Is Tom Hougaard the real deal?

[rb7]

Hi All,

Just signed up and this is my first post.

I noticed there was a bit of back and forth name throwing between the original poster and some others as to whether Tom Hougaard was the real deal or not and I would like to add my comments coming from a long experience of listening to Tom, following his posts live and generally seeing how consistent his trading is with what he preaches.

So here we go.......................Tom posts all his trades live on a telegram account that you can sign up to for free. He typically will tell you if he is trading a specific day or not and generally his calendar for the weeks ahead but things can change at short notice so he won't be there every single day when everyone wants him to be.

He has 26k subscribers on his Telegram account. When he is trading live I think it usually amounts to anything from 1k to 2.5k. I can't remember exactly but there are a lot of people listening live (10% of his total or less). He tends to trade DAX, FTSE, DOW and NASDAQ on the Day trading channel. He has a swing channel for FOREX but not a lot of trades and I don't personally follow.

His trading style: He absolutely bangs on about the mental side of trading for a good reason. He knows everyone can find a set up, or what can be descibed as an edge, everyone can back test that edge to see if it will make money but when you're at the coal face and that trade is live and going against you will you just extend that stop loss a little cos you can't bare to face that loss or worse have no stop at all. Will you be so scared to to let your winner run cos you're scared you'll lose it. He posted some research by a CFD broker that showed that approx 60% of trades were profitable and 40% were losses. But the losses were much greater than the winners so you end up losing and that's the key reason so many people fail at this.

His Trading: I noticed some comments made about how he trades and I agree with some commentators that he is often looking for a break out to happen, whether that's a move up or down above a point i.e yesterdays high or low. Or whether it's a double bottom/top that he likes to trade and I agree it can be sometimes hard to know and see exactly his mindset for taking a trade unless he clearly states it but I will say this. He pretty much always has the same stop losses in place when he trades DAX 30 points/pips, DOW/Nasdaq 50 points/pips, FTSE 10-15 Points/pips. I have watched him hit countless stop losses and never ever once saw him move a stop loss below his original and I have seen him stopped out loads of times sometimes by a point or 2 and the market suddenly moves in the direction he wanted (we've all been there I am sure) and whilst he might curse he moves on very quickly. That is consistency.

I have never ever seen him add to a losing trade. If he gets stopped out he accepts he got it wrong or his timing was wrong and he moves on. I have seen him add to winning trades plenty of times but I will say I don't often see him hold them for a long time after. For example: I have seen him buy the dow, it goes in his favour, he adds and it continues in his favour, stop losses are moved to break even so we now have a no lose trade. When the market makes another move up he tend to take profits (a very successful and profitable trade) but I have not seen him just let it run for the next hour or 2 and see where it goes and whilst he may have walked away with 100 points or more when the day ends it could have been 400 points. I would like to see that as he does highlight he'd be annoyed to not see where that trade could have gone.

He has posted various items about edges he has found which you can trade. I will list a few and attach related documents:

• School run strategy
• Advanced School run Strategy ( I have not tested or looked at in detail yet)
• What happens when Tuesday is a trend Day
• How to trade FOMC (Rule of 4)

There are more but you will need to DYOR

Is he a fraud? He is 100% NOT a fraud. He does NOT sell courses. He has NO subscription charges to his channel. You're under NO pressure to use the same Broker as he does. He has to PAY someone to look after his website, to update his spreadsheets and on a very odd occasion he posts a donation link for anyone who wishes to assist in the running of the channel but you're under NO obligation to do so.

He does have a book for sale but a huge amount of it is covered in the various documents he has on the Telegram channel. He actually gave away some of the book (not the final draft for FREE on his channel) I will upload to this post.

I have seen him win and lose live countless times, I have been in those same markets at the same time and can categorically say his entries are real time. I have seen him have absolute stinkers of a day as well as great ones and he does not hide behind any of the bad ones, he doesn't try to find excuses and he accepts that this is part of the mental game you will face if you want to become a successful trader. He talks a lot about the process so he reviews his trades and asks if he did the right thing in buying at that time and often the trade reasoning was correct but it didn't win and we all have to accept that no system/strategy works 100% of the time so you will have losses.

