Think twice before you buy the hype

So I was chatting with a consulting client about his experience in a how to training program. And I thought I might summarize it without mentioning any names to give you some examples of what actually happens behind the scenes that never gets really spoken about. So this is a cautionary tale for those of you that might be getting crazy ideas about wanting to trade full time or to do it for a living. I say, follow your heart for sure, but have, and I’m serious about this, and I know you’re not going to do it, but I’m dead serious. Give yourself enough runway where you can pay your bills and give yourself a finite period of time where you say, if I haven’t shown any success at this period of time, call it six months, I’m going to go back to work.

Or I’m going to focus on my main my main business, or you could also say I’ve got $10k I’m going to try to trade this. And I’m going to, I need to show some positive results by again, six months. So make it a thing where if I lose $5k, I’m done. Or if you lose all the $10k you’re done to say like, well, I’m going to do anything to make it. I think that’s foolish. You have to remember when I was coming up, it took me a long time, but I also had a steady revenue stream. And so it’s very different to say, well, I’m just going to quit and throw caution to the wind and I’m going to burn the boats behind me. I appreciate the bravery there, but I don’t necessarily think that that’s necessarily a smart thing to do.

And my colleague, I don’t want to mention his name because you might be able to reverse engineer the thing, but he is terribly horrifyingly, bright guys, an attorney, and um, very well educated went to an Ivy league law school and he’s bright as hell. He really can see things for what they are as far as I’m concerned. And that’s a rare skill to have and he talked about his experience in this group where there were recorded videos on the how to part. And then I think there was a live chat function. I don’t know if they used Slack or Discord or Microsoft teams or what have you, but they would run you through the program, cost several $1,000 for recorded material and they would run the daily thing and give you levels and this and that. And there’s an enormous amount of failure among the people who are trying to endeavor to do this, which is not terribly shocking.

You can imagine that that’s the case. Most traders fail, but was what was interesting here though. And I don’t know if, what the percentage or was of this, but when people would try to trade, according to what they had learned in the videos and then apply it to the daily levels and all of this people were losing a lot of money and blowing up. And then when they would comment in the chat function with other students traders, as well as the leaders of the group, the leaders would come back and say, well, it’s your fault. It’s your trader psychology. You’re not doing it right, this and that. And there was no accountability. Now coming from that school, that’s one of my areas of expertise is behavior of traders and goal setting and the mindset and all that kind of stuff. Probably not a big shock to you if you, if you listen to the show a lot.

And while I think, yes, you can’t necessarily hold people accountable for your actions. This does give you a moment of pause. Give you a moment to really think about stuff. Like if these people are doing everything they possibly can to get you to depart with your money, to be part of their program. And then after the fact, you’d try to do everything that they possibly say, you lose money. And then they say, well, it’s your fault. I do think that there’s some ownership in there by these so-called educators, because if you sell and market the thing as a panacea to help people do the types of things that they were doing. And you’re talking about people who mortgaged borrowed money against the equity of their homes to come up with a grub stake to trade and they lost it.

They lost tens of thousands of dollars. And that’s the reality of the business. So I put this out there to say like, don’t spend thousands of dollars for educational material when you can get it for free on the internet. And I don’t care who the teacher is. I know a lot of them – they’re good people. If you do your homework, there’s a lot of it that’s already for free on the internet. So I’d say save your money and use that money to trade. And I do put my money where my mouth is. I actually don’t put my money where the course is so to speak, play on words, because we don’t really do a lot of the how-to stuff because I think just the sales stuff to people, I’m an expert with the English language. I absolutely could come up with a sales landing page in one of the little tic-tac scroll bars in the right margin and give you long form sales content with an embedded video sales letter and promise you the world and show you testimonials of just the survivors and then real trading results. I know the racket, I know how to put together a marketing platform.

But I think when you’re doing that, the goal is – and they all talk fast and they’re all excited about the opportunity. Because they they’re literally taught “enthusiasm sells.” You’re never going to see a guy come out like what’s his name? Ben Stein [mockingly, lethargically] “Hi everybody. I wanted to tell you about my really exciting trading strategy that might be a good fit for you.” Like these people are always amped and the problem is that sure they might have had success for a year or two. They might even come up with new names for existing chart patterns just to create a sloganeer about the thing. But you really have to measure eight times and cut once. The old saying about the carpenter: the carpenter measures twice and cuts once. You really have to measure like 25 times and I’m not even being facetious your money is hard enough to come up with and just because you want it.

