You’re surfing around on Facebook, and you stumble across an unusual ad on FB promising you the following:
“A wildly profitable hands-free system that can make you thousands a month in trading profits with a single click of a mouse…even if you have ZERO trading knowledge.”
All you have to do is click on a button and follow the “winning traders” with the highest win rates, sit back, go about your day… and wait to cash in.
Wouldn’t that put your greed glands on overdrive?
Wouldn’t you be curious to learn more by attending their “free” workshop to find out more about how you can effortlessly mimic the strategies of successful world class traders as a sure-fire route to riches?
Wouldn’t this be very helpful in helping you bypass many of the headaches involved in trying to become the next Warren Buffett?
If you’ve answered YES, you’re certainly not alone.
Many too, have succumbed to the irresistible lure of easy riches, only to wind up not only with no gains, but losing a huge percentage, if not all of their capital.
Over the past few months, we have heard countless ‘horror’ stories from victims of Copy Trading, which is also known as Mirror Trading or Social Trading.
As per the firsthand account from one such victim whom we shall name “Mr L”…
“During the free workshop, the speaker(s) described in brief how it is possible to generate recurring income from their referral program, and the possibility of achieving 5% monthly return from their copy trading programme. Members need not have prior knowledge about foreign exchange trading. The speaker(s) kept emphasizing that participants who register for the three days seminar will receive value-for-money materials. It was also emphasised that a reliable system and ground work have been laid for all members who signed up for the three days seminar. The speaker(s) made sales pitch to attract participants to sign up for their seminar with a so-called discounted price, and offer of an initial deposit of $700 that will be deposited to each new member’s foreign exchange trading account.
What the client need to do is to select the Master Trader(s) and authorize the system to copy exactly what the Master Trader(s) is doing. Nobody know who are these traders or their trading strategy apart from their name and avatar that shown up in the system. They do have trade records but nobody know are these trade records really trade by the said person or could be different traders that trade under the same account number. The query become valid at the later stage as the trading pattern is inconsistent within the same Master Trader (suspect is a different trader is trading on that account)
During the course, the organizer reiterate repeatedly that we should trust these Master Traders. These Master Traders are professional and they know what they are doing and no Stop-Loss is required as they know the game well and will have counter measure when the market is going against them. With all the assurance from the organizer, I follow as what was advice been myself is a dummy in trading.
In the first 3 months of the copy trading, technical glitch here and there (total is about 2 months in rectifying and upgrading of system with no trade) with some trading going on and these Master Traders do make some profits. In the day of 7th Oct 2016, there is a sudden dipped in the GBP/USD currency pair and thus wiped out about 50% of my fund as there is no Stop-Loss been placed by the Master Trader!!
Below is my account dashboard.
In this incident, many participant including myself question the organizer on the incident. The organizer been responsible, investigate and get back to all participants few days later. They state nothing was wrong with the Master Traders except that there is sudden dip in the market caused by the “Fat Finger” (human error). The issue was rectified within a minute and the GBP/USD currency pair is back to norm. The organizer sent information and video clip to explain the scenario and emphasize nobody (the organizer, Master Traders or the Brokerage company) is at fault. It is the market that causing the issue and all participants need to abide and swallow the facts that “Trading is RISKY”.
Apart from the explanation, there is no plan in helping the participants to recoup what was lost in that incident. I asked around and learn that many participants got 100% of their fund been wiped out and one of them lost about $50,000 in that incident. Many participants and myself commented that if a Stop-Loss was in place during the trading in the first place, this incident will not happen at all. The organizer just iterated that “Trading is RISKY” and all participants had been warned at the beginning of the course.”
According to Mr D, classmate of Mr L, his experience was largely similar:
“After the course I started to copy the master traders and started quite well and earned about 30% profits for the 1st 3 months. I stared with ratio lots but switched to higher fixed lots when I wanted to earn more profits in a shorter time. Then in Oct due to the flash crash, I suddenly lost all my profits that I gained plus about 30% of my original equity in just one day. Most of my fellow classmates also lost money. The team organized a session to explain the cause of the crash and that our money was lost to the market. The team wanted to help us to recover our losses through a external party but in the end could not proceed due to unforeseen circumstances.”
Watch the full story here:
And if this still doesn’t drive home the point that you should stay away from Copy-Trading, take heed of this last bit of cautionary advice by “M”:
“For a newbie trader, with no knowledge in forex, the idea of copying Experts and making income sounded so attractive. I was immediately hooked and signed up for the not so cheap course with the dream of making money. I was convinced that with so many people signing my decision could not be wrong. I should have known that in this world there is no such thing as easy money. The organisers may have been sincere but it was my money that got burnt eventually, 100% of it. Copy trading is not as easy as it was portrayed. It did not strike me then that the traders we copy do not care about us, they only care for commission.”
Clearly this is just the tip of the iceberg, and we’re barely scratching the surface, but here’s a very simple 3-part litmus test to determine the veracity of the speaker’s claims if you ever attend a preview as such.
Simply ask the speaker these 3 questions…
“Since you claim that Copy Trading is the greatest thing since sliced bread, how much have you personally invested in your own account?”
With all the supposed benefits and unlimited upside of Copy Trading, it only makes perfect sense that the speaker should lead by example and be personally vested by having a substantial amount of capital in his/her trading account. If it’s anything less than 5 figures, run for the mountains immediately.
“Can you show proof of consistent gains from your own account?”
Isn’t this what the crux of the “program” supposed to be about? If the speaker himself is unable to produce at least 6 months of consistent gains by copying the trades of supposed “World Class Traders”, then what makes you think you will succeed?
“Are you an introductory broker? Do you make IB commissions?”
If the speaker says YES, then and he is unable to produce ample proof to back up the previous 2 questions, then the game being played becomes pretty apparent, and you should politely leave the venue, secure in the knowledge that your money is in a much safer place than in the hands of the scam artist.
Hope this helps.
Stay tuned for part 2, where we expose more about the evils of Copy-Trading. In the meantime, make sure you share this article with your friends and loved ones to protect them from falling prey to such a vicious scam.