume sizes. Such trading is unrealistic in the long term and can easily lead to burnt accounts, no matter what the drawdown to date has been.
This is often a method some signal providers use to show incredible short term performance, knowing full well than in the long term, it will never be sustained. They simply then close up shop and leave.
6 Don't just look at total returns/risk. Look at how the returns/risk etc are distributed over the months.
Is the expected pip per trade consistent? Is it going down? Was there just one great week/month followed by many mediocre one? You are ultimately looking for consistency.
7 Query the subscription amount.
In my opinion, any signal provider who wishes to charge more than $100 a month, should have least one whole years verified performance.
Never ever take the excuse, "we are a premium service so we charge more".
8 Never sign up for anyone who charges in advance per quarter.
Many will try this knowing full well that they will not be around in a few months time.
9 Ask what history the signal provider has of running a similar service in the past.
Running a signal service when others people money is on the line is an emotional drain and will test anyone. If someone has no experience of this, it will catch up with them.
10 Never ever get taken in with someones supposed past.
"I was a bank trader".
"I have traded this system for seven years and I am now a millionaire"
Ask yourself, if this person has traded this system for any length of time and is so successful at it, why are they on FF and trying to entice retail clients. If they are that good, they should be working for some hedge fund no trying to drum on business on financial forums.
11 An honest provider will have no hesitation in giving their real name(s).
What are they hiding otherwise?
You are not asking them to give you their home address or bank account details. If they won't even tell you who they are, why should you trust them with your money?
12 If you are paying for the subscription via Paypal, see which country the payment is going to.
If payment is going to one country yet signal provider states they are in some other country or their FF account states they are in a different country, why are they lying?
Do not be taken in by comments such as, we need to keep our identity secret.
Do not be taken in by our back office is in ie. India/Singapore. How many signal providers do you know come to FF and are so successful that they have a back office somewhere else in the world?
13 Ask for worse case scenarios and what rules are in place to mitigate these.
Nothing is full proof but this should not stop someone from having a set of rule in place ie. what is max drawdown expected? What happens if max drawdown reached?
14 The moment a signal provider breaks one their own rules, be weary.
15 Remember, even a MyFXBook as weaknesses.
For example, to stop drawdown from getting bad, a signal provider can simply disconnect from myfxbook and re-connect again once it's recovered.
Adding deposits will also distort the drawdown figure.
Understand the weaknesses of the reporting/verification system is necessary. You must therefore go through the trade history in detail, especially if trades are left open for a considerable period of time.
OK am tired of writing now so hopefully others can add to this.
But if the above can act like a check list, even if one person is saved from a shoddy signal provider, it will have been worth it.
Let the buyer always be aware.
Good luck.
After reading various threads on this board, it has come to my attention many (mostly newbies) are easily being conned (yes that is the right word) in to subscribing to various shoddy signal providers despite there being ample evidence from the very start that the signal provider is only interested in making short-term fees and knowing full well that their system will blow up eventually resulting in the subscribers losing money.
I have therefore decided to start this thread to outline the basic things every potential subscriber to any signal provider should be looking out for together with the types of questions they should be asking.
Hopefully other readers will add to this list and if this helps even one person from subscribing to a shoddy signal provider, it will have been worth it.
I have refrained from mentioning any signal provider directly, am sure they will identify themselves in the below. I will just list the obvious deceptive methods they employ.
Anyway, the absolute basics one should look out for:
1 A real and verified account which is a minimum of 6 months old.
Do not be put of by such excuses such as MyfxBook wont let me verify
Do not make do with screen shots.
Do not make do with back tested results.
Do not be taken in by those who only allow you to view their account via a password/pin (like FXBlue)
2 Make sure the verified account is with a reputable AND acknowledged broker.
More experienced users will know MT4 can be hacked and together with a shoddy bucketshop operator, trades falsified.
3 Make sure the verified account has started with a good deposit, $5000 is a good starting point.
Anything less, the psychological aspects of the provider is not being tested.
A signal provider who does not risk their own money, amongst other things has no faith in their own trading.
A signal provider who does not risk their own money, should not be charging $300+ a month.
4 Make sure that nothing (except the open trades) is hidden on the verified account.
A reputable provider will not hide trade history, equity, balance or any other aspects of their trading and be happy to let a peer review of their performance.
By letting other more seasoned traders on ie. FF review their trading performance, any weakness and issues with the signal provider ie grids, not cutting losers, excess lots etc will be found out and mentioned.
Remember, by letting others see the basic information on ie. Myfxbok, it is not the equivalent of asking the signal provider to give away their "trading secrets".
5 Make sure the returns are realistic.
Anyone who shows 5%+ gains in a day is likely to be trading huge lot sizes and/or huge volume sizes. Such trading is unrealistic in the long term and can easily lead to burnt accounts, no matter what the drawdown to date has been.
This is often a method some signal providers use to show incredible short term performance, knowing full well than in the long term, it will never be sustained. They simply then close up shop and leave.
6 Don't just look at total returns/risk. Look at how the returns/risk etc are distributed over the months.
Is the expected pip per trade consistent? Is it going down? Was there just one great week/month followed by many mediocre one? You are ultimately looking for consistency.
7 Query the subscription amount.
In my opinion, any signal provider who wishes to charge more than $100 a month, should have least one whole years verified performance.
Never ever take the excuse, "we are a premium service so we charge more".
8 Never sign up for anyone who charges in advance per quarter.
Many will try this knowing full well that they will not be around in a few months time.
9 Ask what history the signal provider has of running a similar service in the past.
Running a signal service when others people money is on the line is an emotional drain and will test anyone. If someone has no experience of this, it will catch up with them.
10 Never ever get taken in with someones supposed past.
"I was a bank trader".
"I have traded this system for seven years and I am now a millionaire"
Ask yourself, if this person has traded this system for any length of time and is so successful at it, why are they on FF and trying to entice retail clients. If they are that good, they should be working for some hedge fund no trying to drum on business on financial forums.
11 An honest provider will have no hesitation in giving their real name(s).
What are they hiding otherwise?
You are not asking them to give you their home address or bank account details. If they won't even tell you who they are, why should you trust them with your money?
12 If you are paying for the subscription via Paypal, see which country the payment is going to.
If payment is going to one country yet signal provider states they are in some other country or their FF account states they are in a different country, why are they lying?
Do not be taken in by comments such as, we need to keep our identity secret.
Do not be taken in by our back office is in ie. India/Singapore. How many signal providers do you know come to FF and are so successful that they have a back office somewhere else in the world?
13 Ask for worse case scenarios and what rules are in place to mitigate these.
Nothing is full proof but this should not stop someone from having a set of rule in place ie. what is max drawdown expected? What happens if max drawdown reached?
14 The moment a signal provider breaks one their own rules, be weary.
15 Remember, even a MyFXBook as weaknesses.
For example, to stop drawdown from getting bad, a signal provider can simply disconnect from myfxbook and re-connect again once it's recovered.
Adding deposits will also distort the drawdown figure.
Understand the weaknesses of the reporting/verification system is necessary. You must therefore go through the trade history in detail, especially if trades are left open for a considerable period of time.
OK am tired of writing now so hopefully others can add to this.
But if the above can act like a check list, even if one person is saved from a shoddy signal provider, it will have been worth it.
Let the buyer always be aware.
Good luck.