Would you pay 10K for a trading system and mentorship

csw2002

I have been contacted by an outfit that wants to sell me a trading system + ongoing mentorship for 10K and promises monthly returns of 40% of higher. I normally would have laughed off such offers and dismissed them as scams (which I did on many previous occasions). However, this one has had me slightly more intrigued than normal. Here are some of the facts of the systems that they are selling:

(1) It's a swing trading system that targets multiple equity stocks. At any time, the system would hold about a dozen to a dozen and half positions.
(2) It employs leverage in every single position, from 10 times to 20 times.
(3) Positions are usually a mix of long and short, and holding periods are from days to months.
(4) Stop loss is always set at 5% of total trading capital, and a trailing stop is employed. I have no idea as to how the system sets the price targets.
(5) I am not 100% sure of how they select stocks for long or short. However, it appears to me that they are using purely technical indicators. From very limited data I have gathered, they use 30 day SMA, 30/50 MA Cross over, MACD, STO, OPI (not sure that this is) and a number of other indicators, totally 16. They assign weighting to these indicators to create a combined score. Those with the highest score (bullish) are selected to go long and those with the lowest are selected to go short.
(6) Users then decide based on their own risk appetite and market leanings the number of long vs short positions to take.
(7) A trading mentor is assigned to help teach you how to read various indicators, position oneself and the usual stuff.
(8) Apart from the upfront 10K cost, there is monthly data feed that costs 90/month and another 5K contingent payment that only becomes liable if one makes 20K or more throughout the year based on their system with an initial start-up capital of 5K. The contingent payment clause is pretty useless in so far as I am concerned. However, the 10K upfront cost is certainly very steep.

The outfit has provided trade recommendation history going back from May to Nov. Monthly returns are anywhere from 20% to 135% with no monthly losses. The average is around 45%. However the history is too short to make a judgement as to its consistency.

My concerns are the following:
(1) As positions are held on margin, margin interest hasn't been included in the calculation. However, given the low interest environment and short holding period, I suspect the $ impact is minimal. On the other hand, if short, one would have to pay dividend adjustment and long, one receives dividend adjustment. I suspect the effect of dividend simply washes out.
(2) The impact of correlation during extreme market stress - while the outfit recommends both long and short positions which may mitigate against extreme asset class correlation exhibited during market stress and the large number of positions also mitigate against correlation, I still suspect perform would suffer during extreme market stress like what we saw in the fall of 2008.
(3) The head trainer didn't realise that index products he recommends are impacted by dividend payment. This is a major warning sign to me. The head trainer is supposed to have had 30 years of experience trading stock, indices and forex. Such oversight seems just about most improbable.
(4) The sales are ringing me everyday and have already provided their banking details so that I could make payment immediately upon sign-up. Such keen-ness are usually warning signs.
(5) I have asked for references but have been fobbed off with the excuse on privacy provision. Then again, even if they did provide references, how am I to know whether they are genuine existing clients?

What do you guys think? How likely that this is a scam and if not, what is likelihood of consistently achieving the return they have achieved already (I am not greedy, and consistently achieving 20% monthly returns are OK by me). Anything you guys think I should ask to find out more?

summer123

for 10K and promises monthly returns of 40% of higher.

can you pay 1k for the first month and get 40% month return on 10K investment? If you can get return at 40% monthly rate for the first month, do it again for the second month, and third month, and then pay  rest of 10k.

yaobooyao

If all factors on the ads are true,  that will mean they just hand over you free money for ever.

But we all know there is no free money in the world,  so the hypothesis test is false.  Zero!

MM_Wu

这些人是在做慈善？40%/月你一年就是百万富翁了。还要你1万刀来干吗？他们自己肯定先赚得成了巴菲特了！

ranchgirl

99.9999999999999999% probably it is a scam. Many people got ripped off his/her account to be made zero.

All such scams happen too often.