Can you follow his trades and make money? Absolutely yes but I will caution that there is often a tiny bit of latency on the streams as well as the time it takes you to react and close out a trade. So, he can get out of a trade and make 15 points and by the time you have reacted and closed out you might be on 8 points but equally you could be on 20 points especially on the DOW/Nasdaq that can move very quickly but all things being equal this should even out and if at the end of a month he made 500 points and you made 480 points I don't think too many would complain.

I personally think he has had a bad start to 2023 despite being highly profitable and he'd probably take offence at the very suggestion that someone who has more than doubled there account has had a bad start but I think he could trade better and have seen him do so. I think it's down to the amount of time he spends answering emails, talking through trades and all the other things that would come from having 20k subscribers to your channel. I would like him to stream and focus purely on what he's doing as he can often be distracted and I think that ultimately is why he has needed to take a break in 2023.

Someone asked about his actual trades and results that are all available on his telegram account. I have attached lots of info for you all and I wish you all the best with your trading journey.

Were you able to make money by following his trades?

It's a bit suspicious that you just registered on this forum to post your appraising on that guy. But maybe it's just me...

 

[patmc]

Were you able to make money by following his trades?

It's a bit suspicious that you just registered on this forum to post your appraising on that guy. But maybe it's just me...

Hi RB7,

Yes, I was able to make money. There was a time in 2022 when he was trading consistently and was focused just on the markets and not everything else around him. I believe he has been a little more hit and miss this year so I haven't followed him religiously and I can also say I have entered trades that I didn't truly believe in and have lost as a result of that but equally I have been on to some good winners too as a result of following.

I can say I have easily spent 50 hours listening to him live as he posts his trades and the main point about my post was that he is not a fraud in any way. Whether you consider him a good trader or you like his approach to trading is another thing but he is legit and I think it's unfair to the man to for people to call him a fraudster when it's fairly obvious he doesn't make any money from any of the 26k people following him as he doesn't charge them anything, he posts live for all to hear and if he was posting trades that didn't exist I am sure a lot of the 26k people would have called him out by now.

Does he make money from the broker he uses? I simply don't know but if he did I would think he would be pushing that broker to his followers more often and he rarely does.

I saw him live for the first time at a talk at CMC markets in London a couple of weeks ago so he obviously will work with other brokers too and I have no doubts he was paid for his talk as he flew in from somewhere (assume Denmark) to do the talk.

I note your suspicions as I have never posted before but I don't think my first post is overly praising him, I was at times critical of certain aspects and simply posting my experience of having spent a long time listening. But in answer to your suspicion I discovered this site when I googled Tom because this morning he posted this to his Telegram:

"STATEMENT 23nd May 2023

Over the weekend of the 20th and 21st of May 2023 a YouTube video was released, alleging very serious accusations against me. I am at this point, for legal reasons, unable to go into further details.

The accusations are 100% untrue. They are baseless, without merit or evidence, and entirely unsubstantiated.

Unfortunately, true to human nature, the court of public opinion doesn’t need much encouragement to jump on the band wagon, which the video incited.

Subsequent to the release of the video I received a number of threatening communications, which I am forced to take seriously.

I started sharing knowledge with the public in 2002. I have never until this weekend had threats made to my person and my family. It is a shock to me, and I don’t believe that I am in the right frame of mind to trade.

It is for this reason that I am stepping back from public life until I have considered my legal response and given the authorities an opportunity to investigate.

I will leave my Telegram channels open, as well as my website. Feel free to use and share the knowledge I have shared with you.

Yours sincerely

Tom Hougaard"

I tried to find the video he was referring to but couldn't and after googling name and other words I found this chat hence my intrigue. Hope that eleviates your suspicions.