I used to say this to the folks in the wirehouses. They I’d say this “just because you come into a business owner or meet a business owner who has had, has gotten really bad advice is at a relationship at another competing wirehouse that they don’t like is ready to move and is looking for someone like you. It doesn’t necessarily mean that it’s a good fit for you.” You really have to do your due diligence and do your homework. And if you’re thinking about signing up for the academic stuff, remember that you have to have the emotional constitution to pull it off. I find that the majority of people are looking for help are looking for the intellectual solution, thinking that’s going to be a solution for their emotional issues. And you’ve heard me say before that there are no external solutions for your internal emotional situations. And that includes learning more stuff, reading more books, learning more chart patterns. Like if all that stuff work, you wouldn’t have people failing so much. You know, when you think about it from a practical standpoint, there’d be one definitive book, there’d be one definitive way to do it.

You are the enemy at the same time. So you have to find a way to fight that beast. Do your due diligence and be like a detective and an investigator – find out who went through the program and who didn’t, how many people actually succeeded. You can go to social media and ask that question and people might come out and say, yeah, I failed at my, I lost all my money. I turned $500k into $67,000, you know? And we go through all that stuff, but they might DM you privately because you have to ask why wouldn’t the thing work, who wouldn’t it work for?

And those are the tough questions that don’t typically get answered. You’re very rarely going to see a testimonial in one of these things that says, “yeah, this program sucks. All it does is help you get tax loss, carry forwards. So if you need those, because you’re making so much money elsewhere, I would definitely sign up for this course because it’ll teach you to lose money. Like you’re a pro like you don’t even have to try.” So you ought to know both sides of it. You know, when you’re in the public eye like myself and you do a podcast and you write a book, you have objective third party places where they write people, write reviews and you can see those reviews on Amazon for the book. I think you could probably see them on Apple Podcast. I think Spotify has stars. And so there’s nowhere to hide.

When you look at video sales letters and pages, you could say, well look at all the historical results of this trading style, but they don’t show you the people that blew up, they don’t show you. You know why people couldn’t follow the strategy. And it’s true that trading can be taught, but it doesn’t mean you can actually execute it. And traders get paid to execute. They don’t get paid to know stuff. You have to have basic competency. So I’m here today to tell you, be super careful about what you drop your money on. Because if you were like me, it was hard enough to get the grub stake in the first place. And there is no intellectual solution that’s going to make you feel better. If you have self doubt, there is no such thing as an “A-ha” moment on the intellectual side, it’s on the emotional side.

And I get email after email from people who say, “Hey, I wish I found your show XYZ period of time ago‚Ķ” usually months or years ago, because I tried to do this. I signed up for this guy’s program and this and that. And it didn’t work out. And a lot of times it’s because they understood it intellectually. They could see the moving parts, but it wasn’t a good fit. So that’s why I say just go trade, go find some strategies on YouTube, ask what your friends are doing and just try it with one share or one contract, of course only risk what you can afford to lose because then you will at least feel what it feels like to do that trading strategy, which has a lot to do with compatibility. You need to know how you’re going to feel when you’re in that environment or when you’re in that type of strategy of managing risk.

Because until you put real money to risk, nothing really matters. Paper trading is interesting, but it really, to me is only beneficial to show you how the platform works to enter orders. So you don’t fat finger stuff or start hitting the wrong buttons or so that you know how to enter stops and all this and that. And what’s the syntax for the ticker symbols and all that kind of fun stuff tend to want to keep it simple. But even still, I think tomorrow I’ll talk about backtesting because I’ve run a little bit long today, but it’s a thing that I’m pretty passionate about. Because I hate to see people get ripped off because the stuff that I see is just so remarkably, it’s just unbelievable. The boundaries that these marketers will push to get you to give them money and then not necessarily care about the wake of destruction that they leave behind them because they already have your money and they figure like, well, you ought to know better.

You see? So I don’t feel like there’s a lot of integrity in the system to protect the consumer because it’s highly unregulated. It doesn’t matter who’s succeeded. Somebody’s going to win the lottery for sure. But it’s a game of negative expectation and the majority of people never, ever win. And even if they win a $100, it still pales in comparison to the thousands of dollars that they spend on these stupid scratch games or the other pick pick six kind of games. All right. So be careful. Just be careful do your due diligence and ask the hard questions that you might not want answers to because it blows up the fantasy. All right. It’s a very hard business.

This is a computer generated transcript.

Subscribe to the show  

Click here to  get your free copy of The Inner Voice of Trading audiobook.

Please note: I reserve the right to delete comments that are offensive or off-topic.