This is my first post, and apologies for just barging in, but I’m not sure where else to turn to for some assistance. I will leave out or mask specific details for now, but I need help in confirming whether something is a scam.
I am a complete FX noob, and whatever jargon I have stated below is due to research rather than knowledge, which means I could use these terms in the wrong way.
Someone close to me (let’s call him Adam) has bought into a managed FX scheme. How it works is that he paid US30k to a company operating in a major European capital but registered in an offshore tax haven (you know, one of those tiny islands who sell bank accounts and passports). This company then provides Adam with MT4 login details so he can monitor the trades. Adam has the necessary account permissions to execute/manage trades, but is advised not to and to just “leave it to the pros”.
The account started with the $30k deposit and had an initial credit line of $1m (ostensibly coming from some European bank and arranged by the scheme), with the broker offering 1:200 leverage. Over the last few months, the line of credit has grown to a whopping $15m.
The trading goes well, with the firm seemingly making consistently profitable trades using a combination of FX and CFDs. There is no reason to suspect the trades themselves are bad - Adam has watched them being executed in real time, and they follow broader market movements, so the managers seem to know more or less what they’re doing. The FX trades are reasonably-sized (relative to available margin), but the derivate trades can be absolutely enourmous (position sizes can be over >$100m). This is all on his account alone.
His MT4 software reports that his account size has grown from $30k to over $3m in a just a few months, along with the full trade history as to how that happened, and all the numbers stack up.
Withdrawal is currently not possible under the scheme, but is promised within the “new few months”.
Adam is blinded by the numbers, but after talking to him and doing my own research, the problems I have with the whole thing are:
Where on earth does the $15m credit come from? Ostensibly it is from some “foreign bank”. Adam never signed anything. And remember this is just for one client account.
On the volume indicator in the MT4 software, it appears that the total volume traded on the entry/exit candles are LESS than the total position size on the derivatives trades. Can this be possible?
Is it possible to market order nine-figure trades on popular derivatives without crazy slippage?
Arguments FOR this being legitimate:
The trade decisions themselves, from what I can see, are well-timed and are profitable. No scam here.
The person who introduced Adam to this scheme is a very trusted and conservative lady who has been reaping rewards from it after joining it herself a few years ago. They have a personal relationship that spans many years, Adam trusts her implicitly, and it is extremely unlikely that this lady is a fraud/liar.
The MT4 software on desktop and mobile both indicates this is a live/real (and not a demo) account. I don’t know how much this means, and I suspect it’s easy to fake, but just mentioning it nontheless.
It oocurs to me that if you really wanted to run a scam, you would not do it in such a way that generates such sick and totally unbelievable profits. You would grow the account at a good rate to keep investors happy, but not at the rate of 100x in 3 months! That’s just asking for investigation and further diligence. So perhaps there’s “too good to be true”, and then there’s “so ridiculously good it must be true”.
Over to you guys.
If this is a scam, does this story take on the pattern of similar well-worn stories? Is it possible that it is legitimate?
Adam’s position is that he went in with eyes wide open, is willing and can afford to lose the $30k, so takes a “well if it’s legit, it’ll be worth it” approach. This is fair enough, but still, every bone in my body is calling bull on this.
Any thoughts? Thanks for sticking with me thus far!