 

[patmc]

Again you get mad if you want to copy him. His average trade is less than 2 points on his indices short term trades. He does not trade the much more liquid SP500 for a reason I suspect. Because he cannot move it by 2 points than the other indices when 100 or 200 of his followers do follow him and trade with him. You are only part of his lemmings, like a sheep to be slaughtered later. Good luck if you can follow him with similar results. Then you can double your account every month I guess, because of his tight risk management. Until you reached the same trading size as Tom. Then you cannot increase your size because there is no more liquidity to be added for his average trade of 2 points on Dax or Dow. You cannot trade 100 lots on DAX for 2 points on average. If you did this on CFD you get much worse fills on any CFD broker because on the underyling futures market it cannot be replicated, so any market maker on the futures contracts would stop you here from profiting more. I would say you cannot follow him, but if you can without any slippage, just trade and get rich by him. But be warned! It is not that easy with this very tight profits! Just do basic maths on his excel sheets of trading performance. And you need to be higher alerted with the need of an electro shocker, everytime he announces a trade entry and exit. Because if you already miss his 2 points average trade net performance because of slippage...you loose in the end only.

Hi TrAndy2022,

I agree with you that slippage can be a problem and I acknowledge that in my post. I had a quick look at the numbers for this year and can see the following:

564 Trades (Across DAX, FTSE, DOW, NASDAQ)
1773 Points made
Average of just over 3 points per trade
Number of Days traded 61
Average points per day 29

I would say slippage works both ways and you can gain on them as much as lose but you make a valid point and if you lose a point or 2 from each trade he posts you might not make much money or it might not be worth the effort.

 

[Laissez Faire]

Hi TrAndy2022,

I agree with you that slippage can be a problem and I acknowledge that in my post. I had a quick look at the numbers for this year and can see the following:

564 Trades (Across DAX, FTSE, DOW, NASDAQ)
1773 Points made
Average of just over 3 points per trade
Number of Days traded 61
Average points per day 29

I would say slippage works both ways and you can gain on them as much as lose but you make a valid point and if you lose a point or 2 from each trade he posts you might not make much money or it might not be worth the effort.

Would be interesting to know the average winner versus average loss if you have those.

From what I heard from someone else that's following him is that Tom is big on the concept of adding to a winning trade, but when this guy followed him he mostly saw him take scalp trades and small profits which isn't quite congruent with the idea of adding to a winner and letting winners run.

Thank you.

PS: My superficial impression from the outside is that Tom isn't necessarily a great technical trader, but have done well thanks to excellent risk management, i.e., ruthlessly cutting losses on small size and running winners on larger size. I may be wrong.

 

[patmc]

Would be interesting to know the average winner versus average loss if you have those.

From what I heard from someone else that's following him is that Tom is big on the concept of adding to a winning trade, but when this guy followed him he mostly saw him take scalp trades and small profits which isn't quite congruent with the idea of adding to a winner and letting winners run.

Thank you.

PS: My superficial impression from the outside is that Tom isn't necessarily a great technical trader, but have done well thanks to excellent risk management, i.e., ruthlessly cutting losses on small size and running winners on larger size. I may be wrong.

I have posted a screen shot of the numbers for 2023 only. I personally think his 2022 numbers would look better but I am not going to punch through 12 spreadsheets to find out ;-)

As you can see his average loss on all indices (in 2023) is greater than his average win (typically by a point or 2), however he wins more than he loses (60% win rate on average) which makes him profitable (Up £300k).

His loss amount is pretty much always fixed as I stated previously, he typically moves the stop loss up towards breakeven when the trade is in his favour.

I kind of agree with your comment about adding to winners, I have seen him do this a lot but not so much in recent months. When he enters a trade he starts to see how it develops, if it isn't doing what he expects or the reason he entered it he sometimes closes it out to take a small scalp but there have been more recent times it has gone in his favour and he's not added. He tends to admit when he is not in the right frame of mind to trade and I think he hasn't been more recently.

I also agree that it's his risk management that has put him where he is but isn't that what most seasoned traders will say. The old mantra "Cut your losses, let your profits run" or as per his book "Best loser wins"

But ultimately, I think people need to form their own opinions. They could follow every one of his trades for a month on a demo account and see what slippage they got, how good he was and more importantly if they made any money and if they felt it wasn't for them they have not lost a single penny/cent.

Wish everyone all the best on their trading journey.

