Forex expert advisor is a type of trading software that can generate automated trading decisions for traders. Thus, the trader can gain more profits and the trading continues without the trader being present all the time. Traders can run these robots on MetaTrader platforms like MetaTrader 4 and 5. They offer several features to traders, such as providing signals for placing a trade and placing and managing trades automatically. However, as the EA grew popular, it also became a target for scammers. Nowadays, there are many frauds that showcase their EA products online to make easy money, but if you purchase them; you will only waste your money because they will not work. So, it is important to identify and avoid forex EA scams.
There are many ways to spot expert advisor scams.
Although the scammers try their best to fool the customers, there are some clear signs that you need to look out for, such as:
High drawdown figures
When traders look at the trading chart of an EA, they make the mistake of only looking at equity curves. You should know that most EAs have an upward equity curve. With a 99% modelling quality of an EA, traders are easily attracted. However, keep in mind that the EA is likely to be useless if the drawdown figures are also high. Drawdown figures are overlooked by most traders, but you need to avoid any EA with high drawdown rates.
Long open trades strategies
Long-term trading strategies are preferred by many traders, so this point does not seem fishy initially, which makes it easy to fool most people. Long-term trades indeed have their benefits, but only if the period is limited to a few days or months. It does not make sense when an EA holds trades for several years. No matter how satisfactory back-testing results they show, it is always the best option to avoid this EA. The reason is simple. It is suspicious when you are getting yearly returns with only long trading periods like a few years.
Scalping strategies are indicated by the number of people using them, and these strategies are very popular. However, expert advisor robots that use scalping strategies do not work most of the time because of the sensitivity of this strategy to price range. So, it does not work on most brokers. Most traders rely on test results to know if a robot is useful or not, but you may not know that these tests can be easily fabricated. This is why you may notice scalping strategies working on a broker but failing on another even with similar settings. Your trades will be ruined if you end up buying a scalping expert advisor that does not work on your broker. So, it is better to avoid these EAs. Do not be fooled with the fabricated test results displayed by scammers.
Unrealistic marketing messages
Some forex trading EA robot sellers promise things that are too good to be true, for example, high percentage growth returns. You need to understand that making returns is not easy in forex trading, even if you are experienced and lucky. It is very rare when traders make more than a 20% return in a month. So, if an EA developer is claiming high returns, you need to steer clear of it.
Untrustworthy Myfxbook Account
You can follow the trading results of an EA robot on its Myfxbook account. It is a platform for the forex community where traders can analyse their trading account and share their trades. By visiting the Myfxbook account of an EA, you can see its trading chart. This page contains every detail about the trading of the specific EA, from deposits, balance, gain, drawdown, equity, profit, withdrawal, last update time and more.
If you analyse the chart carefully, then you can understand if the account is genuine or it is a scam, such as:
You can trust on the chart if the data is verified, but anything that is not verified is not reliable. So, look at the top of the chart and see if track record and trading privileges are verified. If it is not a scam and you are looking at the account of a genuine EA, then these two will be verified. If not, then you must not invest your money in this robot.
2. Private and open data
If it is an honest account and doesn’t have anything to hide, then it will keep every data open for visitors to see. Keep in mind that trade results can be fabricated, as mentioned earlier. So, the chart you are looking at can only be a tool to fool you. However, if the data matches the chart, then it can be considered trustworthy. So, if there is a scam, then the scammer will keep the data private so traders cannot see them.
3. Last update
This is overlooked by us most of the time, but it is very important if you want to spot a scam and avoid it. Assume that an account has been performing really well for some time, but after that, it starts failing to make more profits. In these cases, they stop updating the chart and only show the period when it was making profits. So, traders can be easily fooled and think that it is a useful EA. Always, make sure to see when the chart was updated for the last time. If it has been updated within a few hours, or days, then it is fine. However, if it has been done months ago, then it is more likely to be a fraud.
Low-Quality Content on The Website
Any individual who wishes to sell products online needs to have a well-designed website that attracts customers and helps visitors to find what they want easily. However, when you search for EA robots, you will come across some websites that are not helpful at all. You will not be able to find out anything about the robot from the site. The features, plans and product description will not be stated clearly. These websites are definitely suspicious. They do not provide the link to the Myfxbook account or backtest results either.
These are some ways to identify and avoid forex EA scams. If you are careful enough, then you will be able to spot these easily.