http://www.kiplinger.com/magazine/archives/our-man-goes-undercover-and-tells-all.html
Our Man Goes Undercover and Tells All
He spent days sitting through free seminars to become a super trader.
Lesson number one: Itâll cost you.
By Thomas M. Anderson, Associate Editor
From Kiplinger's Personal Finance magazine, March 2010
Admit it: Youâve been tempted. Youâve seen the infomercials for trading systems that will teach you how to master the markets. Sign up for a free seminar in your area and youâre on your way to wealth and freedom. Ordinary people just like you are earning thousands each month. Why not join the club?
With visions of early retirement dancing in my head, I decided to take the plunge, or at least the initial part of it. I would attend the free seminars of three big trading-education outfits: Online Trading Academy, BetterTrades and Profit Strategies. I wanted to see whether these outfits delivered on their promises to help people become successful traders. Hereâs what I found.
Related Links
âRespect your capitalâ
The first rule you learn at the Online Trading Academy (OTA) is not to trust Wall Street with your money. âWall Street has trained us to be buy-and-hold investors,â the instructor, Chris, told me and the two other students attending the Power Trading Workshop at the companyâs offices in Vienna, Va., a suburb of Washington, D.C. (OTA also has offices in the United Kingdom, Singapore and Dubai, as well as in 29 other cities in the U.S. and Canada.) This is a bad thing, Chris said, because the market goes up, down and sideways. And when it heads south, as it did during the 2007-09 bear market, buy-and-hold investors get crushed. OTAâs mission was to teach the likes of me how to make money regardless of what the market does.
How, you ask? Through the power of technical analysis. Technical analysts study past data -- primarily a securityâs price and trading volume -- to predict the future. They look for patterns to find reliable signals of when to buy or sell financial instruments, such as stocks, options, futures and foreign currencies. The process involves studying a menagerie of indicators, such as candlestick charts, Bollinger bands and something called the stochastic oscillator. Technicians care little, if at all, about fundamental analysis -- the examination of, say, a companyâs earnings and balance sheet or of general economic conditions.
Technical analysis has both passionate critics and ardent adherents. For example, an October 2009 study by New Zealandâs Massey University found that of more than 5,000 strategies that employ technical analysis, none produced returns in the 49 countries where researchers tested the strategies beyond what youâd expect by chance. However, scores of traders, including billionaire Paul Tudor Jones, say the discipline helped them amass great fortunes. So I tried to keep an open mind.
But a debate about technical analysis was not part of the program at OTA. Instead, the seminar quickly evolved from a round of Wall Street bashing to a pitch to enroll in the companyâs $4,990 Pro-Trader class. The seven-day course would show âhow to treat your capital with respect,â Chris said. He added that some of the academyâs students had doubled their money in three months after taking the Pro-Trader class. Once I paid tuition, I could retake the course as often as I wanted. And if I used one of the six discount brokers that partnered with OTA, I would earn rebates on commissions up to the cost of the classes I took.
Overall, I left my free OTA seminar less than satisfied. I wanted to learn how to trade and all I got was a sales pitch. It was time to hit the road.
âWho likes money?â
I drove to the Hilton Airport Hotel in Norfolk, Va., to attend the Financial Freedom Expo, sponsored by BetterTrades. About 30 would-be zillionaires, mostly baby-boomers, sat in a cavernous ballroom. Men outnumbered women two to one.
BetterTradesâ presentation was the most lavish of the three seminars I attended. At the front of the room a large projection screen was draped in velvety purple curtains. Tables displaying neat rows of BetterTrades DVD box sets surrounded the screen. I felt like a contestant on The Price Is Right, especially after I met the expo leader, Steve, who was tall, tan and likable -- just like the game showâs Bob Barker. Steve fired up the crowd with questions such as âWho likes money?â and âWho would like to make more?â
For Steve, successful trading was a matter of identifying support and resistance levels for a security. Look at a stock chart. If you draw a line that hits multiple points where the stock price bounces back from a low point, it is known as a support level. The line drawn on the chart that hits multiple points where the price peaks is known as a resistance level. Under technical analysis, a stock trader wants to buy at support (low) and sell at resistance (high). Sounds easy, but itâs difficult to know where the support and resistance levels are until after the fact.
With the class wrapping up, Steve had a special offer for me. For just $3,995, if I acted now, I could attend the two-day Market Essentials seminar coming to Norfolk. The first five people to sign up would get free bonus training materials. Steve said I had nothing to lose because if BetterTradesâ strategies did not earn me three times what I spent on tuition within six months, the company would refund my tuition or train me free of charge for up to a year until I mastered the program. (His offer did not take into account how much capital I would put up.)