 

[Nagelis]

Here are my findings FWIW.

Intrigued by hearing a lot about him, I have been following Tom´s live trading for several months now. I do firmly believe that Tom, as a person, is a solid, honest, straightforward guy. He does not charge anything to any one for the knowledge he shares, he does not have anything to sell other than his book (which costs next to nothing).

YET, there is something that does not feel entirely right in all his trading and associated activities, and I cannot quite put my finger on it. Here are some thoughts:

* If you have strong edge like he seems to have, why would you put it up for grabs to more than 25,000 followers, for free, not counting all the people that just take his (simple) strategies off his website?? Hell, there are even several scammers selling signals on the back of his trading (which he is aware of) , so there is for sure a large degree of proliferation going on which can cause a threat to his system´s long term profitability. The risk is, if his results are real, that some institutional traders follow the strategy for huge size as well.

If an edge gets proliferated / known to so many competing market participants, surely it will cease to be an edge quite quickly . This is what I cannot get my head around. Why would you put your bread and butter at risk in such a way like he is doing???

Consider the fact - which I am sure you all know - that Renaissance Technologies and Jim Simons are mega secretive about their edge which gives them just shy of 51% winning percentage. Tom seems to have around 61% winning trades.

* This concern I have should be even more valid if we consider scalping / day trading to be a negative sum game, so why would you do that, i.e. giving complete insight, shouting your edge in detail from the rooftops??


If the algo´s / market makers sniff out what Tom (and by consequence thousands of followers and same system traders) are doing , (btw, most of his trade set-ups are very simple, precise and objective, based on H and L of specific "signal" bars, not vulnerable to subjective interpretations), they would start to trade against these weak hands and make money by picking off / squeezing all these short term traders and trades ... (by the way, I believe this MAY be what is slowly unfolding now, as Tom´s track record is slowly but steadily deteriorating, he recently had a rare loss month and his YTD bottom line is much less than what it used to be).


* Next point: if many of these CFD brokers (such as Tom´s) would see their client is consistently profitable, they would simply start copying the trades via a simple program and get exactly the same execution price and P&L on their copied trades. Hell, they could be themselves quietly selling the signals under a different name. That is what happens in the FX markets. Needless to say, the same signal/trade risks getting proliferated even more and would destroy the edge even quicker.


* I wonder if /why Tom has not yet asked these questions himself and what his response would be. He clearly is very smart so why never talk about these risks? Could it be he is counting on a huge execution wave of flow which he creates himself and rides in the first place? What would be the max capacity of trading size that could be executed before it starts to distort the strategy?

* For a private/self trader his stake size is very high (200 GBP per point). You can only trade that size, if you have unwavering solid confidence in your edge and system (and/or sit on a large pile of cash so you can´t be too stressed about losing a boatload per day). The psychology fluff (meditation) around his trading may be valid to some degree but is quite vague and imho OTT and can not in itself account for the successful track record (if it is real). Some of the trading greats admitted they were scared with every single trade they took, yet that did not keep them from performing very well and could even be the reason why they performed well... So this psychology bit about eliminating fear remains a question mark as to how much it contributes to his success.


* OTHER RED FLAGS: What I do find strange is that he does NOT show his live trading on screen, we never get to see the executions on his platform, account balance, trade blotter. How do we know if it is real money trading? How do we know he does execute at the entry and exit he says? He never seems to suffer from any slippage, yet many of his followers do. There is no third party track record at all. I have seen Tom being attacked and threatened quite aggressively by disappointed signal followers as is also shown higher in this thread.

Like some others have mentioned already, he swears by his off-shore small broker. A bit strange. Not sure what to think of it.

* BOTTOM LINE. So perhaps, as far as I can see, his only true edge is indeed adding to winning (short term) positions, not the system or entry/exit signals in itself which - given the large stake size- needs a decent amount of confidence. So imho it´s the "position sizing" component which is the driving factor, mixed with a "psychological" factor which is hard to quantify.

Food for thought: looking at his numbers of losing and winning trades as published by others above, imagine what the outcome would be IF HE WOULD NOT add to winners, his success rate would be closer to 50% or even below 50%.

