I don’t even have to explain why you should only learn to trade only from people who have already been trading successfully for many years. It is very obvious.
What is more surprising, however, is that most of the trading educators I have encountered in my life do not even invest their own savings, revealing a complete lack of confidence in their own financial knowledge. Based on what I have seen, they are probably very wise not to trust themselves.
First of all, a real statement does not just prove that you are a legitimate professional and not a scammer, it is also the only proof trading coaches have to show that they are teaching is, at the very least, empirically proven.
The most common excuses you’ll hear from trading educators who are faking it are:
- We cannot provide it for privacy reasons
- Some regulators do not allow us to do so
- I only give proof to people who have already bought some courses (yes, seriously!)
- My dog has eaten it
Sometimes, albeit very rarely, they will give you something complete worthless to divert your attention, such as the following:
- An Excel spreadsheet with performances
- A demo account statement
- A photoshopped statement
- A real statement from an unknown broker. You can ask them to remove some bad trades from the list for “marketing purposes”
- A real statement but on a very small account
- An mt4 statement
On Facebook, most financial educators or traders, share images of successful, small accounts that are just a few months or even weeks old.
One can think that because they made money—even if just for a few weeks—they should have at least done something right, even if just for a very short period of time.
Unfortunately, very often, these people have cheated by using some simple and well-known tricks.
If you are a smart guy, but new to this environment, it is not completely obvious that they are playing dirty. In fact, they are showing real accounts, and, at first glance, everything looks fine and legit.
Because of this, you might just fall into this very well-engineered trap and buy an expensive course from someone who is, at best, a digital marketing expert, but not a trader.
The most common trick is very immediate and consists of opening several accounts. After a few weeks, at least one of those accounts would be in good profit, and this one will be used for Facebook advertising.
The cost of doing this is that some accounts will be burst to obtain a winning one. However, marketing has a cost. This is why these accounts are kept small—otherwise, this advertising strategy could be really expensive!
Often, the size of these accounts are between $1000 USD and $5000 USD, and the worse they are as traders, the more accounts they need to burst in order to have at least one winning one.
Burning $30,000 USD by trading to have something in profit to show is a very profitable and dishonest strategy.
There are essentially two ways to check if the account you have seen on a Facebook ad belongs to a good trader or to a good scammer:
First: if the account has an initial value above $100k, it is almost impossible that someone has burst another twenty accounts of the same size to have at least one “survivor”.
Second: if the account, is small, but it is more than two years old, there must be something good behind whoever made those trades, because, in the long term, luck tends to have less influence.
If you are lucky while trading twenty accounts, after three months, you might have one that is in profit, but, because the person who is trading that account is not skilled, in the long term, that luck would disappear and the surviving account would die like the others.
If the trader is not better than someone who trades at random, there is a drift that brings down their accounts because of commissions and transaction costs.
Thanks to the central limit theorem, by having the number of monthly trades, the likelihood of burning all the money can be calculated.
It is now very common to mislead potential clients—or just to show off to friends that you are a good trader by sending a My fx book or other online-based performance tracker statements. A quick search online reveals that there are even tutorials on how to manipulate these. While it is very easy to cheat using them, it’s not easy to see where the glitch or change is—especially to the untrained eye. These statements are not necessarily always fake, but it is becoming increasingly difficult to spot which ones are legit.
How can you tell if someone is really able to make money?
Say you want to apply for a job in a real FCA-regulated trading position in a real hedge fund prop desk in London. Before reading your cv, they would ask for a statement sent DIRECTLY from a broker or a bank that is regulated in a g20 country. Anything else has got zero credible value.
A trader should ask for the same, but, of course, it is a little bit more complicated for even an entirely honest educator to ask his broker to send a statement to everyone who asks for it.
A solution could be to have a track record with a list of trades, open positions, and the possibility to watch it live from the trader’s computer.
If you really have it and you are just proud of your performance, then privacy is not usually a big issue(publishing your bank account track record on Facebook, however, would be too much). That said, having the possibility of showing off your performance is really good.
At this point, dear reader, you might be wondering, does this guy really have one?
Yes, of course! I’ve got one that is big (in financial size) and long (in time).
I trade different accounts. These deposits are held in real banks or brokers not a small CFD broker on some little island off the Pacific Ocean.
Take a look below.
I have deleted the number of the account and some sensitive data because anyone on the internet can read it. But if you are interested, just mail me here: firstname.lastname@example.org
You’ll get the full statement with a list of trades and all the information you could possibly need. Additionally, you will receive information on the performance of other accounts.
I would say that 99% of the time, educators do not have a real account in profit.And even if they did, it would not have more than $20,000USD in it. The account shown above has $1.4 M and I did 8% during the last few months, which means that I made after taxes and commissions—more than $100k.
As far as I know, no other trading mentor in the UK can show a document like this because they simply do not have one. There are only a few in the world that do any better.
Am I showing off how good I am?
A little bit, yes, but I am proud of myself!
But what I want to point out here is just how difficult it is to spot the fake in this industry.
If you go to a doctor, you can be almost sure that they have a valid medical licence that allows them to legitimately do their work, but in trading, anyone can pretend to be a master trader.
Another extremely important reason why I think real trading educators should show their performance to clients and potential students is because nothing is more motivating than that! When a student sees that their teacher is actually able to make what he says he does, it encourages the student to learn, and their motivation will skyrocket.