My search for AI forex trading magic
I’ve been forex trading for a while now.
Like many traders, I am always in search of a new edge, so I set out to investigate AI (Artificial Intelligence) trading methods. It seemed like a good idea: I already use automated trading software for some of my trades. If only the software could learn from my mistakes and use what it learnt to make a better trade the next time. It would be forex trading magic.
I was surprised to discover there is not much information online about AI trading for retail forex traders like me. Surely there are developers all over the world trying to build AI to win at forex? Anyone who succeeded would be able to reap huge financial rewards.
After a little searching, I finally found an article on AI trading. The article mentioned a company that has AI software for retail forex traders. Now I was getting somewhere.
Market characteristics change all the time, as I had learned (not in a good way) in March 2020 when the COVID pandemic hit. I wanted an easy way to adapt my trading systems as the markets changed. Artificial intelligence (AI) seemed like the perfect solution.
I clicked through from the article to learn more about the company and its AI software. And found 8topuz.
According to its website, “8topuz is Automated Artificial Intelligence software for trading in the Currency Market”. This was just what I needed; at last I had found an AI solution to boost my forex trading!
I couldn’t wait to get my hands on some software that could place trades for me and learn from the results. If the AI worked, every winning trade could be replicated and every losing trade would teach the software what to avoid next time. The result: more winners, less losers.
I was ready to sign up immediately.
But then things started to get weird.
Where’s the AI?
According to 8topuz.com, “8topuz provides an Intelligent, supervised, multi-layered, AI Trading Software system that learns and adapts according to its environment.”
Automated trading is usually achieved by installing trading ‘robot’ software that interacts with a trading platform on the trader’s own device. The most popular trading platform is MetaTrader4 (MT4), which supports automated trading.
8topuz has ‘partner brokers’ that use MetaTrader4, so they would be able to handle automated trading.
All good so far. But when I tried to buy the AI software, I couldn’t find a way to do it.
I contacted 8topuz to find out more.
In response, I received an email from an 8topuz ‘Fintech Specialist’, a man called Robert. In the email, Robert asked me how much I wanted to invest and described some investment ‘accounts’ I could open.
Investment accounts? What did that have to do with AI? I emailed Robert asking him to tell me more and sent him my phone number. He called within the hour; a call that originated in Cyprus. Which was odd because his email footer placed him in Dubai.
Robert didn’t seem to be familiar with MetaTrader software nor how other automated trading systems are used by forex traders. But he did help me to understand the 8topuz products on offer. There are two products and neither of them are AI software. It all sounded pretty weird.
At the end of the call I was directed back to the signup webpage, where I could create a forex trading account with one of 8topuz’ ‘partner brokers’. Then I had to deposit funds into the new account. This was the investment product that 8topuz was selling? And I had to sign a client agreement with 8topuz.
But wait, the so-called ‘investment’ funds would be in my own forex trading account. Huh?
Seemed like a weird type of investment.
So far I had found out that:
(1) 8topuz does not sell or license AI software and
(2) any funds that were used in 8topuz’s ‘investment’ products would be held in an account owned by me… essentially my funds, under my control. That didn’t sound like any investment I had ever heard of.
It was time to dig a little deeper.
The special broker
8topuz’s partner brokers all appear to be legitimate, properly-regulated forex trading brokers. Except for one. If you want to participate in the cheaper investment option — the Lifestyle Account — you have to sign up with a broker called 4xCube.
An internet search for 4xCube reviews turns up quite a lot of upset traders.
Not all the reviews were bad, though; I did find some positive reviews. The positive reviews mostly contained affiliate links, meaning the reviewers were receiving commission from 4xCube for sending customers to them.
The only positive review I found that didn’t contain an affiliate link was attributed to a writer with no surname and no photograph, who writes under the Medium handle @4xcube.
4xCube tells its website visitors that it is licensed in The Cook Islands. There is certainly a listing on the Financial Supervisory Commission of the Cook Islands for the company that is said to own 4xCube, Geomatrix Ltd. That company has a license for money-changing businesses. Forex trading is not money changing, it is buying and selling of contracts for difference (CFDs).
I wasn’t sure about this. To me, it seemed that 4xCube might not be a good place to put my money. If I wanted to get involved with 8topuz I would need to use one of their other partner brokers.
The other brokers all seemed to be completely above-board. There was one problem though. To invest with 8topuz using one of those brokers, Robert told me I must deposit a minimum of $25K.
AIs are cheap to run.
Robert had already told me the 8topuz AI runs on the MT4 platform, although not on the trader’s own device. If it works on MT4, it should work on a demo trading account. But 8topuz doesn’t allow demo accounts.
I couldn’t think of any reason why a demo account would not be allowed. Unless the trading is done partially by human traders. Could that be it?