 

[TrAndy2022]

Here are my findings FWIW.

Intrigued by hearing a lot about him, I have been following Tom´s live trading for several months now. I do firmly believe that Tom, as a person, is a solid, honest, straightforward guy. He does not charge anything to any one for the knowledge he shares, he does not have anything to sell other than his book (which costs next to nothing).

YET, there is something that does not feel entirely right in all his trading and associated activities, and I cannot quite put my finger on it. Here are some thoughts:

* If you have strong edge like he seems to have, why would you put it up for grabs to more than 25,000 followers, for free, not counting all the people that just take his (simple) strategies off his website?? Hell, there are even several scammers selling signals on the back of his trading (which he is aware of) , so there is for sure a large degree of proliferation going on which can cause a threat to his system´s long term profitability. The risk is, if his results are real, that some institutional traders follow the strategy for huge size as well.

If an edge gets proliferated / known to so many competing market participants, surely it will cease to be an edge quite quickly . This is what I cannot get my head around. Why would you put your bread and butter at risk in such a way like he is doing???

Consider the fact - which I am sure you all know - that Renaissance Technologies and Jim Simons are mega secretive about their edge which gives them just shy of 51% winning percentage. Tom seems to have around 61% winning trades.

* This concern I have should be even more valid if we consider scalping / day trading to be a negative sum game, so why would you do that, i.e. giving complete insight, shouting your edge in detail from the rooftops??


If the algo´s / market makers sniff out what Tom (and by consequence thousands of followers and same system traders) are doing , (btw, most of his trade set-ups are very simple, precise and objective, based on H and L of specific "signal" bars, not vulnerable to subjective interpretations), they would start to trade against these weak hands and make money by picking off / squeezing all these short term traders and trades ... (by the way, I believe this MAY be what is slowly unfolding now, as Tom´s track record is slowly but steadily deteriorating, he recently had a rare loss month and his YTD bottom line is much less than what it used to be).


* Next point: if many of these CFD brokers (such as Tom´s) would see their client is consistently profitable, they would simply start copying the trades via a simple program and get exactly the same execution price and P&L on their copied trades. Hell, they could be themselves quietly selling the signals under a different name. That is what happens in the FX markets. Needless to say, the same signal/trade risks getting proliferated even more and would destroy the edge even quicker.


* I wonder if /why Tom has not yet asked these questions himself and what his response would be. He clearly is very smart so why never talk about these risks? Could it be he is counting on a huge execution wave of flow which he creates himself and rides in the first place? What would be the max capacity of trading size that could be executed before it starts to distort the strategy?

* For a private/self trader his stake size is very high (200 GBP per point). You can only trade that size, if you have unwavering solid confidence in your edge and system (and/or sit on a large pile of cash so you can´t be too stressed about losing a boatload per day). The psychology fluff (meditation) around his trading may be valid to some degree but is quite vague and imho OTT and can not in itself account for the successful track record (if it is real). Some of the trading greats admitted they were scared with every single trade they took, yet that did not keep them from performing very well and could even be the reason why they performed well... So this psychology bit about eliminating fear remains a question mark as to how much it contributes to his success.


* OTHER RED FLAGS: What I do find strange is that he does NOT show his live trading on screen, we never get to see the executions on his platform, account balance, trade blotter. How do we know if it is real money trading? How do we know he does execute at the entry and exit he says? He never seems to suffer from any slippage, yet many of his followers do. There is no third party track record at all. I have seen Tom being attacked and threatened quite aggressively by disappointed signal followers as is also shown higher in this thread.

Like some others have mentioned already, he swears by his off-shore small broker. A bit strange. Not sure what to think of it.

* BOTTOM LINE. So perhaps, as far as I can see, his only true edge is indeed adding to winning (short term) positions, not the system or entry/exit signals in itself which - given the large stake size- needs a decent amount of confidence. So imho it´s the "position sizing" component which is the driving factor, mixed with a "psychological" factor which is hard to quantify.

Food for thought: looking at his numbers of losing and winning trades as published by others above, imagine what the outcome would be IF HE WOULD NOT add to winners, his success rate would be closer to 50% or even below 50%.