Our Man Goes Undercover and Tells All
He spent days sitting through free seminars to become a super trader.
Lesson number one: Itâll cost you.
By Thomas M. Anderson, Associate Editor
From Kiplinger's Personal Finance magazine, March 2010
Admit it: Youâve been tempted. Youâve seen the infomercials for trading systems that will teach you how to master the markets. Sign up for a free seminar in your area and youâre on your way to wealth and freedom. Ordinary people just like you are earning thousands each month. Why not join the club?
With visions of early retirement dancing in my head, I decided to take the plunge, or at least the initial part of it. I would attend the free seminars of three big trading-education outfits: Online Trading Academy, BetterTrades and Profit Strategies. I wanted to see whether these outfits delivered on their promises to help people become successful traders. Hereâs what I found.
Related Links
âRespect your capitalâ
The first rule you learn at the Online Trading Academy (OTA) is not to trust Wall Street with your money. âWall Street has trained us to be buy-and-hold investors,â the instructor, Chris, told me and the two other students attending the Power Trading Workshop at the companyâs offices in Vienna, Va., a suburb of Washington, D.C. (OTA also has offices in the United Kingdom, Singapore and Dubai, as well as in 29 other cities in the U.S. and Canada.) This is a bad thing, Chris said, because the market goes up, down and sideways. And when it heads south, as it did during the 2007-09 bear market, buy-and-hold investors get crushed. OTAâs mission was to teach the likes of me how to make money regardless of what the market does.
How, you ask? Through the power of technical analysis. Technical analysts study past data -- primarily a securityâs price and trading volume -- to predict the future. They look for patterns to find reliable signals of when to buy or sell financial instruments, such as stocks, options, futures and foreign currencies. The process involves studying a menagerie of indicators, such as candlestick charts, Bollinger bands and something called the stochastic oscillator. Technicians care little, if at all, about fundamental analysis -- the examination of, say, a companyâs earnings and balance sheet or of general economic conditions.
Technical analysis has both passionate critics and ardent adherents. For example, an October 2009 study by New Zealandâs Massey University found that of more than 5,000 strategies that employ technical analysis, none produced returns in the 49 countries where researchers tested the strategies beyond what youâd expect by chance. However, scores of traders, including billionaire Paul Tudor Jones, say the discipline helped them amass great fortunes. So I tried to keep an open mind.
But a debate about technical analysis was not part of the program at OTA. Instead, the seminar quickly evolved from a round of Wall Street bashing to a pitch to enroll in the companyâs $4,990 Pro-Trader class. The seven-day course would show âhow to treat your capital with respect,â Chris said. He added that some of the academyâs students had doubled their money in three months after taking the Pro-Trader class. Once I paid tuition, I could retake the course as often as I wanted. And if I used one of the six discount brokers that partnered with OTA, I would earn rebates on commissions up to the cost of the classes I took.
Overall, I left my free OTA seminar less than satisfied. I wanted to learn how to trade and all I got was a sales pitch. It was time to hit the road.
âWho likes money?â
I drove to the Hilton Airport Hotel in Norfolk, Va., to attend the Financial Freedom Expo, sponsored by BetterTrades. About 30 would-be zillionaires, mostly baby-boomers, sat in a cavernous ballroom. Men outnumbered women two to one.
BetterTradesâ presentation was the most lavish of the three seminars I attended. At the front of the room a large projection screen was draped in velvety purple curtains. Tables displaying neat rows of BetterTrades DVD box sets surrounded the screen. I felt like a contestant on The Price Is Right, especially after I met the expo leader, Steve, who was tall, tan and likable -- just like the game showâs Bob Barker. Steve fired up the crowd with questions such as âWho likes money?â and âWho would like to make more?â
For Steve, successful trading was a matter of identifying support and resistance levels for a security. Look at a stock chart. If you draw a line that hits multiple points where the stock price bounces back from a low point, it is known as a support level. The line drawn on the chart that hits multiple points where the price peaks is known as a resistance level. Under technical analysis, a stock trader wants to buy at support (low) and sell at resistance (high). Sounds easy, but itâs difficult to know where the support and resistance levels are until after the fact.
With the class wrapping up, Steve had a special offer for me. For just $3,995, if I acted now, I could attend the two-day Market Essentials seminar coming to Norfolk. The first five people to sign up would get free bonus training materials. Steve said I had nothing to lose because if BetterTradesâ strategies did not earn me three times what I spent on tuition within six months, the company would refund my tuition or train me free of charge for up to a year until I mastered the program. (His offer did not take into account how much capital I would put up.)
