Let's begin with a quote:
Vjacheslav Vasiljevich, I think that it is necessary to start learning Forex not with the fundamental and tech analysis, but from introducing various scams (some DCs, brokers and investment funds etc.) to novice traders. Such information is of primary value for any novice trader, even in comparison with your outstanding discoveries in TA and FA, because it can prevent novices from being frivolous about exchange markets. It can also help potential investors to save hundreds of thousands by revealing to them the pitfalls that can make them lose many deposits at Forex after opening a trading account with some scam DC or investing in some scam investment fund. (End of quote)
Academy members wrote me such messages dozens of times. I'm going to lay open to public some information from the closed part of the Academy forum.
The first story is dedicated to one of many topics - special courses (there are dozens of them) taken from the Department of Investment of MF Academy – Forex investment funds… or why 99% of Forex investors go empty-handed as a result of the well-planned actions of some scam DCs and a range of “successful Forex traders”.
Forex investment funds (IFs) as new and (in 99% of cases) scam techniques of robbing investors of their money in countries of the former USSR.
Forex IFs have become a new object of investment.
In countries of the former USSR investors, which are attracted wit the success of the investment funds founded by Soros and Buffet, invest their money in domestic and foreign “traders of natural gifts”… and lose their money in 99% of cases.
How to distinguish a trusted/promising investment fund (the investors will almost definitely profit with it) from a scam IF (the investors will almost definitely lose the money with it)?
This chapter is dedicated to these essentially new criteria and algorithms developed by MF and not described by the classics.
An ideal scam scheme for attracting investors, which is used by some Forex brokers and DCs
The scam scheme is based on the following:
· Preliminary collusion between a DC (BC) and a “successful trader”, who raises money from investors to found his/her own investment fund, and who has definitely opened a trading account with the very DC.
· These scammers know perfectly well investors' demands and needs… Consequently, they make up in advance all the “proofs” and “facts” needed to convince their potential investors of giving them the money. And in 99% of cases the scammers succeed.
The algorithms and stages of the scam scheme.
· Some DC/ broker company uses its internet forum to promote the name of some trader.
· As a rule it is a contest winner, who has increased the contest deposit by 5/10/20 or more times within a couple of months.
· Or the DC and the trader himself/herself “accidentally” decided to share with all the humankind the happiness of winning with the very DC.
· Right after the winning the DC starts a PR campaign to promote the trader (and the DC itself) around the whole internet ( the trader is interviewed many times, then they publish his photos followed by his instructions for novices (without revealing his TS) on how one can and should trade at Forex… of course, with the very DC)
The DC's minimum goal is achieved: the PR campaign shows “the live example” to influence novices' subconscious mind by showing how easy it is for a novice trader to make a fortune at Forex just within a month or two… of course, by trading with the very DC.
· Chen Likui, a Chinese, showed an impressive 61595% return on his investment within a month while trading with Forex Club
· A couple of weeks later some Russian trader set up another record by turning 3000 into a million while trading with another DC called “Alpari”
· In both the cases no facts are given for a thorough examination of these “successful” traders' TSs…Any offers to show the champions' statements are removed from the forums and the authors of the posts are banned
2. If the “name promotion” is a success the trader announces the founding of his own investment fund
· The investors are given an invest password to check the statement of 0,5/2,5-year “real” trading, during which the trader made 2000%-10000% of the initial deposit. (Actually, any sum can be forged in MT4. The main thing is to make the potential investors believe).
· The essence is that the tech support of many trading platforms (for example MT4)… can change any details of any trading statement created “for investors” (the compliance with money management… the location of stop-loss orders and other data)
Have you imagined yourself an investor?
· The trader's name is “promoted” and well-known
· The “respected” Forex broker gives “the history statement of the trader's account”, which confirms the deposit increase by 50 times for the 1st year and by 70 times for the 2nd one.
· It is easy for a potential investor to calculate the increase in profit from a 20000$ investment to a million $ in 6 months ( after the deduction of the commission for the managing trader)
· At the same forum somebody “accidentally” shares his/her “brilliant idea” on how to get the money for those who do not have spare 20000$. He/she tells everybody how he/she borrowed a credit with some bank, invested it earned an impressive profit, paid back and “found his/her feet”.
Are you sure that you can resist such temptation as an investor?
Doesn't your common sense prompt you that:
· Anyone who managed to earn millions of dollars within 2 years doesn't need your 10-20 or even 100 thousand dollars, especially when it is necessary to keep the books.
