Cautionary Tales About Trading Gurus

By | July 18, 2016

Three things happened over the past few days that reminded me once again how much BS and deceit there is in the trading world. But before I start, I’d like to quickly answer  those who think along the lines of: ‘why do you even care, just mind your own business’. I care because these guys bring the entire profession into disrepute – and since they are either unregulated or fly under the radar, someone has to call them for what they really are.

1. Charlie Burton, who appeared in BBC’s Traders: Millions by the Minute documentary didn’t like the fact that I doubted the emperor has clothes in this article so he left a comment, threatening me with legal action (!!). What’s been Mr. Burton up to since I wrote that in October 2014? Has he provided any verified performance on his website (ezeetrader.com – really confidence inspiring name, eh Charlie ?) No, he started another site, which has sleazy salesmanship written all over it.

2. I just became aware that a couple (as in man and wife) of Twitter trading gurus – https://twitter.com/NorthmanTrader and https://twitter.com/Mella_TA hasn’t been heard of for almost a month now. Rumor has it that Sven Henrich aka NorthmanTrader lost some big money for people that trusted him to manage their accounts (apparently in an unregulated manner). The lesson here: just because you’re a prolific tweeter, have many thousands followers and appear via phone on CNBC, it doesn’t mean you’re a good trader or actually trade at all. I really like this quote from the CNBC piece:

While Henrich doesn’t manage any money, his chart work on NorthmanTrader has garnered a significant amount of attention in the online world.

The ‘doesn’t manage any money’ part was surely intended to mean ‘doesn’t manage any other people’s money’. But from a cynical point of view, it can mean ‘doesn’t have a live account’ :) – a distinct possibility since we don’t have proof otherwise.

Update 31/07/2016: Northmantrader has written this article telling his side of the story and answering Twitter critics.

3. Speaking of ‘trading experts’ who are big on social media, I came across the case of Keiko Kawamura, a 27 years old woman who was charged by the SEC in 2014 for an alleged scheme to defraud and for fraudulent misrepresentations and omissions. Below are some fragments selected by me, alternatively you can read the whole proceeding here:

In August 2012, Kawamura started a website kawamurafinancial.com where she provided investment advice for a monthly subscription fee until February 2014. Kawamura solicited subscribers through a number of misrepresentations, including falsely claiming that she obtained an annual return in excess of 800% in her personal brokerage account (in fact, she lost all of the money invested in the account), that she had managed millions of dollars, and that she had nearly ten years of experience in the financial industry.
Contrary to Kawamura’s representations to investors that she would invest all of the funds she raised in stocks and options, she misappropriated much of the hedge fund’s money to pay for her living expenses and for luxury vacations to Miami and London. Of the approximately $55,000 Kawamura did invest, she pooled the money in one brokerage account and lost it all in highly risky options trades.
Kawamura posted screenshots of portions of a brokerage account statement on her Twitter account, which many of her investors followed, that suggested that she was obtaining incredible returns in her own brokerage accounts. In fact, the screenshots reflected particular returns on unusually successful trades and/or trading days from her boyfriend’s brokerage account and were not indicative of the performance of the trading in her account.
This part once again underscores why I beat the drum on third party verified performance. Photos and videos not only can be manipulated, but even if they’re not tampered with, they usually show best case scenarios.
Kawamura’s website contained numerous material misrepresentations and omissions that she acknowledges were intended to attract subscribers. Kawamura claimed on the site that she had “been in the Investment banking industry for nearly a decade, specializing in Wealth Management for a major Financial Institution.” At the time she created her website, Kawamura knew this was false. She has never worked in the investment banking industry and has never worked for any financial institutions.
Lesson here: next time a trading guru blocks, ignores or calls you a ‘hater’ for merely questioning his claims, think of Kawamura and how far can BS and fantasy go on social media.

21 thoughts on “Cautionary Tales About Trading Gurus

  1. Dan

    Have you come across Francis Hunt AKA ‘The Market Sniper’ at all? He sells various training materials, as well as access to some sort of exclusive trading club that he runs. His website states that his material isn’t for beginners, and is more aimed at traders with several years of experience. I came across him a while back after watching what I thought was quite a decent, informative interview with him on YouTube. I did a quick search of some of the popular trading forums, and he doesn’t seem to be well known. Seems fairly legit to me, but I’m no expert.

