GFT Demo Account a Scam?

Beginner Questions
1

Hi,
I am new in Forex trading and I have just opened a demo account with GFT. What I am wondering now is why am I just winning? I made USD 2K over the past 48 hrs and am wondering if the GFT Demo Account is for real.

Or was I just lucky?

OK, here was my strategy so far.

  1. I only traded when the strading did not have much movement i.e. not at the beginning of sessions.
  2. I only traded major currency pairs (USD/JPY/CHF/GBP/AUD) and never more than 200k at any given time.
  3. Immediately after entering a trade i set the exit to 10pips
  4. i checked the 5 min charts, used basic bollinger bands, Dinapoli, Arron Forcast Oscilators… but really only to give me an idea on how the trend is going.
  5. If the trade went in oposite direction… I just let it ride out… hoping it would come back. basically believing that these pair could not wipe out my equity an in a sideways move they would eventually come back. (I only had 200k max positions open at any given time.

Often when I saw a trend I was in and out in 1-5 minutes.

Here are my other questions…

A) Does this strategy really work in the long run?

B) For 10 pips scalping… do all these Charts and technical analytics really matter that much? By the one has come to the conclusion that there is a trend… its probably already too late for a scalper…

Any comments or views would be appreciated.

Thanks

2

Demo accounts are often different from live accounts, spread can be different, execution is deffinetly different, and more often than not feed does differ.

I would be careful of trading during hours that do not have much liquidity because there usually is no real direction to be found, and if you do make enough money to start trading big lots you will start to get slipped on both entries and exits.

3

There is a really simple answer: YES.

You don’t state how many trades you took over the 48 hour period but I’m going to guess that it was nowhere near enough to provide any sort of statistical proof that your trading approach has a sustainable edge.

If you never have any stop losses (as stated in point 5) then you are guaranteed to wipe out at some point in the future (i.e. you have no risk management in place at all). Therefore this strategy will not work in the long run.

Noone can answer this question for you. Charts, TA, using fundamentals: it all comes down to personal preference. Only you can decide what works for you.

4

Let me see if I got your situation, you are new and you are trading for real? I don�t get it, is just a demo or a real account?
Also I think you are really newbie, so you haven�t read enough to understand the market and the indicators you can use for 5 min chart.

5

Just lucky would be my guess. My first demo I forgot to close a trade and came back to it, from another demo, three days later and it was up +900 dollars.

Just use a demo to learn the nuts and bolts about the platform and give you a feel for putting in orders and experimenting with strategies.

There probably are quite a few demo’s around that are set up to make gains seem easy. Hang around the newbie forum long enough and you will happen upon dozens of forex traders that get rich in demo mode, but lose their butt when they go live.

6

When I first started trading, I demo traded for six months with GFT.

You might be surprised to hear that GFT runs their demo accounts on a separate server than their live accounts; however, this isnt for the reasons you may think:

First of all, the spreads and quotes are exactly the same on demo and live. Order execution and chart loading time is actually much worse on demo because they have so many people demo trading on the demo server.

The live server is much faster as far as order execution goes.

If you just cranked out 2k in your first week trading with GFT, your broker is the least of your worries I guarantee you.

Here’s what you need to worry about:

In my very humble opinion, the absolute worst thing that can happen to a new trader is to come in and be wildly successful right off the bat.

Why? Let me illustrate with a story,

John gets interested in Forex trading suddenly after stumbling upon babypips.com and reads the entire school of pipsology two times. He then starts trading and is very successful, he makes more than he has made at his day job in a week his first day!

“Wow”, he thinks, this is easy! I can do this forex thing.

Unknowingly John has just experienced a run of good luck, but goes live the next week anyway. He promptly blows his entire account in the course of two days receiving his first margin call.

John quits forex trading and spends the rest of his life telling anyone who mentions the markets that its gambling and that all of the brokers are crooked.

Get the picture?

My post is not meant to discourage, but to warn you against becoming John. You CAN do this! Your just gonna have to work your butt off every day and never give up. Be prepared to demo for 6 months to a year. If your here for overnight riches, your money would be better spent buying lottery tickets or at the casino.

Happy pipping.

Added: There are many traders out there who will tell you to go live as soon as possible. I am not one of those traders and will not change my opinion on this. If I had traded live early on, I would be dead, because my wife would have killed me for losing all of that money. You will think you have this figured out MANY times, then have to eat humble pie.