· Or why MF-V Academy traders have difficulties opening and closing positions (for example in Alpari) as soon as their deposit exceeds 8.000-10.000$, yet some other trader can increase his deposit from 15.000 up to 1.000.000$
· One should always compare one's own suspicions born out of the life experience (and common sense) with the opinions/conclusions of independent experts (a separate special course of the Department of Investment is dedicated to this). If they coincide than it is a scam.
3. The “successful trader” collects the money for the investment fund, pays out the dividends to the first investors… and a classic “pyramid investment scheme” is created.
· One day the DC/the broker announces the total loss of the IF deposit, the “successful trader” simply vanishes into thin air (as it is possible to manage a trading account from any part of the world, the technique of disappearing is not that complicated).
· According to some unofficial data the missing trader earns from 10 to 25% of the money lost by the investors, the rest goes to the dirty DC/broker, who is not responsible for “the Loss” (yet it is very doubtful whether such traders get the money as the sums are huge, yet nobody wants another unnecessary witness).
4. The DC/BC personnel will be doing all their best to help the police investigation and the infuriated investors (they will provide the police and the investors with all the data the trader provided in his/her turn while opening the account including the history of money circulation through the trader's account etc.)
· The DC will also let the investors talk about their misfortune at the internet forum, they all will condemn the “unworthy person”… and they will definitely mention the diversification of risks (they say “don't put all your eggs into one basket”), i.e. it is necessary to invest in several investment funds (I hope there is no point in explaining where those new “brilliant traders” open their “real” accounts to start their own investment funds. Of course, with the very DC).
5. The scam scheme will repeat itself once again
· The DC analysts will tell us at the forums that “Forex is unpredictable”, “No TS works well forever”, “Everyone saw that the TS was working …and suddenly stopped gaining profit”
The investors won't feel better after such phrase-mongering.
The main question is: Is it possible to save the investment capital from this (and many other) scam scheme of Forex investment funds? (They are thoroughly studied at the Department of Investment of MF-V Academy)
The algorithm/know-how of the “ideal” work scheme of a Forex investment fund by MF
It is the guarantee of the money return that is primary for investors, not the percent of the gained profit.
· If the investment principles published on the Net do not work, then they are written for investors either by amateurs or by scammers – forget about then if you do not want to lose your money.
· Try to define your own simple and clear criteria. Below we are going to provide you with the basis of them.
Preliminary check of a Forex trader as an object of investment.
1. Checking by the potential investors of the managing trader's account history at least for the last 2 years (the methods of checking and the criteria of revealing scams are given in a separate special course for investors).
2. Providing the potential investors with an access to the trader's real-time trading by giving them an invest-password to the real trading account, of course, the access should be limited in time (1-2 weeks)
· It is very important for the investors to make sure that the trader really trades and profits and that the inner logic of his deals coincides with the one of the deals in the history statement (without the DC making up this history with a weekly update).
3. The investor should clearly understand the trader's TS.
· The 1st wake-up call for the investor is the trader's NON-disclosure of the essence of his/her TS.
If the “successful” trader's TS is a “black box” then it is:
· Either a TS of little competence (some simple secret), which can stop working any time.
· Or it is a 100% scam, created for investors by some DC/broker.
We can say it because any scam implies:
· The aura of mystery (reservations, uncertainty and incompleteness) concerning the main question (the TS) in order to lead the conversation away from the specifics of the TS and current trading (the TF that the trend belongs to, movement targets, S/R levels, stops etc.) and to emphasize the manipulation with human emotions, weaknesses and instincts.
· An example: The Google advertisement of some IF doesn't contain a word about the TS… 1700% of annual income for investors… an invest-password to the trading account (in MT4 anything can be forged)… calculate yourself how much you will earn in 2 years if you invest 1000$ - it is a childish task to check the investor's quick-wittedness.
A psychological description of a scammer - by MF – it is an evident contradiction between “an artistic image of a scammer” and the real prototype of a successful businessman, which the scammer tries to simulate in public with failures. (You can find the details of MF's algorithms on the example of the GST investment fund founded by Robert Fletcher, which were written long before the IF was recognized as a scam and its founder Robert Fletcher was arrested
4. The examination of the trader's TS by 1 or 2 independent experts.
· A trading system shows the trader's style, the logic of the TS being almost invariable
· By examining the style of the TS on can find many things about the trader, including even those that the trader is afraid of admitting to himself/herself (the knowledge of TA and WA, money management, the psychology of trading, fears, excitement and many other things, an objective picture of which any MID/LONG-term investor must see).