    These are the videos I watched: https://www.youtube.com/watch?v=jM_fx-JTdpY&list=PLnSelbHUB6GT9L_TanRe_sya0CV5_QHW-

    Reply
    1. JLTrader Post author

      Yes, I’ve stumbled upon that video some time ago, frankly he comes across as a smooth salesman. The problems I see with him: – no evidence he’s trading a live account and no sign of a track-record (according to his LinkedIn profile he’s been running Market Sniper since 2009)
      – these claims on his LinkedIn profile can’t be verified: Also a Trader FX desk Trium Capital Management.
      Primary Fund Manager of the FireBird HVF Fund [up 56% for the year 2015] https://uk.linkedin.com/in/francishunt
      – also the claim: Founded and set up my own Property Investment Company, which ran highly successfully for 4 years, with growing revenues making £5, 8 Million by 2007. can’t be verified: https://beta.companieshouse.gov.uk/company/05718248/filing-history
      I don’t like people who make big claims which can’t be backed up.

      Reply
  2. James

    I think you are unfair to Sven Henrich and his wife Mella. I subscribe to their live twitter feed and can say that they definitely make calls ahead of the market that turn out very well. I don’t know if they manage other people’s money as they never mentioned it. But the reason they went off twitter was that several weeks ago Sven became seriously ill and was told to take a break from 15-16 hrs of following the market and commenting on it on twitter. It was obviously taking a huge toll on him. Ironically this happened the same day the Brexit vote results came in and he made a lot of money playing the bear side. But it cost him health-wise. He and Mella did not abandon their clients but simply shifted the service off twiiter and conduct it by email and through their websites. To accommodate Sven’s recovery needs they are also taking a less intra-day approach and more of a swing one. You can choose not to believe me if you want. Don’t really care. I just saw your comment and thought I woud fill you in on what actually happened. As a client of Sven’s I can simply tell you that my experience over the last year is that he is a completely straight shooter, provides excellent macro analysis w/o ever projecting the idea that he “knows” anything special or can guarantee anything, and is very responsive to clients such as myself whenever we have a question. My 2 cents for it is worth.

    Reply
  3. James

    Secondarily, if Valletutti is your main source I would highly question the value, accuracy and motivation of this particular source. For some reason (possibly b/c he used to be partnered with Sven’s current wife who chose to leave her partnership with him and join up with Sven), Valletutti appears to have an untempered and highly emotional compulsion in cyberstalking the two of them. He seems as concerned with their success as he is with is own, if not moreso, and spends a lot of time tweeting about them. Not the most rational voice, I would say.

    Reply
    1. JLTrader Post author

      As I said in the article, I’m not making accusations, merely repeating the word on the street. I know about Northy’s last tweet about the alleged heart attack – it may or may not be true. What is strange is that since then there hasn’t been any activity on Mella’s twitter either.

      Reply
    2. Pnl

      They were using mike’s model to get more subz and passing it off as theirs. Reason mike calling them out is because one of their subz had his account blown up by them and told mike about it. Northy been a bear forever and been run over constabtly

      Reply
  4. Livvy

    Mella is one of of the all time worst market scammers. She is really the donald trump of finance twitter. she is rude, crass and clueless, which ignorant people are drawn to. Not surprised at any of this.

    As to the doubter: There is a document from GuruLeaks online showing their assets at 18k. Sad!

    Reply
  5. Igor Butsenko

    Those guys will always exist as there will always be plenty of people who truly believe in fairy tales.

    Reply
  6. Rafal

    When I saw Charlie Burton on BBC I thought he was a real trader. It turned out there is zero proof and his website is a cheap scam. What a joke. All those people should be taken to court.

    Reply
  7. Wilson Fisk

    Why in the world would anyone who is truly successful at trading teach others how to trade? Answer: They wouldn’t! They would be to busy steadily increasing their leverage through position sizing and exposure to more markets!

    Reply
    1. JLTrader Post author

      There are plenty of reasons to teach others and many documented cases of successful traders having taught other people to trade. From the top of my head I’ll mention Richard Dennis and William Eckhardt who taught the turtles, Ed Seykota who taught Michael Marcus who in turn taught Bruce Kovner.

      Reply
  8. Wilson Fisk

    You’re absolutely correct with those examples …my fault in assuming (since most of this site seems focused on bashing trading educators) that the point I was making was entirely relative to trading educators who sell trading education for profit, not someone who is teaching someone else to trade so they can trade for / with them. The day Richard Dennis starts a trading education website I’d assume he blew up in a big big way.