Could you tell me more about your passage about the broker, could sell any trader his trades or positions as signals under different names in FX trading, really ? I never heard that before. Also a broker can only do A-booking and not taking the same position 10 times or so. Or I am mistaken here ?

 

[Laissez Faire]

Here are my findings FWIW.

Intrigued by hearing a lot about him, I have been following Tom´s live trading for several months now. I do firmly believe that Tom, as a person, is a solid, honest, straightforward guy. He does not charge anything to any one for the knowledge he shares, he does not have anything to sell other than his book (which costs next to nothing).

YET, there is something that does not feel entirely right in all his trading and associated activities, and I cannot quite put my finger on it. Here are some thoughts:

* If you have strong edge like he seems to have, why would you put it up for grabs to more than 25,000 followers, for free, not counting all the people that just take his (simple) strategies off his website?? Hell, there are even several scammers selling signals on the back of his trading (which he is aware of) , so there is for sure a large degree of proliferation going on which can cause a threat to his system´s long term profitability. The risk is, if his results are real, that some institutional traders follow the strategy for huge size as well.

If an edge gets proliferated / known to so many competing market participants, surely it will cease to be an edge quite quickly . This is what I cannot get my head around. Why would you put your bread and butter at risk in such a way like he is doing???

Consider the fact - which I am sure you all know - that Renaissance Technologies and Jim Simons are mega secretive about their edge which gives them just shy of 51% winning percentage. Tom seems to have around 61% winning trades.

* This concern I have should be even more valid if we consider scalping / day trading to be a negative sum game, so why would you do that, i.e. giving complete insight, shouting your edge in detail from the rooftops??


If the algo´s / market makers sniff out what Tom (and by consequence thousands of followers and same system traders) are doing , (btw, most of his trade set-ups are very simple, precise and objective, based on H and L of specific "signal" bars, not vulnerable to subjective interpretations), they would start to trade against these weak hands and make money by picking off / squeezing all these short term traders and trades ... (by the way, I believe this MAY be what is slowly unfolding now, as Tom´s track record is slowly but steadily deteriorating, he recently had a rare loss month and his YTD bottom line is much less than what it used to be).


* Next point: if many of these CFD brokers (such as Tom´s) would see their client is consistently profitable, they would simply start copying the trades via a simple program and get exactly the same execution price and P&L on their copied trades. Hell, they could be themselves quietly selling the signals under a different name. That is what happens in the FX markets. Needless to say, the same signal/trade risks getting proliferated even more and would destroy the edge even quicker.


* I wonder if /why Tom has not yet asked these questions himself and what his response would be. He clearly is very smart so why never talk about these risks? Could it be he is counting on a huge execution wave of flow which he creates himself and rides in the first place? What would be the max capacity of trading size that could be executed before it starts to distort the strategy?

* For a private/self trader his stake size is very high (200 GBP per point). You can only trade that size, if you have unwavering solid confidence in your edge and system (and/or sit on a large pile of cash so you can´t be too stressed about losing a boatload per day). The psychology fluff (meditation) around his trading may be valid to some degree but is quite vague and imho OTT and can not in itself account for the successful track record (if it is real). Some of the trading greats admitted they were scared with every single trade they took, yet that did not keep them from performing very well and could even be the reason why they performed well... So this psychology bit about eliminating fear remains a question mark as to how much it contributes to his success.


* OTHER RED FLAGS: What I do find strange is that he does NOT show his live trading on screen, we never get to see the executions on his platform, account balance, trade blotter. How do we know if it is real money trading? How do we know he does execute at the entry and exit he says? He never seems to suffer from any slippage, yet many of his followers do. There is no third party track record at all. I have seen Tom being attacked and threatened quite aggressively by disappointed signal followers as is also shown higher in this thread.

Like some others have mentioned already, he swears by his off-shore small broker. A bit strange. Not sure what to think of it.

* BOTTOM LINE. So perhaps, as far as I can see, his only true edge is indeed adding to winning (short term) positions, not the system or entry/exit signals in itself which - given the large stake size- needs a decent amount of confidence. So imho it´s the "position sizing" component which is the driving factor, mixed with a "psychological" factor which is hard to quantify.

