The Perfect Expert Advisor Scam
In recent years we have seen more and more EA’s (expert advisors) with extraordinary historical performance, being listed for sale. Several thousand percents return in profit isn’t unusual, and a price tag of $1,000 or more is seemingly the new normal.
To a layperson, this might seem ludicrous because;
Everyone knows that high return equals high risk and who would pay top dollar for a high-risk strategy; and even with a high-risk strategy, 1,000% return or more, in a short period, smells like a scam!
There is however, one key aspect here, which changes everything; proof of historical performance, via MyFxBook. This is one of the most trusted platforms when it comes to verifying past performance of any trading account.
The reason for this obvious; faking it via MyFxBook isn’t easy. It might be possible, but trust and security must key aspects for MyFxBook so unless you are an educated hacker with inside info, you probably won’t stand a chance.
So a sales page for an EA, with amazing historical perofrmance, and a link to a MyFxBook account to verify the data, is basically a license to print money.
Unfortunately, the end user – the client purchasing the EA, often end up in a horrible situation;
– Paid lots of $$ for the EA
– Spend time going through instructions and settings things up
– Paid money for a VPS to have the EA running 24/5
– lost money as a result of the EA trading
– Confused and disappointed (at best) with this experience
But but but… The EA is supposed to make money – not lose them. Right? What’s wrong here.
Well, the good old rule of thumb that says; If something sounds too good to be true, it probably is” – that’s still true today, and specially in the Forex / EA market.
But how is this possible, when we have seen verified profitable historical performance on connected live account via MyFxBook?
Well, it might be close to impossible to fake the results on a MyFxBook account, but its very possible to fake the data going into your MyFxBook account.
If you, like the majority of all MyFxBook clients, is a “regular” retail trader with an MT4 account with one of the many brokers they support, you won’t be able to do this. The data from your MT4 account is basically mirrored in your MyFxBook account, and you won’t be able to amend this data in any way; in your MT4 account nor MyFxBook account. But your broker will.
But hows does this work exactly? The ones selling these outrageously “profitable” expert advisors, aren’t brokers – or are they?
Two options come to mind;
– Stat a brokerage with the sole purpose of manufacturing a trading account with a very profitable history and use this to sell an expert advisor.
– Connect with an existing broker and convince them to manufacture a profitable trading account.
Does this sound far fetched? Alright, well let’s take a look at one example that looks more than suspicious.
EA: Broker Arbitrage
An EA hyped and promoted by everyone back in 2014. This EA was supposedly created by a guy named Mark Reid. It has an astonishing historical performance of 439,236%!
The account is still active, although no new trades have been entered for a long time. You can see the whole thing for yourself, right here. Below is a screenshot of the MyFxBook account where there are two details to pay attention to (indicated by the two arrows)
First of all note that the performance has only been going on way for the whole period up until august 2014; UP. Brokerarbitrage.com was according to internet archive, seen online for the first time, in the middle of September 2014. Note that this isn’t necessarily accurate, but certainly not too far off, either. Either way, the EA was being promoted just around August 2014, and right after this, the impressive performance came to an end, and started to drop.
Why is that? Well, you can fake historical data. But as soon as the first copy is sold, the client would expect to get the same or at least, very similar, deals executed on his platform. Because of this, the option to amend historical loosing deals into profitable ones, end with the first sale.
Another thing to note, is the broker connected to this MyFxBook account – Deutche Trading. I never heard about that specific broker before stumbeling upon the Broker Arbiteage EA. So I took a closer look and lo and behold, Deutche Trading has a Russian website – or, more correctly, Deutche Trading had a Russian website; not that its been chnged to a german one, its just been shut completely down. Funny thing is that the first time Dethcne Trading was around online, was jus a couple of months prior to the release of Broker Abitrage.
As mentioned above, the time this broker was seen online for the first time is suspiciously close to the released of the broker arbitrage EA. If you search for http://deutsche-trading.ru in the wayback machine (internet archive), you will see the following.
Not only was the broker created just shortly before the release of the EA Broker Arbitrage, but it was also shut down a couple of months later. Again, the stats from Internet Archive wont be completely accurate, but they do give us a hint as to what happened when.
Another factor that points us in the direction of this being a scam, is the forward test listed over at Forex Peace Army. You can see the test here. Now before you get too impressed with the results, make sure to read the fine print.
We appreciate BrokerArbitrage.com sharing their EA performance on a LIVE account with ForexPeaceArmy.com traders community!
Please address ALL questions regarding the settings of this EA to BrokerArbitrage.com support. The FPA is monitoring this EA using the investor password and has no access to the settings being used.
2014-08-11 Broker Arbitrage Real Test stopped by the FPA due to the questions raised regarding the previously unknown broker, Deutsche-Trading. The FPA has invited BrokerArbitrage to select a better known broker and submit a new test.
2014-06-04 Broker Arbitrage Real Test started with help of Investor Access.
The reviews listed over at ForexPeaceArmy goes hand in hand with all the details and basically highlight this as a definite scam.
Now if you think Broker Arbitrage is the only example with this kind of sketchy setup, you would be wrong. Keep in mind that even with a accurate historical performance, this isnt any indication of what is going to happen in the future – it’s merely data of what happened in the past.
If you are thinking about purchasing an Expert Advisor, make sure to doubble check everything before you pull out your credit card.
Have you ever been scammed with an EA? I would love to hear your story. Drop a comment below and share your thoughts.