7

First of all, I am still in Demo mode and I agree that I probably just had a lucky run. Still, while scalping I don’t see too much value in analytics if you are only in for a few minutes.
One way to avoid to get blown off with trades that go the wrong way is maybe with hedging at -200pips. But my reasoning is the that If I never have more than 200k of any currency in open positions then the move has to be really big to loose USD10K and get a margin call. On a 100K position … to loose 10K the the currency needed to go 10% in the oposit direction which is unlikely to happen over a short period of time and if it does you make money with that trend as well.
What I am trying to say here is that if you can leave that bad trade in as a longterm investment then (provided one has the cash) it could work out as most of thes currencies will over time level back or get close to that level. (1-3years)

I may start trying this with a mini account first.

Just a side note here: I am not a gambler or one that is too greedy. If I can take $50-100 in profits I will take it immediately or if I see that I am in a trend then adjust the exit signals constantly to protect that profit.

8

Man, straight up, keep using the demo account and do not go live trading anytime soon !!

I asked the exact same questions as you only a few months ago. I will admit it, I am as fresh as can be to Currency Trading [U]but[/U] I will take my time to listen and learn to ensure I will not fail. From what I have picked up in the last few months is that people like you and I [B][U]NEED AND MUST[/U][/B] learn everything about everything in this game and never stop. We must continue to learn throughout our entire Currency Trading days as the market is not as simple as scalping for 5-10 pips off the 1 or 5 minute chart

My situation is I thought I had a sound system to scalp off the 1 minute chart and it does work sometimes, but I will always look to improve and listen to advice. The truth is this game has no winning plan and everyone who says it’s a hard road to riches is giving million dollar (or life saving) advice

I doubt GFT is scamming people with their demo account. I might be wrong but I’m sure they are one of the biggest brokers in the game and I know first hand they provide an excellent service. Any broker that’s regulated (research that) should not be scamming anyone, but as other people in this thread have said, demo accounts may vary slighty from live accounts

I have a spare $1,000.00 waiting to turn into $1,000,000.00 in Currency Trading, it’s just sitting in my bank account waiting to be put to the test, but after 2-3 months I’m still not confident yet and don’t expect to be until early/mid 2009

I guess what I’m really trying to say is read and process [B][U]EVERYTHING[/U][/B] you can that comes your way about Currency Trading and especially the negative side of things. I’ve had so many of these exact replies that have burst my bubble on making quick cash, but I take them in a positive way. Carry the information given to you into the next decision you make. Always be aware that you can loose everything so fast, but if you are wise and take all the advice you are given and learn all you can, you can make so much more. Be patient and set yourself up to be the King of Currency Trading, not the joker

I mean everything I say in the most positive way possible

Get your money man !!

[B]C.R.E.A.M. - Cash Rules Everything Around Me[/B]

9

To be honest… if you only have a $1,000 to spare then I don’t think you will get anwhere far and fast. As the saying goes Money makes Money :slight_smile:

See, here is the thing (and my theory when it comes to scalping).

Unlike stocks… the major currency pairs will never loose 20-30% overnight.
In the 5-60min scalping you looke at the price swings that happen 10-20 pips, and there are quite a few of these. In a stable market thus it is quite predictable looking at basic charts which direction the price will swing… but I don’t believe in automated trading and thus you would need to sit concentrated in front of your screen ready to pull triggers.

When it comes to money management…
Lets say a currency drops 2-3% per day you will never get exposed if you have enough to cover the losses. So on a Mini Account you would need about $2,500 to stay afloat.

20% on 10k = $2k but that would normally take 2-3 month… and there are normally periods when the currency recovers and offers you a way out. But even then… you could just keep that position as a long term investment till the currency recovers. (6-12 months)… and hopefully you make some money with other trades during that stretch.

If you are going in with only $1K, you will be dead in no time.

Another key to success probably is to never have more than 1-2 open positions. … and really stick with the major pairs.

Anyway, thanks for your reply and good luck.

10

Let me add my spin on this one:

If you think of your account in terms of dollars (euros, pounds, etc.) you will be dead in no time.

If you think of your account in terms of percentages, and only risk a small percent of your account at once, you will either eventually be profitable or last a very very long time before going broke. I suggest risking no more than 2% of your account at once.

