If you're like me, you've probably heard of Myfxbook and know it as a social trading network and an automated trading platform
, period. Maybe you took part in one of the contests organized by Myfxbook and sponsored by various large brokers like FxPro
. But I personally admit I had never thought of the fact that Myfxbook is a very good method to prove how good a trader you are or check out how someone is doing. I know this probably sounds a lot less exciting to you than it did to me, but I'm firmly convinced that any Forex rookie needs a good teacher or at least guide to learn well. The problem is, there are a lot more failing (or at least flailing) traders out there. So how do we tell the good ones from the bad?
This is an issue I saw explored while wasting away my precious work hours in idle browsing of popular Forex forums. A very well-spoken member of one such forum raised this completely valid question and used Myfxbook as an example of the ways newbies can tell which gurus, leaders, signal providers, teachers or whatever you wish to call them are just not worth the effort and money invested. Here are the 10 red lights you need be wary of when someone gives you their Myfxbook account as proof of their performance:
1: “Track record verified”
A green tick next to the “Track record verified” at the very top of the account is an indication that the information provided by the account holder matches what the brokers submit to Myfxbook. It means that the displayed trades, deposits and withdrawals have been confirmed by the broker. It also means the account is real and not just a demo.
2. “Trading privileges verified”
The “Trading privileges verified” is another bit at the top of the account that needs to have a little green tick next to it. This means that the person giving these results as proof actually has the rights to use the account for trading. Basically, this is a way to prevent people from passing an account off as their own after they have obtained the holder's investor password somehow (for example, by pretending to be interested in seeing their track record).
3. Real broker
When Myfxbook started out, the list of supported brokers was pretty short. At this point however, practically every MT4 broker is supported. Each trade executed is verified via a MQL4 server. In order to keep track, Myfxbook has listed specific servers as belonging to a particular broker. However, it is possible to set up a “fake” server that acts like an MQL4 one to provide trading results. Since there is no actual broker behind the server, it will be listed as “Other (MT4)” and will have no green ticks to verify points 1 and 2.
4. Gain and Absolute gain
“Gain” here means the gain from the initial deposit. “Absolute gain” is actually the overarall return on investment (ROI). The “Gain” part can easily be manipulated if you put a really tiny amount as initial deposit, say $1 for example. Do this, then add another $100 and make $100 more. Absolute gain will be a bit under 100%, but the Gain will be 100 000%. Pretty impressive, isn't it?
5. Custom start date
I think this really requires no explanation. Being able to pick a custom start date for the results displayed in your account means you can just pick your best moments and no one will be the wiser about all your failures.
6. Real account
As I already mentioned in point 1, it is possible to be tricked into thinking what you're looking at is a real account, when it is actually a demo. This is a pretty big deal, since traders behave very differently when risking their own funds and when they are just messing around with fake money. Also, don't forget demo accounts tend to execute orders a bit faster than rel accounts, since Metatrader 4 (MT4) may lag slightly in times of high volatility. Though we are only talking about a matter of seconds (or less), there are some trading strategies that can only work under demo account conditions. If you choose to follow such a trader, you'd find yourself losing money due to slippage and requotes, while the demo account trader profits.
It is possible for an account holder to manipulate their equity curve by not closing a trade, since trades don't appear in the Myfxbook account until closed. However, the drawdown tab will lay all trades bare. For example, seeing a trader's drawdown regularly drop as low as 60%-80% is definitely not a good sign. Since the side panel of the account only shows maximum drawdown, the tab is a better choice here.
8. Account age
It is fairly easy and frequent to find an account that has performed well for a couple of months and then gone bust. That's why you need to look for a longer trading history – it's harder to fake success over a longer period, say two or three years. Anyone who remains profitable longer is a Forex master by definition, of course.
Think about it – in itself, Myfxbook is meant to be an independent verification service of a sort. Why would anyone use a screenshot, if not to dupe you? Even the simplest of software can be used to alter a screenshot and make any account look profitable. It makes completely no sense at all to go through the trouble of using Myfxbook, and then providing a screenshot instead of the actual account.
10. Open account history
I think this one is pretty obvious. An open history means you can see everything that went on in this account and decide whether you want to trust this person or not. Of course, it makes sense to hide current trades (after all, no one wants to be copied without payment), but there is no legit reason to keep your overall history closed unless it is to hide crappy tactics like overleveraging, holding onto losing trades, doubling up on trades, etc. The history is also where you will see the age and performance of the account over time.
Feel educated? Good! Though these points may seem like the last thing that should be on your mind when you start to trade, don't ignore them. Never forget the success rate in Forex is quite small and if you want to be part of it, you need to be alert and think of all possible things that may go wrong. If you've decided to trust someone's signals or teachings, you must first be very sure this person is worth their while and not just another hack. Trade smart and stay safe!
Myfxbook is a social Forex community and online automated analytical tool for Forex trading accounts. It allows tracking, comparing, analyzing and sharing trading activity with fellow traders. The tool can also be used for improving trading skills and even publishing a trading account statement.