MM_Wu

这个世界上连10%/月的人都没有哦，我说的是每个月连续的。忽悠人没有这样忽悠的，说5%/月还令人觉得可疑。大嘴一开40%，那你自己干吗不去赚，还要出来卖？

ranchgirl

If it sounds too good to be true, it probably is.

bokchoy888

I have been contacted by an outfit that wants to sell me a trading system + ongoing mentorship for 1 ...
csw2002 发表于 2010-11-12 22:46

    Just curious, is the guy from Morocco who has the system?

csw2002

Just curious, is the guy from Morocco who has the system?
bokchoy888 发表于 2010-11-13 00:18

No, actually a local outfit.

colderdown

hell no.

bokchoy888

No, actually a local outfit.
csw2002 发表于 2010-11-13 00:37

    i c, I met the guy from Moroco also claimed to have a holy grail.

if you are so itchy to have it, insist on some kind of test drive deal, like 3 month or even renting it month by month, but most likely they want you to pay up front as they know it could only work in
some situation.
good luck.

ppteam

csw2002

I am also leaning towards that it is a scam. This outfit also has an index trading system. They are using a CFD trading platform that I am extremely familiar with and some of their screen shots on trading DJIA they made purporting to show the profit they have generated from the system do not look like the platform I have been using for 3 years.

However, the most glaring issue is that it purported to show a profit on buying DJIA index on 19th Oct at 2:48PM for 11063 and selling the position at 4:38PM for 11078. Now from my intraday chart, DJIA traded between 10924 and 10988 from 2PM to 3PM and between 4PM and 5PM from 10974 and 11102 (after hour number obtained by adding future/cash spread to the Dow Futures number). So the result they presented is completely impossible. Now, just in case the time they are using is actually UK time (where all of the CFD providers reside at and the one they claim to use is at as well), I looked at trading range for 9AM - 10AM US time (being 5 hours in front of US) and 11AM and 12PM. The trading ranges respectively are 10978 and 11051, and 11009 and 11064. Again, Dow Cash never traded in either the buy or sell range in these hours. Most importantly, no one is crazy enough to buy and sell Dow index for such small profit. Spread + volatility every minute in Dow during cash hours would have exceeded the 15 points they claim to have made. If 15 points were what the system were gunning for, their reward/risk ratio would have been way below 1, making it improbable to be profitable in the long run.

dzyx

Not a penny。这些东西没用的，要自己建立操作系统，不断修正。

trade28

NO way.

terranmn

i would pay 1M after a 3 month trial

xiaochong

要是这么好用的话，他们肯定自己留着了，10k卖给你太便宜了哈

lwjnbtx

Ask this to yourself, if you have developed such a wonderful system, would you sell it for 10k? How much would you sell for it? Or, would you sell it at all?

linday

The outfit has provided trade recommendation history going back from May to Nov. Monthly returns are anywhere from 20% to 135% with no monthly losses. The average is around 45%. However the history is too short to make a judgement as to its consistency.

csw2002 发表于 2010-11-12 22:46

Trust me, those are computer generated result. It is very easy to generate MHP excellent results. Almost all selling systems have those to demo to potential clients to get your money into their hand. They can make it look so true to convince you! I have seen a lot.

Don't forget Buffet Tang!!!! I also know another guy do the same thing.A "famous" company does generate a lot of money the first 3 month, and disappeared in 8-9 month. There are many different scams.

You can never tell all the scams what trick they are playing on you. Just remember one thing: If it sounds too good to be true........just say NO to it.

linday

However, the most glaring issue is that it purported to show a profit on buying DJIA index on 19th Oct at 2:48PM for 11063 and selling the position at 4:38PM for 11078. Now from my intraday chart, DJIA traded between 10924 and 10988 from 2PM to 3PM and between 4PM and 5PM from 10974 and 11102 (after hour number obtained by adding future/cash spread to the Dow Futures number). So the result they presented is completely impossible. Now, just in case the time they are using is actually UK time (where all of the CFD providers reside at and the one they claim to use is at as well), I looked at trading range for 9AM - 10AM US time (being 5 hours in front of US) and 11AM and 12PM. The trading ranges respectively are 10978 and 11051, and 11009 and 11064. Again, Dow Cash never traded in either the buy or sell range in these hours. Most importantly, no one is crazy enough to buy and sell Dow index for such small profit. Spread + volatility every minute in Dow during cash hours would have exceeded the 15 points they claim to have made. If 15 points were what the system were gunning for, their reward/risk ratio would have been way below 1, making it improbable to be profitable in the long run.
csw2002 发表于 2010-11-13 01:23

Please do not spend time to research their computer generated result, even try to find holes in it.

Waste your precious time to make them improve the cheating system, help them cheat more people more convincing more easily????

They will be very happy by your findings..............