Managed Accounts…Are They Really Safe???
For awhile I have been noticing an increasing trend of HYIP investors showing interest in managed accounts, typically Forex.
The term “MA” has even been coined as a result of the growing interest in this. If someone said “MA” in a Forex forum they would be referring to a “moving average”.
As a result of this trend, I have seen “MA” services providers and middlemen appearing more frequently in HYIP forums. The market for this is growing and they are stepping up to take advantage of it. This may not necessarily be a good thing. It will likely cause an increase of them and many will form one just to take advantage of people that have yet to be educated about “MA”.
I have seen people ranging from a guy that had a successful backtest on a MT4 EA and thinks he has gold, to an amateur turned IB (middleman) that found a trader and doesn't know what a good trader is and just cares about his IB fees/commission, and then there are managed account services looking for clients.
Here is an example. I recently joined the Udachu Fund forum because I was interested in joining the fund, but that is another story. In the forum I noticed a thread for a managed account service offering.
Here is the title and link to that thread:
Managed Forex Account (100% your control) But high profits!
That is certainly enough to make someone curious. Who wouldn't be interested in high profits? When I clicked the link I was surprised to find there were only forms to apply for the service. Not even something as basic as performance history was present. In fact, I had heard of the trader before. I previously ran across someone offering the same trader under the same conditions….”20% of new profits based on monthly highwater mark” and “3 pips per round turn”!!!
When I asked for more information from the other person offering the same trader my questions were conveniently ignored. So naturally I wanted to learn more details thinking Rod Spiller of Udachu could fill in the gaps. This is normal to want to know more facts before investing. Wouldn't anyone want to know?
Well you can read the thread yourself to see what happened. By page 3 of the thread you will notice people are already investing without knowing any further details!!! I was asking legitimate questions and at the same time offering a little education so investors would think about it before jumping in. I am by no means an expert, but thought I could share what I know.
In the end, I was accused of speculating and criticizing, which I was clearly not doing. In fact, when I posted to clarify I was doing no such thing….my post was deleted!!
Here is proof:
Link to screenshot before the deletion: The Evidence :)
Link to screenshot after the deletion
As you can see, my post is now missing.
I was very surprised by the defensive nature in the forum, especially from Rod himself. As the person presenting this opportunity he should be fielding questions regarding it. When I come across a lack of willingness to provide details and proof I consider this a red flag. It is only natural for an investor to ask such questions before taking the plunge.
I was told in PM that Rod was doing everyone a favor by offering this. I totally disagree. Rod is the IB (Introducing Broker). Think of an IB as a person getting referral income….and yes an IB does make money from this. He introduces the opportunity and is compensated for it. Go to a Forex broker website and look for “Introducing Broker”. An IB makes money whether the trader makes winning or losing trades. I consider this a conflict of interest. In this position he doesn’t need to have your best interests in mind, he gets paid either way.
In addition, someone on the forum said:
“I have seen this guy is working with a few other groups on the internet as well....”
Rod’s reply to that was:
“Be careful because many of these posts people are seeing are not involved with Chris. In fact he has not even heard of many of them.”
Why would it matter? I have seen others using the same trader and broker. Rod is likely saying this to protect his IB income.
The sad thing is many will jump into a “MA” and do so without trading proof or any type of due diligence. Just like in the example above. They will do it simply because it is a "MA" and think they can't lose because the trader can't run with the money. That is HYIP investor type of thinking. At least with a Ponzi we have a chance to use timing to make something from it.
A managed account is real trading and losses do occur. The trader can easily blow-out your account. Let’s say the trader trades your account down to 30% of what it started at and is no longer able to trade it. Then what happens? Nothing! You were told trading is risky. Not a problem for the trader. The trader just doesn’t get a performance fee. The trader had nothing to lose by trading YOUR money. Not to mention the IB that also had nothing to lose. In fact, the IB is in a winning situation. The IB has no money at risk unless the IB has also invested.
In the end, HYIP investors will need to become more educated in this matter if they want to start utilizing managed accounts. Otherwise they will learn some hard lessons. “MA” could be a scam in another form that HYIP investors may not recognize. New types of scams are always being invented on the internet and “MA” could be one of them. I am not saying all “MA” are. It is up to the investor to educate themselves and decide which ones are scams. Know the pitfalls and what the person offering it has to gain as well as their other possible hidden agendas.
Just because it is a managed account doesn’t make it a golden goose. ;)