Those of you who have some idea of which brokers I like to test systems on know that I am very glad to test any broker which has convenient deposit/withdrawal options and cent accounts despite their regulatory status. I do this both because I like to give them a chance and because these are the brokers where new and small traders are most likely going to deposit their funds since they offer the best possibilities regarding money management (small lot sizes on cent accounts allow you to adequately trade systems and portfolios without too much capital). Today however I am going to talk about when a broker-testing experience goes terribly wrong as was the case with IntelFX. This experience has taught me a few things which I would like to share with you on this post.
Why IntelFX? The story starts when I was looking for a broker near the end of 2010 to test a system we had just developed in Asirikuy called Sapaq. I needed three brokers in which to test this portfolio and LiteFX and InstaForex were my first two options, I was missing a third. Then – while looking through a Forex broker site – I found IntelFX which provided convenient deposit/withdrawal methods (such as credit cards and paypal) which I could use to easily deposit/withdraw small amounts of money to test a Sapaq portfolio cent account. Since the amount of money involved wasn’t large (only 200 USD) I decided to give this broker a chance with the intent to open somewhat larger accounts in the future (2-10K) if they proved to be a reliable solutions.
To tell you the truth things didn’t seem bad in the beginning, moderately decent execution (although Asirikuy systems are far away from being scalpers or needing very good execution to succeed), a good website layout and a convenient and straight-through way to deposit and withdraw money. Then things started to turn sour from a trading perspective as I noticed how InstaForex and LiteFX were in the green and InstaForex was in the red. After discovering time array mismatch errors and correcting them on IntelFX it was obvious that server updates were not good and there were some terrible issues with the way in which the feed was being handled. To add insult to injury last week there was a complete “hole” on the trading history with daily bars missing from about March to early June. How are you supposed to calculate a 14 period daily ATR when you have 60+ days missing from recent history? No wonder why IntelFX had so much broker divergence when compared with the other two brokers!
Then the crown jewel was an email I received from a guy who was saying that IntelFX was a scam and that they wouldn’t give him 27K USD he had deposited with them. The surprising part about the email was not the scam part but a link to a public forum were someone had posted a csv file which contained account information of apparently ALL IntelFX customers (with me included). It is quite unnerving to have your name, last name, email, broker phone password, telephone, home address, account number and deposit amount posted publicly on the web. Luckily I custom generate all passwords for brokers (never repeat passwords, it is a serious security risk) so I don’t have any further problem because of this but certainly it is just horrible to see that my private information is just there on the public eye. Also note that I didn’t give them any credit card information (all deposits were through e-currency processors like paypal) otherwise I would have cancelled them already.
Although I already had made the decision to stop using IntelFX merely due to their feed issues it is now clear to me that they are a terribly bad broker which does not even take privacy seriously. I have requested a withdrawal of all the deposited capital (which sadly not surprisingly still hasn’t gone through) and after fighting “support” they now say that all withdrawals will be processed on Monday (although I do not have much hope). For me this is just a little bit more than an inconvenience (as I understand the importance of trusting and knowing brokers when depositing large sums of money) but for a few it was a large hit. Adding the customer data available freely online total deposits are around 1.7 million dollars so some people must be pretty upset if they really turn sour and negate all withdrawals (at least the website is still online now).
For those of you who are looking for brokers for testing there are a few pieces of advice which are useful when choosing a broker which might not be regulated. First, choose brokers which have been active for at least 4-5 years, I have been trading with both LiteFX and InstaForex for almost 5 years now and both have always been decent brokers. It is also very positive when a broker has the ability to send you a debit card since you know you can easily “withdraw” your money without requiring any broker intervention. Debit cards are therefore a big plus for me when deciding. Also – if possible – it is always better to only use these brokers for limited testing (or when strictly necessary) and use regulated brokers whenever you’re investing large amounts of money. I would have to say that many unregulated brokers are still very decent, well-managed businesses but the terribly bad brokers (not to say scammers) – like IntelFX – do show up from time to time. This will however not stop me from testing new brokers as I am always keen on giving them the benefit of the doubt with small amounts of money :o)
If you would like to learn more about my work in automated trading and how you too can learn how to build and trade your own algorithmic trading strategies please consider joining Asirikuy.com, a website filled with educational videos, trading systems, development and a sound, honest and transparent approach towards automated trading in general . I hope you enjoyed this article ! :o)