Watch out for this stock market scam! // Options scams Forex scams Binary options scams Investing welcome to looking at the markets with David Moadel and today we're going to
talk about something that well I'm not necessarily going to call it a scam
because that's a really strong word but it's something to really look out for
whether you're trading stocks options for X commodities binary options
whatever it is you'll see advertisements on the internet all the time and if you
do a go google search you'll certainly see these its automated trading programs
or auto traders sometimes they're called robot traders auto traders algo traders
automated trading systems whatever they want to call it they have many names for
it and basically the idea is that you just sit back and let the robot or
program do the trading for you you don't even have to do it and I've seen claims
of huge massive profits if you pay for a if you pay for a in auto trading service
or program and you have to wonder is this too good to be true
well let's explore it a little bit and I'm going to use some information I
found from a few websites that i found and if you want to visit these websites
the web address is right here on the address bar and this is of as of Tuesday
august $YEAR 16 2016 this is from the financial review website and I think
it's a good introduction I'm just going to read a little bit of it and i wanted
to give him credit so it's from financial review online and it says get
up turn on the robot go to work come home
turn off the robots collect the money it's a traders dream
unfortunately the hard reality of the arms race in algorithmic trading means
this scenario is slipping further away from the individual traders realm
ok and that's a quote and you know what what they're trying to say here is that
you know maybe robotic or algorithmic trading might work for hedge funds and
large institutional traders but that's very different from what they're going
to try to sell you the the individual investor or retail investor what you're
going to get is some program that if it goes you know if the price of a stock or
binary option or our commodity or for you know
currency if it goes above a certain price it's going to automatically by and
if it goes below a certain price it's automatically going to sell or whatever
and it's yet the promises that it takes the emotions out of trading and you know
it it is something that's automated so you don't have to watch it all the time
it just does it for you but is it really for retail investors
well according to this article fully automated trading is the province of the
well resourced and fully dedicated trader this generally limits to the
field of hedge funds and investment banks alright the general principle that
drives much automated trading is repeatable behaviors that deliver
profits more often than not the problem is that successful strategies are
repeated and copied until the Prophet profile flattens 20 meaning you won't
make any money anymore or a negative expect expectancy which is a nice way of
saying saying that you're going to start to lose money after a while
alright so you don't count on this working for you for any length of time
and please whatever you do if you feel like you must invest in auto trading
software which I do not personally recommend but if you feel like you must
don't just walk away from it and let it do its thing and not watch it okay
because the last thing you need is for that your profit profile to flatten to
zero or negative or a negative expectancy which is a nice way of saying
that you're going to start losing money pretty soon if you don't watch it and
and then if you have to watch it all the time then is it really automated I mean
maybe it is but the whole allure of the automated trading programs is that you
don't have to watch them so if you have to watch them all the time then what's
the point
here's from The Wall Street Journal here's the website web address if you
want to go there
and an article here explicitly stated explicitly states
beware of training programs most small investors also should avoid automated
trading programs that promise huge returns in a short time . short time .
these programs also known as expert advisors or ea's so be aware of that
phrase you know you might want to run the other way if you hear that phrase
they execute trades in milliseconds and may raise even greater risks for
unsophisticated investors
alright then they they mention a few particular ones
and they mention how its yet these retail programs try to be similar to the
ones used by hedge funds they they can automatically execute trades when
specific parameters such as price levels or hit
all right that that's all it does is unemotional and when it reaches a
certain price it's probably going to buy yourself okay
yeah and it mentions the hidden dangers as market dynamics change or news alters
trends these programs often collapse at some point
the programs that advertise huge returns and short periods are likely to crash
and burn the fastest computer program computer programs that shows smaller but
steady or gains over long periods are the best bets all right but even that i
personally don't recommend them if you're looking for small but steady
gains there are much better ways to do it and in my opinion then just just
leaving it to a computer program that somebody's selling to you all right and
here's an example from the binary options black list and there's the web
address for that and they mention a particular particular program auto
trading program and yeah I'm not going to mention the name of the program
necessarily but because you know I i don't know if it's a good program or not
I cannot speak to that but here's somebody just an example who started
with some money
a hundred seventy six dollars you may not sound like a lot of money but maybe
to this to this person it is a lot of money and then 29 short trades later
just loss after loss after loss and turned it into
twenty-five cents at twenty-five cents busto
okay all that money got pretty quickly so you don't want that to be you and it
was not difficult to find horror stories about these auto trading systems i just
wanted to give you an example and interestingly enough sometimes these can
look very benign they can look harmless
here's trade Kings website which is a broker and I don't have a particular
problem with tradeking as a broker I I i like their low commission structure and
and low fee structure you know that that's all fine and good but I was very
surprised to see them
you know recommending an auto trade service here it says trade kings auto
trade service enables you to activate automated are automatic trading in your
account based on the recommendations of investment newsletters was pretty
surprised to see that I I would never base my trading there are automated
based on what investment newsletters say yeah I mean come on you have to do your
own due diligence you have to pay attention to the markets yourself don't
just leave it to people who write newsletters
I mean I don't know we accept trading instructions directly from the
newsletters you specify then the auto the orders are automatically executed
according two parameters that you preset on your account when you activate your
auto our Auto trade program will automate will automatically execute
order orders
sorry based on your newsletters recommendations
you don't have to watch the market all day if you don't want just leave it to
the experts
I don't know I'm not gonna lie i have not tried this service so i'm not going
to recommend or not recommended but personally I it's not something that i
have subscribed to you know i-i-i don't
automate my trades based on what some news letter writers recommend so yeah
that that's just my opinion on it
alright so yeah again i'm not saying that these are scams are not scams i'm
not going to recommend or not recommend any particular program but personally I
can tell you what i do and do not do and I do not use any automated trading
programs if i'm going to put my money real money into a trade or an investment
i'm going to research it i want to know about the company i want to know what's
going on in the news
overall I want to look at the price action I want to see the chart just to
get an idea of what you know what the trend is where it's going it does it
generally go up does it generally go down over time is it
you know what's what's the price range is it expensive right now is a cheap
right now relative to the general price range that it goes in these are
questions I want answers to before I invest in anything
in the stock market or options market or anywhere else
alright so if you'd like more help with this or if you just want to put a
trading plan together because that's super-important feel free to contact me
anytime
my name is David Modell MOA dl and you can contact me by email at David Modell
@ gmail.com and if i could prevent even one person from making a huge financial
mistake in losing their money blowing up their account as they say based on you
know some poor decision that they made or just handing over their decisions to
somebody else who might lose money on their behalf if I could prevent somebody
from doing that then you know I've really achieved what I wanted to with
this and if you like this video please give it a thumbs up on YouTube leave a
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educational information that I put out there so thank you so much for watching
this I really appreciate it and I hope to hear from you soon