Mysterious investment pricing
But first, the pricing. To participate in the ‘investment’ product with a well-respected broker, rather than 4xCube, you must deposit at least $25K. Why?
Robert told me that having $25K in an account gives you “better ability to manage your risk” and control draw-down. Now, I’m not an expert trader by any means, but I know enough to know that’s rubbish. I have a very small trading account but have the same ability to manage risk as traders with large accounts. Plus, surely a good AI robot would manage risk and draw-down as part of the algorithm?
None of this was making sense. Even a novice trader wouldn’t let a trading robot operate without well-defined stop losses and proper risk management, no matter how small or large the account. There did not seem to be a good reason for 8topuz to insist on such a large investment for new customers.
However, the $25K limit makes more sense when you consider that 8topuz might be collecting commissions for new customers who sign up with their ‘partner brokers’. A larger deposit means a bigger commission. The broker links on 8topuz.com look like affiliate (referral) links. I took a closer look at the 8topuz client agreement. It is essentially an agreement that allows 8topuz Consulting LLC to introduce you to a broker. And it specifically states:
“The client has no right to ask the Agent for trading recommendations or other information… the Agent may provide trading recommendations at their discretion, but bears no responsibility….”
If you sign up with 8topuz you are signing up to receive nothing at all. But you are allowing them to receive commissions from brokers. Mystery solved. Almost.
What about 4xCube?
If 8topuz are collecting affiliate commissions from ‘partner brokers’ for large accounts, what happens when 8topuz clients sign up for small accounts with 4xcube?
4xCube is a bit different to the other partner brokers. They have a model called PAMM (percentage allocation management module). Under a PAMM model, a ‘money manager’ can trade money deposited by their clients.
Robert told me that when an 8topuz investor signs up for a PAMM account with 4xCube, 8topuz will trade their money for them. The investor can see the results of trades in their account but does not have any control over them.
The 4xCube PAMM option with 8topuz does not make use of the MT4 platform. This means that investors do not get a visual representation of currency prices or movements as they relate to the trades.
An internet search of 4xCube reveals that some of the money managers who have used 4xCube in the past may not have done a great job with their client’s money. But hey, that’s hardly 4xCube’s fault, is it?
On the other hand, no legitimate forex broker would want to be involved with money managers who have been accused of running scams and pyramid schemes.
Among the public comments about 4xCube there is one that alleges common ownership between 8topuz and 4xCube. It is alleged that the owners of both organisations include Joao Monteiro and John Goddard, who are said to live in Cyprus. It was Joao Monteiro who wrote the Medium article that first introduced me to 8topuz.
Footers on both the 8topuz and 4xCube websites disclose ownership of the organisations (sort of). Business names are listed but details such as registration numbers and countries of registration are omitted. This makes it impossible to find out about the people involved.
Coincidentally, websites for both businesses have the same theme, home page layout, chat bot plugin and translation plugins.
Magic trading systems
So far, I had found that some of 8topuz’ revenue appeared to be derived from broker commissions. And that there may be a financial link between 8topuz and the broker that provides their cheaper ‘investment’ account, 4xCube.
But the 8topuz website promises great returns for ‘investors’ month after month. And they claim that this comes from AI trading.
In the 4xCube (PAMM) accounts, it appears that investors’ money is controlled by 8topuz, who makes trades using the investors’ funds. Whether or not the trades are executed by AI software, or simply by a person using information from AI software is unclear.
The PAMM trading model is not compatible with the ‘partner broker’ accounts that 8topuz recommends for investors with more than $25K to spend.
Robert confirmed that for the non-PAMM accounts, investors’ funds are held in a forex trading account in the investor’s name with a partner broker of their choice. Investors can see trades being executed in their account on MT4 WebTrader. However, he told me that if I invested in this way I would not be able to participate in any trades in any way whatsoever. Even though the trades would be executed using my money inside my account.
How can this be?
Because, I was told, if I want to participate, I would have to sign a power of attorney that gives 8topuz the right to act on my behalf.
A power of attorney. What the actual fuck.
The search continues
I don’t plan to provide 8topuz with a power of attorney so that they can do whatever they like with my money. Nor do I intend to send my money to a broker that is licensed (sort of) in The Cook Islands.
But if you have some spare funds that you aren’t too fond of, you should take a look at what 8topuz has to offer.
Let me know how it goes for you.
P.S. I haven’t quite given up my search for an AI forex trading system. But it ain’t looking good.
Update: 8topuz has responded to this piece. Their reasons for not offering demo accounts include the fact that demo accounts would allow their competitors to scrutinize their systems and would allow people to copy their trades. That seems fair to me. 8topuz has also stated that they do not necessarily receive commissions from all their partner brokers. Regarding 4xCube, 8topuz explained that the PAMM model is actually giving some of their best returns. For the full response, check out the comments.