Draw an analogy - for example: Are you going to invest millions of dollars in some medic student without checking his/her discovery by experts? If he/she prevents the experts from checking the discovery, are you really going to give him/her the money, which he/she so persistently asks you for?
5. Checking the broker (there is a range of DCs/BCs, including foreign ones, whose info about the traders' accounts cannot be trusted)
An ideal model for serious/big-scale investors is the following:
· Opening a real trading account on your own behalf with granting the access to the trader
· Opening an account with another broker (to avoid the fact of collusion between the broker and the trader)
· If the trader does not want to leave his “home” broker to work with another one than the investor should doubt whether the trader is worth working with (If the quotes are identical with all the brokers and if there is no fundamental difference between the spread and commissions, than you deal either with an amateur or a scammer).
By doing so investors can secure the funds:
· They can monitor the account (the broker won't be able to make up the history statement once a week/month/quarter).
· They avoid the collusion between the trader and the broker.
Mid/small-scale investors have to deal with investment funds
MF gives the criteria of choosing a promising Forex IF and excluding scammers.
The model of an “ideal” Forex IF and the search of “potential black holes” (where the investors' money will disappear) through comparing any IF with the ideal.
The criterion by MF – it is necessary to do the following:
· To define the organizational, ideal (from the legal point of view) model of functioning of the company you want to invest in.
· To compare the model with the ideal, consciously defining the potential “holes”, where your many can disappear for different subjective and objective reasons
· To define the algorithm of “accidental” coincidence of the “potential holes” for investors (as a rule, scammers are overcautious at each step of pay-out through these “potential holes”).
MF defines the following hidden algorithms of the problems – the “potential holes” for investors (each of them can eliminate your funds):
· Organizational (built into the organizational system of the company)
· Financial (built into the system of money flow including paying the money back to the investor)
· Legal (built into the system of the relationships between the IF and the investors)
· Safety criteria (a separate special course) of IF and investment.
· The issues of the broker company that is dealt with
· The risks concerning the country the IF is registered in (for example, raider attack or the arrest of all the accounts by the tax inspectorate).
· The tech issues of trading (concerning the TS, MM, trader psychology)
· Tax issues
· The match of the “advertised” and the real image of the IF.
· The behavior psychology of the IF managing personnel and many other issues.
On the Academy moderators' request I explain some decoded points/propositions through the following things:
· The algorithms/know-how by MF of the ideal scheme of Forex-IF functioning
·
The algorithm/know-how of the “ideal” work scheme of a Forex investment fund by MF
1. Determining a loss limit for the IF (15-20%), on reaching which the IF stops functioning and the money are returned to the investors (80-85% of the invested sums). Consequently, the owner of the fund is interested in depositing his/her own funds when the IF suffers losses in order to save the IF from closing.
2. Opening an IF with 2 large-scale/serious brokers:
· Who could guarantee the return of 80-85% of funds to the investors and the stop of trading on reaching the 15-20% margin call through tripartite agreements (the broker/the IF owner/ the investor).
· Whose brand and many years of working experience could eliminate (reduce to the minimum) the possibility of criminal collusion between the broker and the IF owner.
3. The transparency of trading – the access for the investors to the total balance of the account with the broker (the ideal variant would be the access to the current deals of the IF…but no trader would do this and it would be right as the investors could copy the deals).
4. The clear division of the percent ONLY from the IF profit within a strictly defined time-period (not the 7-10% guaranteed to the investor)
· For example, the dividend pay-out takes place once a month/quarter (with the possibility to check the balance of the IF account with the broker) – between the IF owner and the investors
· Not less than half of the trader's income is reinvested, thus increasing the guarantee of returning possible losses to the investors as soon as the stop of trading takes place at the point of 85% of the initial deposit.
5. Sharing risks between the investors and the trader. For example:
On the margin call going off (85% of the initial deposit) the trader guarantees the 30-50% return of the lost money to the investors at his own cost and within the predetermined period of time (i.e. 4,5-7,5% of the investments)
Applying the MF criteria of the ideal Forex IF.
Thereby, the given MF algorithms/ know-how imply the following:
· The risks are shared between the IF owner and the investors with both the sides clearly understanding the riskiness of investing in Forex.
