In my short time as a trader/educator, I have seen many things. Some of them are good and some of them are bad. This blog post may be a rehash of things you have heard or read about before but hopefully, I can add my own perspective on them. I would recommend reading 5 B/S Clichés after you read this post.
In the age of social media a buzz and content galore, it is often hard to find what is true and what is frivolous nonsense. This is no exception in the trading community that we live in. Considering the advent of technology there has been a proliferation of fake trading gurus, fake news, greed, corruption, and lawsuits more than ever before. An example would be old floor traders who cannot trade anymore and now operate their own trading service. [Remember anyone can start a newsletter or trading service].
If you are new to the trading community and looking for a way to learn I can imagine what is going through your head right now. I have been there, so I want to share 4 Key Aspects I think you should look for before giving your hard earned money to any trading service. I have been researching and studying markets/trading services for about 15 years now [Dated = 2017].
Even though these 4 Key Aspects will get you in the right mindset of what to look for, like a baleen whale, you will always have to filter a lot of things to get to the nutrients you need.
In today’s world of trading, it is easier than ever for people to share information with each other. This is great and there have been many sites created for traders to post or verify their trades in real time. When you are looking to learn from someone in the market it is almost imperative that you ask to see a track record, or, that person posts their trades in real time somewhere with a picture of their trading account.
However, you need to understand that no one can really promise you anything, but what you are really looking for is just some kind of proof that they actually have skin in the game and trade. No matter what, there is a little bit of faith involved, but if someone is not posting real-time trades and can’t show you some kind of track record, you should be extremely cautious.
Remember that all retail traders who have a trading newsletter or service are generally not registered with any official agency (such as the SEC and CFTC), as they are not required to. Take everything with a grain of salt and use your head and you should be fine.
Things to watch out for:
- Trades with no pictures of account statements.
- Big gains with little to no loss and a relatively high win percentage. Normally fakers show win percentages above 80%.
- People who boast about their huge profits but don’t show any track record before or after that.
- People who call out their trades or predictions but don’t keep track of them or put real money on the line.
- People who tell you that their track record can be found in chat logs.
- People who write books about trading psychology and then sell you a service.
- People who run interview services but can’t trade and then try to sell you on something.
- People who do trade recaps and show you how much they made on an excel file sheet because apparently, that is a thing now.
This may seem very obvious, but I cannot tell you how many people I see fall prey to bullshit newsletters or people. Remember that these are all just rules of thumb. You will come across people who are legit and fit into the above categories. I am not in the business of demoting services or calling other people’s services frauds. As, remember, in the eye of the governing bodies, none of us are registered and generally, we all disclaim everything. Everything is magical fairy dust.
SITES THAT SHOW TRACK RECORDS
profitly.com. Profit.ly is a social trading platform that allows anyone and everyone to post trades, verify trades, or posts trades and verify it with a screenshot. People can also post Watch Lists, Watch Lists with videos, and blogs. There is also the ability to access chat rooms if you subscribe to someone’s newsletter. To gain access to the ability to post trades or join anyone’s service, one must make an account. A good rule of thumb is if they don’t provide a screenshot of their account with their trade, or they don’t verify it from their brokerage account, they are probably faking it. [Verified trades have little check marks next to them] like this:
OR ACCOUNT STATEMENT.
fundseeder.com. Fundseeder, which sort of stole Profit.ly’s business model of transparency, has an interesting twist. On FundSeeder one can post their trades by hand or they can post them directly from their trading account. FundSeeder allows verification through brokerage accounts just like Profit.ly but they have a nice caveat. They have a leaderboard just like Profit.ly does but you cannot be on the leaderboard without going through their verification process from your brokerage account. Also, if you perform really well, Jack may put you in his book and you may get the opportunity to manage money as well. To say the least, FundSeeder, in my opinion, is a great equalizer to bring retail talent to investment money. The business model is dynamic and the first of its kind. I love the transparency aspect of leaderboards. They also have a wide variety of free tools to analyze your trades.