Food for thought: looking at his numbers of losing and winning trades as published by others above, imagine what the outcome would be IF HE WOULD NOT add to winners, his success rate would be closer to 50% or even below 50%.

You bring up some valid points. Maybe forward this message to Tom for himself to read.

A few additional observations and thoughts.

1. If Tom have a marginal strategy, it's possible he could get a benefit from sharing his lagging signals as additional orders in his direction could move the market in his favor. I can only speculate, but if thousands of followers were copying his trades I'm sure it could move even a liquid market a few ticks or even points short term.

2. If Tom had a fantastic strategy (he doesn't), it would make more sense to be secretive, but from what I understand he's trading basic price action concepts, i.e., common knowledge and trading 101. As such, there's not much to hide, honestly.

3. I may be wrong and this is only speculation, but Tom is still a retail trader and I do not think institutional players have any interest in what he's doing and would not waste time trying to make money off his plays (either with him or against him). He's still a small fish in a big pond.

4. Performance issues. Posting live trades in front of an audience is generally a bad idea. Especially if you start performing poorly. Suddenly, you're more concerned about how you're perceived and being right - than actually trading the market. Typically, you'd let losses run and cut winners short. I would bet that this factor in addition to the flaws of his strategy is why he's having issues.

5. Keep in mind that volatility have been extraordinary for the last few years, so as soon as volatility is dropping a strategy that have been minting coin can easily go breakeven or even negative. Adding to winners is a good example as this generally requires a strong trend. In a range bound market adding to winners generally doesn't work, unless your add ons are very closely strung together and your initial entry was early. Which still generally works poorly due to the mean reversion nature of a range bound market.

I can see many reasons for why he's running that room. Trading is a lonely business and maybe it's his way of having some community. Or maybe he have ulterior motives. We can only speculate.

Unless someone was sharing something extremely worthwhile or consistently posting killer trades I wouldn't have any interest in hanging around in a trading room.

 

[speedo]

Here are my findings FWIW.

Intrigued by hearing a lot about him, I have been following Tom´s live trading for several months now. I do firmly believe that Tom, as a person, is a solid, honest, straightforward guy. He does not charge anything to any one for the knowledge he shares, he does not have anything to sell other than his book (which costs next to nothing).

YET, there is something that does not feel entirely right in all his trading and associated activities, and I cannot quite put my finger on it. Here are some thoughts:

* If you have strong edge like he seems to have, why would you put it up for grabs to more than 25,000 followers, for free, not counting all the people that just take his (simple) strategies off his website?? Hell, there are even several scammers selling signals on the back of his trading (which he is aware of) , so there is for sure a large degree of proliferation going on which can cause a threat to his system´s long term profitability. The risk is, if his results are real, that some institutional traders follow the strategy for huge size as well.

If an edge gets proliferated / known to so many competing market participants, surely it will cease to be an edge quite quickly . This is what I cannot get my head around. Why would you put your bread and butter at risk in such a way like he is doing???

Consider the fact - which I am sure you all know - that Renaissance Technologies and Jim Simons are mega secretive about their edge which gives them just shy of 51% winning percentage. Tom seems to have around 61% winning trades.

* This concern I have should be even more valid if we consider scalping / day trading to be a negative sum game, so why would you do that, i.e. giving complete insight, shouting your edge in detail from the rooftops??


If the algo´s / market makers sniff out what Tom (and by consequence thousands of followers and same system traders) are doing , (btw, most of his trade set-ups are very simple, precise and objective, based on H and L of specific "signal" bars, not vulnerable to subjective interpretations), they would start to trade against these weak hands and make money by picking off / squeezing all these short term traders and trades ... (by the way, I believe this MAY be what is slowly unfolding now, as Tom´s track record is slowly but steadily deteriorating, he recently had a rare loss month and his YTD bottom line is much less than what it used to be).