· The IF owner/ the trader realizes the responsibility while he/she clearly understands the ratio between his/her own capital and the invested sums accepted for managing.
For example:
· If the invested sum is 1.000.000$ then the trader's personal capital must be 45-75 thousand $ (150.000$ x 30% or 50%)
· If the trader doesn't have such an amount of money as a guarantee… it is too early for him to handle the managing of a million $.
· If he/she accepts the money to manage it… the investor should think it over very thoroughly (there cannot be any miracle, if the trader didn't manage to earn 50-70 thousand $ with his/her own money by trading with 1-5 lots, then he/she will never profit at Forex with 100-200 and more lots).
The non-loss investment in Forex IFs.
The conditions:
· The broker's guarantee of defining a 15% loss limit for the IF.
· The trader's guarantee of compensating for up to 50% of the loss limit
· Introducing the percent of profitability (dividends) in accordance with the loss limit.
· After getting paid the dividends 1-2 times the investors will not have a chance of suffering losses any more according to the loss limit. Simultaneously the IF owner's/the trader's share grows as a guarantee of compensating the investors for half of the loss according to the loss limit.
For example:
We have a 1000$ investment
The loss limit is 15% (7.5% of which must be compensated for by the IF owner on stopping the trading as a result of a 15% loss). Then follows the chart of the investment growth and the reach of the non-loss with different percent of the IF profitability)
· 5% per quarter
· 10% per quarter
· 15% per quarter
· 20% per quarter
On condition of reinvesting the money for 1-4 years:
· 4 different colors are used to mark the numbers of the investment growth for each quarter on the chart
· Each point contains 2 numbers – the minimum and the maximum.
· The maximum – the investors withdraw the profit or the whole invested sum on condition that the “promising” IF continues working.
· The minimum – the investors do the same thing but after stopping the trading with a 7.5% deduction while making plans for the next 4 years.
The data:
The charts:
The investment growth on condition of reinvesting
Doesn't it look impressive?
Then think about why IFs follow another way, opposite to the criteria by Masterforex-V and to investors' interest… and you will understand many interesting things.
Let's cite below an example of such an IF – ALVIBU. The MF-V Academy rector's office warned the investors about the scam traits of this IF 10 months before its bankruptcy and closure.
The scam traits of the ALVIBU investment fund.
Almost all the rules were broken:
· Instead of a foreign broker company, the account was opened with the North Finance (Brezan) dealing center, whose reputation is very doubtful
· The investors didn't get the access to the IF total balance with the broker.
· Instead of distributing the stated percent of profit… 7-10% of profit was credited every month (Wouldn't it have been more wise to raise a credit with some bank at the interest of 15% per year? It turned out that it was the investors who had borrowed from banks and had invested the money in ALVIBU.
· The TS wasn't logical
· The absence of any guarantees of returning the invested funds to the investors (the only guarantee was given by the WebMoney electronic payment system, which guaranteed only blocking the current balance of the trader's wallet)
· The image of ALVIBU's, used to introduce himself to others, didn't coincide with the one that is typical of such level of a person, including the financial state.
· Many other things
If the IF owner and his investors had followed these recommendations:
· Then the max problems would have been the loss of 7.5-10% (for example, one of the Academy members lost 70.000$. If he had followed the algorithms introduced by MF then max loss would have been just 5.000-7.000$). I hope you agree that such a loss is not critical or fatal for an investor.
· If the IF had paid the dividends to the investors at least 1-2 times, the investment would have turned into a non-loss investment.
· In order to understand the importance of these MF algorithms, draw a parallel with Forex trading, where traders always use stop loss.
Why does investment need other rules to follow? The results of the absence of a stop-loss are the same both for trading at Forex and investing in it.
The relationships between traders and investors.
These relationships resemble the ones in the family:
· When everything is OK then nobody has a concern in them
· When some force-majeure occurs, all the inner contradictions are revealed, the consequences of which must be defined and taken into account by investors in advance).
Let me cite an example, which I took from the fellow lawyer's experience and which I cited many times when having private talks with investors.
A married couple liked sexual sadomasochism. It was their personal matter as long as everything was fine. One day the wife accused her husband of sexual assault (violation) and the husband got a long prison term while the wife got his business.
The relationship between investors and many IFs resemble the mentioned story.
· First both the sides break the optimal rules of relationship “by mutual consent”.
· Then the investors are amazed at the situation that happens to them.
