Vienna: First, I did not want to go into this whole thing. I just saw somebody offering the course, I had met the trader (" ") in question before and thought that the experience I had might prove beneficial to other people's wallets. This is not a post of me whining about a loss: It took me a while but I made the money back and consider it a useful yet painful lesson. Perhaps it serves others.
I know the situation sounds ridiculous. Perhaps it helps to understand that the guy lost 40% in my account WHILE his trading room showed a 25% or 30% profit per month. Lesson Nr. 1: be careful about room records.
Since then I give ZERO credibility to most profit statements of online gurus. Statements such as these can be published for some accounts, but not for the losing ones. There are all kinds of tricks. Theorethically, it would even be quite easy to engineer it so that one account would just be used to hedge profitable positions in others. I am not saying that this is what happened to me, I have no idea.
My situation was that I lacked the time to trade, I work. So I did some diligence (but obviously not diligently enough). I followed the room record for a while, the entries and exits looked profitable, then signed an agreement with the guy to trade my account. Should I have asked for "audited" statements? Perhaps. But it might not have helped- see above.
So, I took the "fact" of these returns and held on to that, after all, it was expected that the fellow would be able to match the performance of his own trading room, right? Please note that the room had shown once or twice intra-month drawdowns of perhaps 15% or so in the past.
Lesson #2:The important point is that the false judgement on my part (seeing some great returns and making the jump to "this guy is a market wizard and could trade my account profitably") led to me tolerating drawdowns that I would have never accepted for my own method. After all, this was an expert trader with a proven record, right? I knew about risk control, had even gone to a Tharp seminar on the subject. We started out with an agreement of risking about 2% of the account per trade. There were some profits, and then almost immediately the account was down about 10%. No big deal, there had been drawdowns of 15 or so percent in the room historically. However, we agreed to reduce the percentage to be risked a little, to perhaps 1.5%. Did I have this signed in a legal document? No, but per phone conversations and emails.
The account made some back and then dove down another 10%. Still only 5% more than what had been "historically" happened, right? And up again for a while, and another big downwave. That is how it happened until I pulled the plug. Actually, I have to check in my records: I am not even sure it took 5 weeks. It might have been as short as 3. All I know is that it happened very fast. There were stops in place, but some large option positions were put on that basically evaporated overnight. Should I have checked each position and calculated the stop value constantly? Probably, but the idea was to have somebody else deal with it for a while. There was a flood of more and more nervous emails from me to the trader, and friendly, reassuring and calming answers, very articulate, claiming that these losses were unusual but some drawdowns were to be expected etc. etc. Was I actually lied to? I don't know, but I know for sure that my risk parameters were not kept. When we finally had our confrontation, the trader claimed that he was trading other people's accounts profitably, that they were all experiencing a big drawdown etc. I have no idea if any of this is true or not.
Well, it is water under the bridge, I moved on. (This is not to say that I did not entertain homicidal fantasies for a while).
Anyway, I took the following lessons from it (and I hope not to offend the professionals)- this is but my opinion:
1. The trading "advisory" industry- compared to other fields- is one big glitzy fair which is crawling with incompetents, people who can't trade but sell their "expertise" and some downright crooks. Not unlike the casino industry perhaps. There are some decent people there too of course, for example I think Bo Yoder is a very nice guy, Tony Oz seems to be etc.
2. When somebody claims certain returns on a website, audited or not, be careful: it does not mean he can trade your money. For example, he could even be a good trader with his own but fail miserably at trading other's money. There was a tread on misc.invest futures where somebody claimed a similar thing happened to him with Pesavento.
3. In my limited, personal opinion people who can trade don't run websites were they sell all kinds of gimmicks, entry techniques or seminars. People who sell all kinds of gimmicks don't have the time. They are busy selling gimmicks, and they make good money with it I suppose.
4.Online fame means absolutely nothing. You can be a famous online "guru" and not be able to trade your way out of a paper bag.
There is nothing new or especially deep about these insights, of course. I only responded to the tread because I saw the name John Carter pop up and it triggered some memories.
all the best
