Forex trading is quite profitable, and many traders rush towards them. Unfortunately, many traders fall victim to an elaborate Forex scam.
One can make a lot of money by trading in a Forex market. Since the early 2000s, many have taken the opportunity of the internet and have been trading ever since. As the technology evolved, traders switched from personal computers to smartphones for Forex trading. However, trading in the Forex market has never been easy until now.
Even though technology has made trading in Forex easier, some scammers still try to pull off a quick stunt and make a huge profit. And then some would rip off the trader by selling an MT4/MT5 trading platform.
MT4/MT5 is explicitly designed for Forex trading and is trusted for security protocols. However, there have been cases where users reported fraud on MT4/MT5 and suffered a loss. Before we look at how the scams are pulled off, we need to understand Forex trading platforms.
What is MT5/MT4? – MT4 vs. MT5
MT4 or MetaTrader 4 was developed by a Russian financial software market leader, MetaQuotes, back in 2005 to make a dedicated Forex trading platform. It sold like hot cake globally as soon as it was launched. One of the most compelling features is the freedom to create your own algorithms based on your trading preferences, creating a trading strategy, and allowing automated trade executions based on these customized trading strategies.
In 2010, MetaQuotes released MetaTrader 5 or MT5, which improved existing features and added a few new features. MT5 features advanced graphics and analysis tools beyond MT4. It also introduced features such as a basic calendar, dedicated indicators, and a black box for programming, thus facilitating easier operations for users.
Is MT4/MT5 a scam?
MT4/MT5 is not a scam; they are software connecting different trading platforms that can allow trading through your personal computer or smartphone. Thus it can be viewed as a connecting bridge between the broker and you allowing MT4/MT5 to receive quotes and place orders during the trading process.
So the question arises since brokers have their own trading platform and MT4/MT5 acts like a bridge, why do most brokers widely choose to cooperate with MT4/MT5?
Using already established MT4/MT5 software is quite more economical than building a trading platform from scratch. Again the MT4/MT5 is almost complete and allows users to carry out data retesting, automated trading, and other operations that meet the standards and conditions for general Forex trading. The Metatraders’ series of platforms are supported to occupy a place in a world flourishing with trading platforms that deliver cheap, convenient, and efficient benefits.
Thus MT4/MT5 scams have nothing to do with the Mt4/MT5 platform, as it is not a scamming platform. However, if you have lost money on MT4/MT5 while considering the normal fluctuations in earnings, the chances that you have encountered fraudulent brokers could be high.
What are the most popular MT4/5 broker fraud schemes?
- Attracting customers under the name of MT4/MT5
If you ever encounter a customer service agent inviting you to open an MT4/MT5 account for trading in Forex, the chances are that you might have encountered a fake Forex broker. MT4/MT5 platforms are never sold to ordinary traders. Since this software acts like a bridge between you and the broker, you will need a broker. Without the broker, this software is quite useless. It requires a huge amount of money which could only be brought in by big financial firms or brokers.
- Exaggerated EA automatic trading returns
One of the prominent features of the Metatrade family of platforms is EA or Expert Advisors. This program is a compilation of investors’ logic, algorithms, and judgments put into the computer to automatically carry out the trade when certain conditions are met. When compared to manual works, these EAs are more responsive to price/trend changes and can guarantee faster order and position placement.
Unfortunately, to lure investors, many illicit brokers exaggerate the benefits of MT4/MT5 automatic trading, ensuring low-risk, and high-profits through their Forex scams. As more investors are lured into EA automatic trading, these investors start losing their money, chances of them losing their entire fund from the account also rises.
- Unable to withdraw money from MT4/MT5
This is a Ponzi scheme where new funds are absorbed to pay off investors’ profits. However, some brokers are using MT4/MT5 software leased with Metatrader. When these investors ask for a withdrawal, brokers usually decline, shifting all the blame on MT4/MT5.
You must remember that MT4/MT5 is just the software connecting you to a broker. It would help if you inquired more about the restrictions and process for withdrawing funds from your account with the brokerage business that opened it, rather than discussing about transferring money from your account with MT4/MT5. It is very easy to withdraw funds from the broker, even though the process is slow and complicated. And for those brokers who avoid or delay the withdrawal process, it clarifies the doubt, confirming that you are dealing with a scammer.
Developing pirated MT5/MT4 platforms
As MT4/MT5 has an open API or Application Programming Interface, many illegal brokers develop their own pirated versions. These developers completely control this pirated version. These developers ensure that the spread of certain quotes deviates from the actual price trending in the Forex market. And since the differences are small, they don’t attract much attention but do impact the trader as it eats away from theory profit.
The platform is unstable and often disconnects since it is a pirated version. Sometimes the traders find it difficult to set stop-loss or close a position, leading to unsuccessful transactions. Thus such occasional glitches can seriously impact your profit margin.
Forex scams are also committed by rigging the trading platform. These scammers will blame the software when things go south for them. If you wish to avoid being a victim, then always approach a reputed broker. It is always wise to ask the broker about the withdrawal and deposit procedure. Make sure you understand the terms and conditions before applying for their services. Last but not least, MT4/MT5 is software connecting you to the broker to facilitate trading; it is not linked to your fund account, so if the broker says that you have lost money in MT4/MT5, then the broker is fraud and must be reported.