    Reply
    1. JLTrader Post author

      While I believe that perhaps 99% of trading educators that charge money are more or less fraudulent, it doesn’t mean that all of them are. Just a few documented cases of successful traders that have paid services: Mark Minervini (recently together with David Ryan), Mark Cook, Dan Zanger

      Reply
  9. Wilson Fisk

    ** my faultl in assuming the point I was making was understood to be entirely relative to trading educators who sell trading education for profit

    Reply
  10. John Smith

    Traders trade..idiots go on twitter and facebook to try and get Mr and Mrs Gullible to part with some money – think of Nigerian Scamsters whenever you see the idiotic comments by some people in relation to trading.

    How many posting here actually trade?

    Reply
  11. BD

    There are funds which:
    * Manage accounts opened by the client under the client name at one of the best US brokerage companies for retail. * The indibidual accounst are protected by AAA insurance up to $250K
    * Have a flat fee
    * Target profitability every month
    * Trade only liquid assets
    * Do not have a budget for ads – having a low flat fee does not leave too much place for a sales department.

    Look hard and you will find.

    Reply
  12. Jason

    First off let me say I love your up front honesty on your site! lots of good articles! I apologize if this is a redundant question but since we are on the page of smooth salesmen, have of the site Trade empowered with Jason Stapleton? They seem conservative about their philosophies on trading and therefore would come across as legitimate to a newbie like myself but I’m not sure If i’m falling into trap that a gullible noob like myself would be prone to. Mostly I’ve just stuck with babypips.com and there is a wealth of knowledge there but I’m looking to build on that knowledge. I’m trying to get off on the right foot and lower the learning curve as much as possible. Any opinions/thoughts would be much appreciated. Thank you sir!

    Reply
  13. JLTrader Post author

    I would advise you to steer clear from Jason Stapleton – if that guy is a trader (let alone a profitable one), I’m Warren Buffett :) Just look at this BS: http://promos.tradeempowered.com/transformation/ ##The 12 Week Transformation is our 3 month comprehensive training program designed to teach you a series of proprietary trading strategies with proven track records.## # I see their YouTube channel is up since 2009, but where’s the track record ?

    Trading is hard enough as it is without wasting time and $$ on pretend traders that like to hear themselves talk on YouTube.

    Reply
  14. C

    I personally like Samuel Morton on YouTube… Maybe it’s just his calm, reassuring presentation style that is conning me into thinking he’s legit, but he does seem pretty genuine and regularly shows live trades open and being closed etc. Unless I am being fooled by that too? Like everyone else he is selling something (though not in a pushy way, like trade Empowered etc) but I’d be interested if anyone else knows any more…

    Reply
    1. JLTrader Post author

      Just another con artist making the standard claim of being a ‘professional trader’ without providing any verification whatsoever. This guy blocked me on Twitter a while back after I challenged him to verify the results he shows on his site (anybody can make a page listing the months of the year next to double digit profits) http://www.forexcfdsignals.com/forex-trading-results.

      Reply
  15. John

    I have been subscribed to Samuel Morton’s trading room for several months. So far I consider him one of the very few “real deals” on the internet. As a member I can see all his trades and analysis, and decide if I want to copy trades or not. The trading results on his site seem to be legit, but I do not know why he does not use a third party verification tool. It would make things a lot more transparent. Unfortunately the last months he has been in his worst draw-down period ever. Jan 17 all of his trades were losers (perhaps -20% monthly result), Feb 17 only marginally better. I am sure that he will recover overtime, but it is not a nice thing to see if you just joined. I would rate most of his trades as “iffy” (not really high probability), but he does have occasional big winners with high R/R. Those make him profitable over the long run. He does have a tendency to sweep losing trades under the carpet, highlight his occasional winners and put only those on YouTube.
    As a professional retail trader you need nothing less than phenomenal results in order to stay in the game. He claims that the last 6-7 years his return was over 800%. Unfortunately, not verifiable. Sam Morton generates a base income with selling courses, his trading room, coaching and other stuff. It is understandable, because a retail trader does not have a base salary like guys from institutions.
    I will continue to follow him, despite this dry patch, simply because there are no alternatives I believe in.

    On the topic of TradeEmpowered, they do share their trading results on occasion in the weekly updates by Akil Stokes, although it is only a picture of their trading room equity curve. But since it often shows draw down (negative results), it is a good sign that they are not lying.

    Reply

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