A friend of mine, Ivo, recently got into automated forex trading with a bot by the encouragement of a friend of his, Martin. Martin convinced Ivo that the bot can yield forex returns of 10% per month. This kind of returns seem possible only in scams to me. However, I could not understand where the scam is and so I could not convince Ivo to not put money into this. So far he has put 1000 euros into it, and I would like to convince him that this is shady before he puts in more (which I am sure he will).
Here is what he did:
he created an account at Roboforex (he passed KYC by providing passport pictures)
he bought the license for DaVinci Pro - a forex trading bot (it costs a couple of hundred dollars per year)
he installed/added the bot to MetaTrader 5
he rented a server from https://zomro.com/ where MetaTrader runs non-stop
He initially invested 100 euros. After about 1 week, he showed me(via screen sharing with Skype) that he has returns and we calculated the returns to be around 10% per month, indeed. After this he put another 1000 euros into this.
After a while, I asked him how the forex trading is going, and he showed me that he is making about 10 euros per day.
The red flags I see are:
Roboforex (https://roboforex.com/) is a company from Belize (we are from Europe). As I understood Roboforex is the broker, and MetaTrader is used to send the orders to Roboforex. However, Ivo transferred the money to a bank account from Singapore.
Roboforex has many negative reviews only about problems with withdrawals (but also just as many positive ones) - https://www.forexpeacearmy.com/forex-reviews/7374/roboforex-forex-brokers.
there are no trading fees
when he was transferring the money, the employee warned him that this might be a scam
DaVinci Pro's website (https://da-vinci.pro/en) has almost no information (who built the bot, how the bot works, what it does as a strategy, etc.) - in fact, before registration, the only available page is a registration page. After registration, the only available information is: how to purchase the bot, some promotional images, a few disclaimers that you might lose money.
the trading bot is of Russian origin (as far as I can tell), as is Zomro
the trading bot can only be bought with the cryptocurrency ethereum
the promotional materials for the trading bot are quite amateurish
extremely high returns
there is a reward system to invite friends (which if you do, your returns can go up to 30% per month)
Martin holds meetings regularly to recruit more people into this
The green flags I see:
Ivo does not try to convince me to join the scheme
Ivo has known Martin for several years (I met Martin once)
the advertised returns actually seem to be happening... for now... (for the last 2 months)
Ivo claims he has control of his money (can withdraw at any time, although he has not tried so far)
Ivo passed KYC
there are YouTube videos from different people vouching for the bot's abilities (few videos though, with few views)
As a result of these high returns, he is in the process of quitting his job and starting an internship at a not-for-profit organization. The internship is unpaid and he intends to put his savings into the bot to support himself (a couple of thousand euros).
He has no previous experience with forex (or any kind of investing). But to be fair, neither do I. However, I am quite convinced some unknown Russian trading bot cannot generate consistent 10% monthly returns with none of us knowing how it even works (me - a software developer, Martin - a businessman (allegedly), or Ivo - a former software developer), or who built it (not even sure if it is a company or just 1 person behind the bot).
Where is the scam in this DaVinci Pro trading bot? Is it possible it is showing false values/trades in MetaTrader, only so that you pay for the license?