HOW TO DIFFERENTIATE BETWEEN GOOD, CONSISTENTLY PROFITABLE TRADERS AND CHARLATANS
There are numerous experts who have deep knowledge about markets dynamics and functions, but who cannot translate that knowledge to lasting success as traders.
There are too many so-called gurus out there who’re targeting clients and investors. They would either offer to train you how to trade, offer you trading signals, sell a trading software to you or help you manage money.
These “gurus” often show you screenshots of their trades and want you to believe that they can always beat the markets, and make you rich if you invest with them or if you buy their trading products. In almost all cases, these people are not as good as you think.
If they could really make money, they might not need to convince you to patronize them… Although I’m aware there are real professionals who genuinely want to help struggling traders out there, especially through education. Some of these world-class trading educators are my mentors as well.
Common Nonsense Posted by “Gurus”
This nonsense are images and screenshots posted by those who want to show you how much profit they have made in a trading session or day.
The problems are:
Images and screenshots can be designed to fool people.
Even when they’re real, the images are only what they want you to see. They won’t show you what they don’t want you to see. The images have been cherry-picked so that you think they make money overall.
What is a profitable strategy?
A profitable strategy is the one that makes average losses which are smaller than average winnings, in the long run.
Thus: A losing strategy is the strategy that makes average losers that are bigger than average winners in the long.
As you can see, both good and bad strategies will make profits and losses… But what makes the difference is that the losses must be kept small enough so that you come with a profit in the long run.
Most of the gurus that post account histories screenshots for you to see are only posting what they want you to see. When there is a losing streak (which every trading method under heaven must experience occasionally), they won’t show you the screenshots for that.
They continue doing this intermittently and occasionally, to the extent that some rookies and unsuccessful traders are convinced that they’ve seen a solution to their challenges.
When they do training, they still lose after practicing on their own.
When they follow signals, they still lose in the end.
When they buy their trading systems, they lose money eventually.
When they give money to gurus to trade, they gurus end up losing the money.
That doesn’t mean that there won’t be occasional profits and winning streaks… However, they will eventually face severe drawdowns or margin calls.
When this happens, most affected investors and trainees would not come online to tell people their experience so that they wouldn’t be blamed for being stupid. Likewise, none of the “gurus” will come online to tell you that they just blew people’s monies. They won’t tell you that they suffered losses. What they’d do is to send screenshots of the new methods they’re trying and fool people, while looking for another victim.
To cut the story short: Don’t believe anyone who tells you they’re good traders. The person may be currently enjoying a winning streak, which won’t last.
Who Is a Good Trader?
Who is really a good trader?
He/she is not a person that makes the biggest profits…Even in the short-term. They’re the ones that can withstand heavy uncertainties in the markets, keep trading capital safe and make money in the long-run. They make money, suffer drawdown, recover the losses eventually, and then go ahead, no matter how long it takes. Good traders are known in the long-term, not in the short-term.
There are so many seminars, so many webinars and too many trading methods and services that promise to revolutionize your trading experience. At last, it’s all fake. Those who have attended these events can testify to that.
HOW TO DIFFERENTIATE BETWEEN GOOD AND BAD TRADERS?
This is written in block letters because that’s what this article is all about.
There is a friend who told me about an EA, which was making lots of money. I saw the screenshots and I was blown away. However, I told them that, before I could buy the EA, I’d need a demo account with investor’s password to monitor that account for 4 months. The request was granted, and I monitored the demo account. The EA made nice profits, but within 3 months, the account received a margin call.
I asked the vendor if he saw that. He only tendered apologies. If it was real money that got burnt; what would follow was only apology.
If I didn’t have access to that demo account; neither the vendor nor the friend would tell me anything about the margin call. But because I was monitoring the account, they had nothing to hide.
There are only 2 ways to recognize a winning trader:
A “guru’ must give you access to his live account or demo account (most preferably a demo account with a broker whose demo accounts don’t expire if traded constantly).
You request for the login details of the account, with an investor’s password (not a master password). With an investor’s password, you can only see live trades and account history. You cannot do anything else.
Then, let the guru trade the account for at least, 4 months. Or better, let him give you access to a trading account or demo account that he’s actively managed for at least, 6 months.
As a scalper, he must have placed at least 1000 trades in the last 6 months
As a day trader, he must have placed at least 500 trades in the last 6 months.
As a swing trader, he must have placed at least 100 trades in the last 6 months.
Most FX traders don’t do position trading.
If the above conditions are not met, you’re being invited into a fool’s paradise. An account that is 5 years old, but with only a few trades, cannot be used a litmus test.
Are 4 or 6 months too long?
Please ask yourself this: What have you gained in your many years of being an impatient trader and looking for ways to get rich quickly? NOTHING!
Wouldn’t you rather be patient enough to discover a winning method that will give you permanent success in the markets? Some people have been trading for 15 years and they have nothing to show for it.
After at least 4 or 6 months of monitoring, you can then make a decision for yourself.
RED signals:
Even if the “guru” is currently making money. These are the warning signs that he cannot last very long trading this particular account, no matter the amount of profits he currently makes:
1. Overtrading. Opening too many positions at a time or having too many open positions.
2. Big position sizes, like 0.1, 0.2 even 0.05 lots for each 1000 USD
3. No stop loss
All the 3 points above are a recipe for financial disasters.
If a guru cannot give you limited access to a demo account or a live account they trade, please ignore any rubbish they tell you or show you. Even on a live account, if a drawdown is due to withdrawals of profits, you’ll see it yourself.
Giving investors limited access to accounts you manage is a great way to market yourself.
Option 2:
If a guru cannot give you any access to his/her demo or live account, then they can sign up and input their demo or live account on Myfxbook.com. This is even more preferable as the link to that account can be given to people to see, plus all the necessary stats of the account. Here, people can see how your account is performing.
Many vendors/marketers won’t want to follow this recommendation. Please protect yourself by ignoring the nonsense (images of winning trades) some “gurus” post online; otherwise do business with them at your own peril.
Perfect Money/Payeer/BTC/AdvCash/Neteller/Skrill: ItuGlobal
Share on Facebook Share on Twitter Share on Google+
Please Sign in or Sign Up to post comments