* Next point: if many of these CFD brokers (such as Tom´s) would see their client is consistently profitable, they would simply start copying the trades via a simple program and get exactly the same execution price and P&L on their copied trades. Hell, they could be themselves quietly selling the signals under a different name. That is what happens in the FX markets. Needless to say, the same signal/trade risks getting proliferated even more and would destroy the edge even quicker.


* I wonder if /why Tom has not yet asked these questions himself and what his response would be. He clearly is very smart so why never talk about these risks? Could it be he is counting on a huge execution wave of flow which he creates himself and rides in the first place? What would be the max capacity of trading size that could be executed before it starts to distort the strategy?

* For a private/self trader his stake size is very high (200 GBP per point). You can only trade that size, if you have unwavering solid confidence in your edge and system (and/or sit on a large pile of cash so you can´t be too stressed about losing a boatload per day). The psychology fluff (meditation) around his trading may be valid to some degree but is quite vague and imho OTT and can not in itself account for the successful track record (if it is real). Some of the trading greats admitted they were scared with every single trade they took, yet that did not keep them from performing very well and could even be the reason why they performed well... So this psychology bit about eliminating fear remains a question mark as to how much it contributes to his success.


* OTHER RED FLAGS: What I do find strange is that he does NOT show his live trading on screen, we never get to see the executions on his platform, account balance, trade blotter. How do we know if it is real money trading? How do we know he does execute at the entry and exit he says? He never seems to suffer from any slippage, yet many of his followers do. There is no third party track record at all. I have seen Tom being attacked and threatened quite aggressively by disappointed signal followers as is also shown higher in this thread.

Like some others have mentioned already, he swears by his off-shore small broker. A bit strange. Not sure what to think of it.

* BOTTOM LINE. So perhaps, as far as I can see, his only true edge is indeed adding to winning (short term) positions, not the system or entry/exit signals in itself which - given the large stake size- needs a decent amount of confidence. So imho it´s the "position sizing" component which is the driving factor, mixed with a "psychological" factor which is hard to quantify.

Food for thought: looking at his numbers of losing and winning trades as published by others above, imagine what the outcome would be IF HE WOULD NOT add to winners, his success rate would be closer to 50% or even below 50%.

Profitable strategies are a dime a dozen. Want an example? Take nothing but bull or bear flags, qualify by either an up sloping or down sloping 20 EMA. Put your stop under/over the signal bar, enter on a takeout of the bar back in the direction of the trade after an opposite color (a trap) and set a target of 2x initial risk. If you do that, you will exceed 50% winners and your winners will be larger than your losses.

Most will not abide by those simple rules. They will talk themselves out of a signal or a trade will begin to go against them and they will move the stop or add to the losing trade. Or they will have 2 or 3 losses in a row and will pass on the next signal because they are afraid it will be another loss. Or lose focus (maybe engaging in too many bullshit threads on ET?) and miss signals. Or they will take it but exit too soon as "At least I made some of my losses back" just to watch it go to target.

Moral of the story? Trading is not about the strategy although an edge over a statistical significant number of trades must be present, but about the trading (trader) itself.

As far as Jim Simons goes, managing a portfolio of billions with many positions open is an entirely different thing than an independent trader day trading one or a few instruments....apples and oranges.

 

[NoahA]

1. If Tom have a marginal strategy, it's possible he could get a benefit from sharing his lagging signals as additional orders in his direction could move the market in his favor. I can only speculate, but if thousands of followers were copying his trades I'm sure it could move even a liquid market a few ticks or even points short term.

I think that specifically with this point, he trades one of those spread betting instruments that are available to people in the UK I think. This has tax advantages from what I remember, but I think this in no way has any impact on the underlying instrument. In fact, I see it when his fills seem to be far away from where the market was back when I was following him in real time.

I think its because even though the NQ or YM might still be at some level for a few seconds, the spread betters have already moved the market in their instrument. Its no different than major difference between the micro and mini contracts. They can sometimes be more than just a few ticks apart.

This also means he pays no commissions since the cost is in the spread. But since there is no impact to the NQ contract, if everyone follows Tom into the trade at the same broker, all it would do is give people worse fills in their spread betting account but not move the NQ itself.