Best Way to Determine if a Trading Vendor/Room is Real

12/23/2015 6:00 am EST

Focus: STRATEGIES

Before signing up and starting to willfully hand over cash to a trading room vendor, Kevin Davey, of KJ Trading Systems, outlines several questions he feels are critical for the trader to ask ahead of time.

One of the words of trading wisdom out there is to ask trading education or trading room vendors for proof of their success…before you sign up for their service. After all, who wants to join a room where the person calling the trades either 1) does not trade with real money or 2) trades with real money, but is a net loser?

Is this a good idea? I think so, although you probably won't get many vendors to offer any kind of proof (there is likely a reason for that).

Of course, some potential customers are afraid to ask, they think it is too invasive, or they don't want to upset the master trader, or maybe they just don't want to know the real answer (the real answer being that most trading vendors are frauds…)

In my opinion, it is not too invasive to ask one of these rooms or vendors for independent verification of real results: brokerage statement, certified letter from their accountant, results from a tracking service such as Collective2.com (although that may not be real money) or Striker.com, etc. After all, maybe their claims of profitability are not true. Since when it is acceptable to say things that are not true? That is illegal and unethical.

Remember, they should be able to prove they actually trade…you have a right to demand this before you hand over your money.

Some vendors will provide a spreadsheet or list of trades, that might be useful, but it does not prove profitability. Anyone can create a list; it doesn’t mean the record is real or was done with real money. You might be dazzled by numbers they give, but what if it is all fake?

I know a few rooms that give out list of trades, but they are all simulated trades. That means absolutely zero.

I know other rooms that create their trade list after the trading day is over…you listen live and get one set of trades, yet their daily log shows completely different trades. That is illegal and highly unethical, but people do it. There is one very popular author and trading room guy who does this. I spent time in his room, recorded every trade he claimed to make (which was really hard, as he is a slippery eel and usually speaks in riddles, "Oh, this could be a short here or a long continuation...I'm not sure which…OK I just booked a quick 1/2 point scalp on that move"). But his end of day record always looked a ton different. What gives?

Here is my advice: find a room or vendor, make sure you are really interested in them, and then ask them for one of the following:

1. Some type of independent proof that they trade—or have traded—successfully with real money.

2. Even one day/week/month worth of brokerage statements that show the trades in the list match up with the trades in their log. They can cover up their name, account number, balance, etc. and just show the trades. See if the trades match up. No reputable person will have a problem with that.

Some will say it is illegal to provide actual statements…that is a lie. The vendor just cannot claim you will get the same results as he did.

If you try this, I bet you few, if any, vendors will meet your request. And there is a reason.

By Kevin Davey of KJ Trading Systems

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