Partners' success can be achieved only on reaching the balance of mutual interests. When the balance is absent then it is the way to the bankruptcy at least of one of the partners.
The 1st practical lesson by the Department of Investment about Forex IFs.
Currently, there are no “ideal” Forex IF that could satisfy all the above-mentioned requirements by MF.
If you apply the criteria developed by MF then you will easily find the difference between the existing Forex IFs.
· Some IFs have vivid scam traits. That is why their bankruptcy… is a matter of time.
· Other IFs do not have such traits although they do not satisfy all the MF requirements of an “ideal”/promising IF (their analysis is one of the concerns of the Department of Investment).
Try to tell on your own the 1st type from the 2nd one. To perform the task, do the following:
1. Find some Forex IFs on the Net
· Start from the history of the broken IFs – Borishpoltz, Kalinichenko and UTGFX, Wega Trade, FOREX INVEST LTD, TIDES FINANCIAL MANAGEMENT LTD, GST etc. (pay attention to the time of discussing the IFs… it was long before many IFs were found guilty of fraud by law-enforcement authorities)
· Active Forex IFs
2. Carry out the PRELIMINARY objective analysis of these IFs from the viewpoint of the algorithms by MF.
· Start from the “potential holes”
· Then analyze the guarantees of returning the invested funds
· Finally analyze the percent ratio of the investors' profit to their possible losses.
3. Try to understand the MF algorithm of detecting scam IFs in real time
· On the example of the IF founded by Borishpoltz, including his complaints about the MF criteria, which spread panic among the investors)
Let me cite a quote:
Well, Either I didn't get something or you , Vjacheslav Vasiljevish, do this damage on purpose. Victor made a clear offer to proceed to his new program of trust managing, where only you decide how much to invest for what period of time and when to withdraw the money. As I understand, these conditions are more profitable… by the way, you will not have to wait till he transfers the money back to you, as you decide it on your own. (End of quote).
Time as an objective judge put everything in its place.
It is very important for Investors (as opposed to analysts, historians, policemen) to find out the truth BEFORE the criteria by MF are confirmed (become evident), not AFTER it.
Learn a lesson to avoid losing your money.
For investors the main lesson is to define on their own the following things:
· First the MF criteria of a promising IF, which could be invested in.
· Only then start searching for the possibilities to invest in the IF.
4. Draw a conclusion: how you, as an investor, can do the following in real time:
· To sort out scam IFs and forget about them forever.
· What IFs are worth paying attention to in order to let experts carry out its further detailed analysis.
Test/practical task 2 – Modeling the trader's behavior after losing the IF money.
· At the independent forum of Masterforex-V Academy a test was performed. It was called Modeling the trader's behavior after losing the IF money.
· Traders from different parts of the world were offered to imagine the following situation:
“Imagine that you took a big amount of money from the investors… lost more than 50% of it and realized that you will never be able to return the money to the investors… What are you going to do next?”
The aim is to get an objective understanding of how a trader is going to behave in the situation when there is no chance of winning back the lost part of the invested money (to disappear with the rest of the money, to give himself/herself up to the investors, to start founding a financial pyramid and inviting new investors to the crashing investment fund).
Then you as an investor will remember the results of the vote for the rest of your life.
A clever person knows how to solve a problem. A wise person knows how to avoid it.
Practical task 3 – the criteria of a promising Forex IF, which can be invested in.
Before investing in Forex IFs it is necessary to develop distinct criteria
· 1.
· 2.
· 3.
· ...
· 8.
· 9.
Dividing them into sub-groups basing on the degree of importance and on the MF criteria of the difference between promising and scam IFs.
If a specific IF satisfies all the requirements – study the investment conditions offered by the IF (agreements, statements, money management, investment period etc.)
If not – forget about this IF as an object of investment. Let others be its victims – those who trust their intuition and the conventional criteria and rules of investment (which are used by scammers to the full), not the new algorithms by MF, using which it is almost impossible to be cheated.
Look for the details at the Department of Investment of Masterforex-V Academy.
You can discuss the chapter with the Academy members who study the SBP techniques created by Masterforex-V by following the link
Part I - Delusions of Forex Market (typical error 97% losers traders: how and what to change on the way to success in Forex) >>
Part II - Masterforex-V's Trading System and new technical analysis.>>
Read more
Book 2. Technical analysis of Forex in the Masterforex-V Trading System >>
Book 3. Masterforex-V “Points of opening and closing of positions at the Forex market (basic course)" >>
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