In the end, these two sites are really the only business models that I know of that allow great analysis of trades and trade uploads. https://www.tradervue.com/ could be up here but it doesn’t delineate between verified trades or fake trades so it’s hard to say what is real and what is not. It also looks like a third grader made it. There are also other business models that allow you to take the same trades as someone and they verify their trades, but I think sites like this will get shut down. They have in the past at least. Also, on these sites I see very talented traders make good money and help others make money yet they only get some percent of the winning dollars. Honestly, some of you folks who are on those sites as “Gurus” should just break off of that and make your own trading service. You are too talented to reap such small benefits but kudos to your transparency.
READ A LOT.
When it comes to the world of finance, you better love it, because if you don’t, you will get burned out very quickly. Personally, I hate reading but when it comes to financing books I’m all about it, especially if I can find the book in audio format. YES, I’M THAT LAZY. Books are great for learning basic concepts or deeper dives into a subject, but they have a deterministic result. The one thing you want to make sure of is you keep your creative mind alive. Don’t just take something at face value and accept it as a truth to the subject matter.
The best way to do this is to recreate the experiment and test it. By doing this you will go through the motions, which will teach you how that person solved the problem. This will generally lead to deeper understanding and when you reflect upon it you may come up with a different way to approach the problem. Watch the video below to see my top 7 books.
FIND A MENTOR.
One thing that will help your learning curve in the market is learning from someone. As I stated above, you must vet this person, but overall, having a mentor (if they are good at it) will cut your initial learning curve in half. To understand all the basics such as selling short, what are options, what are futures, different routing systems, stop losses, all technical indicators, all fundamental factors for each market, macro, micro, etc…… it took me about 2 years to really understand that information. What it was and how it played into the market. From what I have seen in my students, I have cut their learning curve by half. Either way, a year is still a long time and how much time you commit to it daily impacts your learning curve significantly.
A lot of people like to say they never had a mentor in trading, but the way I think about it is we all have mentors. Whether we realize it or not in life. The things you read or hear. Your boss, your co-worker, your parents, they all contribute to who you are. So, in trading you will find that what you read or hear will resonate with you, so make sure you take note of those invaluable tidbits of information along with your journey. You will have mentors in books, mentors you pay for, mentors who have your heart. Don’t believe for one second that you created you. No one in life achieves anything alone, the belief that you do is an illusion and it can be costly as a trader.
You were not born alone.
I have a new course coming up all the time, so check them out here.
PSYCHOLOGY IS NOT THE MOST IMPORTANT THING.
If you are new to trading or just looking around to see what this whole “trading thing” is about, you will most likely come across someone who really focuses in on psychology. This person is generally peddling a book or trying to sell you a course. Let me be blunt with you that your mental game is maybe only 10% of your trading.
There is a formula that marketers use to sell things and it can be easily demonstrated by the drug industry or your local doctor. The formula is simple, create the idea that something is wrong with you and then offer up the solution. A great example of this is Hallmark cards. Notice how we have so many holidays and somehow, we have been led to believe that we all have to buy these cards just to say what we could write on paper ourselves. The genius of what people like Hallmark or drug companies do is they create the idea that there is either something wrong with you or that you need this to be better. Sometimes this is the case, but in trading, people mislead prospective traders using psychology like a drug, it sickens me.
I will never dispute that psychology is not somewhat of an important threshold in trading the market, but it’s not this mythical thing that people actually worship in the ‘real’ trading world. I will give you a simple step-by-step pathway to your brain to understand what you need to gain consistency in trading the market. If you can remember this, it should help you keep your feet on the ground.
As a new bright-eyed trader, you will hear people talk about discipline, or talk about execution, or talk about just endless baloney. The truth is, “all” trading is based on probabilities. It is that simple. Now breathe that in and breathe that out. Once you really understand this, it should solve any ailment you have about the market. Here is the step-by-step process.
People will say, “[Insert Name] no wonder you are losing money, you don’t have discipline.”
Person will respond with, “O ya!, I must get discipline”
Question: “Where does discipline come from?”
Does it come from a book?
Does it come from watching someone trade?
Discipline comes from confidence
The only way to get confidence is to be successful
The only way to be successful is to have profits
The only way to have profits is to know your edge
If you have discipline with a losing methodology, then you need help. That is the definition of insanity.
Knowing your edge (probabilities) in every single trade you make is crucial to your survival and success as a trader. Now you may say, “Matt, I am a new trader, how will I know this?” See the above to learn how. As a new trader, you need to spend less time worrying about trading with real money and more time learning and honing your edge.