2% of 1,000,000 is $20,000.00

2% of 1,000 is $20.00.

Either way, it is still two percent. Dollar amounts should have little to do with the way you trade your account.

The only reason most people fail who go into Forex with 1k is because they are newbies. It has nothing to do with their financial backing. You can loose 1 million just as quickly as you can loose 1 thousand.

The only way $ amount will matter is if you have such a small amount that you can not trade few enough micro lots to risk 2% of your account.

… just something to think about.

11

People make money, capital (money) is just a tool to increase net worth. Self-made millionaires started out with nothing and made it to a heavy weight status

GBLilleyUSMC explains the technicals very well in his post previous

Predicitions of todays markets is not adviced. No one knew how bad this global economy would get, and I would remain skepitcal until the unemployment numbers around the world (hopefully) bounce back, among other numbers. Keep an eye on the US. Don’t rely on anything in this game. Your $2,500 to stay ‘afloat’ may sink with no sign of recovery for a few years …

You don’t have to listen to me. I’m no expert. Your theory could very well be the next great Paradigm Shift of Currency Trading. I hope it all goes well for you

12

I am a new trader, but i have had the gut feeling that individual reviews are not a good gauge for brokers, forex is no joke and i think the scales turn more in favor of bad traders than scamming brokers, i think if you know what you are doing you can make most of the popular brokers make you money. I found gft to have great chat support and started demo trading today. Are you still with them? if not who are you using as an experienced trader? Thanks

13

I have my suspicions about demo accounts, it seems to me that everyone, including me easily makes huge profits on demo accounts then loses big style on their first live account.
I’ve heard many explanations for this the main one being, the emotion involved in trading real money.
This doesnt really add up for me. I traded a demo account with $3000, trading 1 lot per trade and doubled it in 4 days. I then went on to build that account up to $20000 in just a few weeks. It was like I couldnt put a foot wrong, If I traded to the news I made profit, if I traded to the macd I made profit if I traded the bounce between bollinger bars i made profit. If I just randomly said hell that looks like a good position “click” I made profit.

I then opened a live account with $300 and traded 0.1 lots so the ratio of trade risk to account balance would be the same as the demo. I was not at all emotional about the $300 I could easily afford to lose that and didnt really care any more about that $300 than I would have about $3 dollars. I dont mean to brag about money, I don’t want anyone to imagine I’m rich because I’m not, my wife and I both work and have a relatively good income, we often spend over $300 on a single night out so you should be able to see why I wouldnt be worried about the money while trading a $300 account.
The reason for the $300 live acount, trading 0.1 lots was for a “test” live account to see if the results would be anything like the demo account before I opened a "real’ live trading account with a lot more money.

The results were not even remotely simalar, I lost trade after trade.
I consistantly had the trend turn against me almost immediatly after opening a position it was insane, I would watch the charts wait for what appeared to be a great position, open the trade and bam ! almost instantly the trend would reverse and run into a nice loss within minutes.
If I expected the trend to continue it would reverse, if I expected it to reverse it would continue.
Considering the odds should be a straight 50/50, either its gonna go up or its gonna go down, I found it incredible that I could keep picking the loser no matter what I did it was wrong, if I reacted to the news by opening a position it would do the opposite of what the news indicated. If I didnt open a position it would do exactly what the news indicated. Candles would give me false signals trading to bollinger bars left me with running open positions almost always at a loss. As for the macd, I couldnt hit a good trade no matter what I did. I even tried opening random positions just to see if the 50/50 chances of picking a good one would fall into line, did it hell, every single trade for days was losing. Not a whole lot by the way, these 0.1 lot trades were just losing a few dollars here a few there it all slowly adds up though I think I lost about $50 in the first week or so, not a big deal but kinda annoying considering the amount of work I put in to learning all about forex and indicators and strategies etc.
I have two computers, at some point in the comming weeks I intend to run my live account on one and a demo account on the other at the same time and compare.
I’ll let you know.

I edited this post to add this thought, my broker claims to be a non dealer desk broker that has links to several banks so they can always get the best price. The best price for who ? is my question.
Obviously as a trader going short the lowest quote is the best and if going long the highest quotes would be the best, makes me wonder which I’m getting before I open a position and then which am I getting after I open a position.[/I]