Live: Funded & Broker Scams to Avoid + Fx & Gold
In today’s webinar, I covered a number of topics. Firstly My Forex Funds (MFF) shut down after scamming over $300 million from clients. They are now being prosecuted by the CFTC so what are the implications for other similar “propfirms.”
The good news is this should lead to greater regulation in the forex sector. It has been badly needed for the 20 years I have been trading. This story was covered in Andis’s article yesterday: MFF A Wake up call for Prop Firms
Secondly, I looked at some of the things to be aware of while choosing a broker. I covered all of this in a lot of detail at the start of today’s live training session.
Then I went on to discuss some stocks that I’m watching to buy & hedge related to metals and Oil. Lastly, some M2 trade sets. Ashley showed some ideas that we could take on the 4HR level as well.
The Earth and Sky didn’t give so many good setups this week and there were only 2. However Ashley explained why you wouldn’t have taken them, so watch the video till the end for that.
Prop Firms are they good or bad?
I had explained in my webinars before, that most of the original prop firms were a Ponzi scheme. They had lots of complicated rules and unrealistic targets to prevent the vast majority of people from winning. The few who did were paid out of the subscriptions from the bigger group. I was offered a “white label” of one of these companies in early 2021. The software provider boasted that “its a great way to make money. Hardly anyone passes. Most try 3 times before quitting and the few who do get through are paid for by the masses. The first time they break the rules they go all the way back to the beginning.”
I declined the opportunity although the biggest company at that time was making around $100,000 a month net!
The business model was very profitable for the companies, but terrible for the vast majority of clients. Since FX2 came along things certainly improved for the client, with much fewer rules and a more realistic target, the others needed to fall in line or lose market share.
MFF has been shut down as they have been caught, among other things trading against the client whilst claiming to be a ECN broker with a direct feed to the markets. This went on for years with unscrupulous brokers, including some of the biggest. However, things have improved in recent years and in the following article there is a good explanation of things to look for if you suspect your broker is cheating: https://www.brokerxplorer.com/article/forex-broker-cheats-and-how-to-anticipate-them-1569
There are also suggestions on how to avoid being scammed and again I spoke about this in detail in the session. You can read the full CFTC report below MFF court order
The hearing is on 11th September.
I have asked the CEO of FX2 if he can join us for a call in the next couple of weeks so he can explain to us a little more about what is going on and if his clients will be affected. You can check out the FX2 link post below. Here is a link to my original article from last December when I introduced FX2 and explained why, despite my cynicism in the sector, I felt that they were legit and trying to create a sustainable business model both for the client and themselves.
This is a recording of the session where we invited the CEO of FX2, David to explain his plans and how FX2 were different:
If you are an American or Canadian client you can have a complimentary call with Justin Hertzberg who is a lawyer and IB who is licensed to give you advice. We are not: US and Canada brokers
Stop hunting is one of the old tricks in a book for a broker. The trade manager VTC on top of all the other benefits hides stops from the brokers. You only have to pay a one-time fee of $99 to own it and there is a 14 day free trial.
Benefits of a funded challenge
There are still some benefits to doing a prop firm challenge. The main one I tell everyone is it helps you to be a more disciplined trader. You will be more likely to follow the rules as you have paid for the challenge and will be more responsible. You need to be disciplined when you are trading a live account and have to treat it as a business. It will also help you to create a track record if you wish to work for a conventional prop firm in the future or trade for your own clients.
Secondly, It helps you to leverage a bigger account size for a small fee. The entry level is only $95 and the accountability alone is worth it in my opinion.
You can watch the full webinar below