How To Stay Away from Scams in Forex

Forex

If you are interested in forex trading, you know what an EA is. It is software that works on a certain algorithm. Its main objective is to make trading decisions for traders. The trader thus can look forward to some passive income even without knowing to trade fully. Thus, the search is always for ‘Forex EA top’ which means the best one. With the help of such an EA, the trader can make more profits and move ahead with trading without having any knowledge or devoting time.

However, with the popularity of such robots or expert advisors, people are now being increasingly scammed. They come across thousands of EA products that promise to help them earn money. Unfortunately, they end up losing a lot of money. 

For beginners, it is extremely important to spot EA’s that are not scams. Here are some of the many ways that can help in staying away from scams.

High drawdown figures

A common mistake most traders make when analyzing the trading results is only to check the equity curves. First, you need to understand that most EAs have an upward curve, with a 99% effective modeling quality of EA. Second, remember that any EA with very high drawdown figures is useless. The rate of the drawdown can be easily identified when you check properly. 

Long open trade strategies 

Most of the traders tend to prefer long-term strategies for trading. This is why the long open strategy often does not appear fishy to fool people easily. Indeed, it is true that long-term trade has specific benefits. But if the period is confined to some months, the trade hold of EA does not matter. So even if you see very good backtesting results, try to avoid this type of EA for better results.   

Scalping strategies 

Scalping strategies mostly depend on how many people are using this strategy in the present. Some expert advisors use this strategy, and it sometimes does not work due to its sensitivity and latency. But on the other hand, if you have lower latency, the EA can work very well. Traders depend on the overall results of the robot to know its function. However, there are times when you may not know the Meta Trader and the variable speed. In such cases, the EA won’t work even during the backtest. 

This is the time when you need a scalping strategy on a significant broker and a failing on another. The trades you have will be ruined if the broker does not have specified requirements for the EA needs. Thereby, make sure to check properly before believing in the words of a broker. 

Unrealistic marketing messages 

There are Forex EA sellers who often promise stuff that seems too good to be true. These include an extremely high percentage of returns for growth like screenshots of profit in millions. However, you need to understand that making such high returns is not that easy. Even experienced traders are not that lucky to gain such levels of returns from trade. A higher than 30% return is recognized as a sporadic return for any trader in a singular month. In case you come across a seller suggesting high returns, you need to identify it rightly. 

Low-quality content on the official website

The website is the first place where most traders will search before investing in a trade. Now, several traders publish very low-quality content about the products on their websites. Try to cross-check these websites and then decide on a singular one that you can trust before investing. Try to discuss with an experienced trader before believing in the brokers. 

Keep in mind the above and you will definitely be able to stay away from scams.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.