Day Trading Education – Pitches that Win Now, Lose Overall
After a number of years in the trading industry, it’s difficult to avoid criticizing every little detail of various education systems. At a certain point, it seems as though you’ve heard it all in regards to companies selling their systems (and the questions that come from potential customers of said systems).
You even begin to see an almost political sense of loyalty begin to form between traders and THEIR system. Rarely does a trader admit, openly, to the flawed practices which they adopted at one point or another.
I recently heard a pitch so convincing that the educator didn’t even really sell an actual product. His system consisted of making live trades and explaining why certain decisions were being made and why.
Most “educators” who follow this model have 12-20 years of experience in trading and, as mentioned previously, cannot actually replicate their system because it made up mostly by personality traits instead of technical coding.
Day Trading Education – Buzzword: “Accuracy”
“Over 75 percent accuracy,” the salesman says. Your eyes light up as you wonder whether or not he’s telling the truth. Surprisingly, the answer is most likely yes.
But beware of the word “accuracy,” which will always be used as a tool in selling a system because of its ability to be manipulated.
For example, you may find systems that are only actually accurate 15 out of every 100 trades. These systems still claim higher percentages because their trade structure outweighs the 85 losing trades with the 15 winning trades.
The opposite can also be true. A system can be successful on 95 out of every 100 trades, but still lose money overall because the trade structure outweighs the 95 wins with the five losses.
After hearing the word “accuracy,” the best practice is to always make sure to see what the actual overall profit/loss is.
Day Trading Education – Buzzword: “Guarantee”
Another buzzword traders often hear as they research trading systems is “guarantee.” This is obviously in regards to pricing or satisfaction quality, as it is neither legal or ethical to make future guarantees on profits.
Again (just to be clear),there is only one type of establishment which can promise specific returns: federally regulated banks. Not one mutual fund, 401k, stock or trading account in existence can guarantee future profits.
Day Trading Education – The Total Rip Off
Occasionally a potential trader can come across a trading and education system that is a total and complete rip off. While this becomes more and more rare as time passes, it’s still a possibility.
In most cases, these systems promise huge profits on little effort from the trader. Money is exchanged, likely never to even be invested.
There are certain safeguards which are continually being put into place to help guard against this type of fraud, including federal laws requiring risk disclaimers on all trading websites and online entities. However, it’s still important to keep this in mind when searching for your system.
Day Trading Education – Beware of Salesperson
“Even a monkey could trade this,” is something a presenter might say while showing you a trade system demonstration. This may sound like they are trying to convince you, but in a sense, they could be right.
A study was conducted years ago involving a human and a monkey. Both sat in front of a computer and asked to trade for a specific duration of time. By the end of the experiment, the monkey had made more money than the human.
Obviously, results from the case above are rare, and should be taken lightly due to it being a single instance of the experiment. If it were run 1000 times, results would surely differ.
The main takeaway here is that education salespeople will do anything to make trading look easy, which the reality is that it simply is not. In certain cases, new traders can remain profitable for a short period of time, but that doesn’t mean their strategy is perfect.
A good thing to remember for new traders is to practice trade execution for a minimum of one month prior to increasing leverage and trading substantial funds.
Conclusion: Day Trading Education
In conclusion, day trading education is not something to take lightly. While many people learn and make a living day trading, others make their living by selling faulty and outdated education products. Here at Day Trade FEED, we’re doing our best to make sure everyone who is interested can learn to day trade without navigating all the tricks of the sales trade.
When choosing a day trading system, make sure to use the product as much as possible before paying for it. Do this by using free demonstrations, trial periods and other forms of test drives.
Remember, if an education system doesn’t allow you to try before investing, it may not be worth your time.
Trading is something that is difficult enough without trading platforms and software companies misleading you.
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This article is only part six in a series aimed at helping day traders understand what mistakes to avoid.
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