03 January 2021

The 1st 4 Questions To Ask Any Seller Of Trading Riches

Or Any Other Business Opportunity For That Matter


"It is better to know some of the questions than all of the answers."
James Thurber

=============================

Happy New Year All.   


Most of you are beginning this new year determined to have a more profitable 2021. Some of you may have even made money resolutions. Whether through upgrading your existing job or getting a new side hustle, you have resolved to improve your cash flow.  As you might guess from the subject matter of this blog,  I think one of the best ways to increase said cash flow is through trading… securities trading to be more precise.  Since you’re likely to receive a ton of unsolicited offers based on the search that brought you here, let me share the 4 most important questions you should ask any provider of a “trading service.”


1) What’s In It For You?  

This is the number 1 question and it should be asked of any potential service provider first.  You’re likely to hear a stream of reasons that sellers of stock picks and trading strategies are willing to share their winning tactics.  The first of those reasons should be “for an additional revenue stream.”  Why?  Because you have at least a chance of that vendor being honest, that’s why.  The narrative around trading and trading related services has become so bogged down with negativity [yes, deservedly so in some places, but definitely not all] that vendors almost always start with some version of “I’ve made a fortune already, so I just want to share my super-secret strategy with the world.”  I’m not so jaded as to say that’s impossible… but I’m practical [cynical?] enough to say that’s very unlikely.  You should be as well.  


2) Why Am I So Lucky?  

This question assumes that part of the sales pitch is about the super-secret nature of the strategy’s very existence… and why you’re so lucky as to be let in for $19.95.  Don’t get me wrong… there ARE trading secrets… proprietary information if you will.  Things like exact formulas and, sometimes, even the exact combination of settings on a given timeframe for an existing indicator.  But no one is giving those secrets away for $19.95.  Or even $1995 for that matter… especially, if the tool or information is highly profitable.


However…


What a vendor MAY sell you is the output of their proprietary tool.  A license if you will.  That’s a long-standing business practice that makes perfect sense.


So if a vendor offers to sell/teach you the underlying pixie dust of their strategy for peanuts…


Run…


Away…


Fast.


3) Do You Currently Use The Picks And/Or Strategies?

This one is a bit tricky as I’m not a big fan of the notion that anyone who provides stock trading ideas must also trade those ideas… and not just because I share picks that I don’t trade (more on that below).  

Here’s the main reason I feel that way.  One of the core requirements of profitable trading is the effective management of your emotions.  It is MUCH easier to be coldly efficient [i.e. exit a loser quickly] when you don’t have any stake in a company other than whether the stock price performs.  If you own the stock… own it in size… and/or were “banging the table” to get your followers to buy it, it can be much more difficult to elect a stop when you should… and, more important, to advise your followers to do the same.


4) Is The Expectancy Positive?  

Last in order perhaps… but no less important.  Most people ask about how much money they can make...and how quickly. The slightly more advanced folks ask about win %... The more informed ask about expectancy.  Expectancy is about how much you make when you win vs. how much you lose when you lose.  If you are to make money with ANY trading strategy, expectancy must be positive. 


If your wanna be vendor doesn’t know if the strategy has a positive expectancy, Run…

Away…

Fast. 


If he doesn’t know what expectancy is,

Run…

Away…

Faster. 


Don’t worry so much about what the exact expectancy number is… That will vary widely depending on a number of factors like timeframe traded, frequency of opportunity, average stop and target sizes, etc.  If the expectancy is positive, you’ll have plenty of time to dig deeper and decide whether or not the strategy fits your trading personality.


My Answers

As you might guess, my answers line up favorably with the questions. 😝

  1. What's In It For Me? My service is first and foremost an additional revenue stream for me.  If that offends you, you probably also hate that professional athletes have the audacity to make money from endorsements… or that hedge fund managers make a great deal of money from managing the money of others... That also means that I’m probably not the right mentor for you.  

  2. Why Are You So Lucky? You’re not especially lucky… smart maybe, but not necessarily lucky.  You found your way here because you have at least a passing interest in making money from the market.  As a result, I’m interested in you… interested in whether you’re a good fit for my community and the money you can make by joining us.  You’re also not especially lucky because I won’t be offering you the “secrets” of my scans and tactics… just their output for your use if you choose to join us.  At any rate, no luck involved.

  3. Do I Trade The Picks/Use The Strategy? As I said, this one is a bit tricky… I don’t trade single stocks or options anymore, so I neither own nor will I own any of the stocks presented by my scans.  I do however, trade the positive expectancy, simple strategies that I share with community members.

  4. Is The Expectancy Positive? The short answer?  Yes.  I only trade positive expectancy strategies, thus that's all I share.  


I hope you’ve found this helpful.  If you have questions, don’t hesitate to reach out.


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