Author Archives: JLTrader

Timothy Sykes Exposed

Even if, like me, you’re not into penny stocks, chances are that you’ve heard of Timothy Sykes. He’s the guy who, while in college, turned $12k into more than $1million trading penny stocks during the dot-com bubble in `99-2000. He then tried to run a short biased hedge-fund, didn’t quite make it and since 2007 has transformed himself into a guru selling various DVDs purporting to teach you how to become a millionaire trading penny stocks.

His signature pitch in attracting customers is to present himself like a care-free trading millionaire: driving a Lamborghini, making videos in exotic locations surrounded by scantily clad women, trading by the pool side and so on. Unlike most if not all the other people charging money to show you their trading secrets, Timothy Sykes boasts his transparency and the fact that he allegedly already has two students who made over $1million.

I normally would not have written about him – I’m not interested at all in penny stocks, and he’s so over the top in all his marketing (he says that he does it on purpose, to motivate his students) that trying to debunk all his claims would be a case of stating the obvious over and over again.

But it so happened that I saw a link yesterday to an article on his blog bashing the Wolf of Wall Street, Jordan Belfort. If you manage to get past all the hard selling on Sykes’s blog, you’ll notice that he’s written three pieces over time bashing Belfort. Now, I know that Jordan Belfort is a controversial figure and I’d be the last person trying to defend him. But I found it funny how someone like Tim Sykes, who has his fair share of skeletons in the closet,  has the gall to call Belfort a scumbag so openly. And not once, but three times. So I left a comment to his article and thought nothing more of it.

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Unapproved comment

Today I noticed that the comment still hadn’t been approved (although some other comment had been), so I sent a couple of tweets to Tim, along the lines of : ‘Hey, Mr Transparency, cut the censorship, publish my comment ‘. So what did he decide to do ? He banned me on twitter too. :)

Banned on Twitter

Banned on Twitter

So much for all his alleged transparency. As the article that I linked to in the censored comment shows, Timothy Sykes refused to present brokerage statements and related documents to validate his claims. That just says it all about how real the alleged percentages and millions in profits made by his students are. Just as real as his transparency.

Cutting Through the Bull – Forex Price Action

keep-calm-and-cut-the-bullshitI’ve never held the guys selling Forex price action courses in high regard for one basic reason: not one of them can show that what they teach and charge for is profitable. As far as I’m concerned, in trading money talks and bullshit walks. You can have the best designed website and hundreds or thousands of subscribers but if you can’t produce at the very least a year’s worth of verified track-record then you’re at best dishonest and at worst a complete fraud.

What prompted me to write this article was reading the latest post on ForexExposed. What I hope to achieve is to get any person who considers spending money on forex price action sites to think twice about it. They should realize that: 1. they’d be buying very expensive trading education and 2. that it is of a dubious quality from a dubious, potentially fraudulent seller. Some of you will point out that at an average of $300, these courses are very cheap compared for example to the $2500 Andrew Mitchem charges. But what if I tell you that you can get the twenty or so best trading books on Amazon for around $200 ? Yes, I know, a book is not like an interactive website where you get daily or weekly updates and get to ask questions. But let’s see who the guys that answer your questions are. If you search ‘forex price action’ on google, you’ll get the following sellers on the first two pages:

– Dale Woods at theforexguy.com

– Nial Fuller at learntotradethemarket.com

– Justin Bennett at dailypriceaction.com

– Chris Capre at 2ndskiesforex.com

– Johnathon Fox at forexschoolonline.com

You will notice that the websites look pretty much alike and use the same approach to attract members: trade setups for a forex pair or two, with the invitation to register in order to view setups for other pairs. Testimonials so over the top that they are funny: supposedly, traders who have been losing for years, bought their services and now are consistently profitable, doubled accounts and so on. :)

Regarding the trade setups and commentaries, the internet is full of them, from the ones you can find on trading forums to the ones on various sites like ForexLive. Their quality varies considerably, but it’s mostly poor. Just because you start paying $300 doesn’t automatically make them top-notch. Particularly when they come from sources which make unsubstantiated claims of profitability and success to entice aspiring traders in parting with their money.

Regarding the quality of the courses as reflected in testimonials, as I said in the beginning of this article, not one of these guys, although they’ve been in business for 4 years or more, will offer a verified performance record of the strategies they teach. That should tell you all you need about their real value.

To conclude: I see no valid reason for anyone to spend money on forex price action websites. You would be paying for something – trade setups, chat room, emails – that you can find on the internet for free anyway. There’s hardly anything to indicate that these guys are qualified to be trading mentors to other people. If you’re still deluded in thinking you’re paying for access to ‘forex professionals‘, as they call themselves, ask them for a verified track-record. And then come back here and leave a comment with their excuses for not producing one.

Get Funded – A Pitch of the Trading Dreams Factory

fundedArguably, the whole trading educational services industry is a big dream factory. That’s because in 99% of the cases you have self professed trading ‘professionals‘  without any proof of them ever having traded successfully (or even traded at all) purporting to teach others how to do this for a living. I believe this is an unique feature of the trading world. There are a lot of pitches these salesmen use in order to get gullible persons to part with their money, but as you can guess from the title of this article, I’m only going to deal with one of them today: the ‘get funded’ pitch.

There are a couple of firms that I’m aware of (certainly they are not the only ones) which use the ‘get funded’ pitch : Topstep Trader and Apiary Fund. What they basically do is sell the standard (we’re the best, we’ve trained hundreds, we have decades of trading experience bla bla) trading education but with an added promise: if you turn out to be a good trader, you’ll get funded by us. Not only that, but you’ll get to keep 60-80% of the profits realized on our capital. You don’t have to contribute any money and therefore there’s no risk of losing your own capital. Now, doesn’t it sound like a trader’s nirvana ? :)

Actually, it isn’t. The ‘get funded’ sales pitch has more holes in it than Swiss cheese:

  • as with any trading education coming from someone with no trading credentials (verified track-record) it can at best have some quality. It could be much cheaper though to go with the free resources on the internet or several inexpensive books on Amazon. In a worst case scenario, it’s just costly rubbish.
  • the criteria used to define what a good trader is and who will ultimately get funded is specifically designed so that hardly anyone would qualify. Their answer to this is usually that they are only looking for the best traders out there, but that’s just a smoke screen.  Let me give you one example of a  bullshit condition from Topstep Trader that has nothing to do with profitable trading: ‘Achieve an Average Net P&L greater than $0 for each product traded ‘. (emphasis mine)
  • the fact that these firms don’t disclose the number of traders that got funded and with how much – even though they’ve been in business for several years – speaks volumes. I see it as a tacit admission that they haven’t funded anyone – for more than a few months and few thousand dollars anyway.
  • the fact that once funded, the trader would get 70-80% of profits flies in the face of the whole managed assets industry where the standard payout is 1-2% admin fee and 15-25% of profits with just a few superstars like Steve Cohen getting away with 3% and 50%. So either has the industry been doing charitable work for their investors all these years, or the idea of getting 70-80% of profits is just a nice dream.

I hope it’s clear by now what the ‘get funded’ pitch is all about. How come firms of this type are still in business after all these years then, some readers might ask ? It’s because human nature never changes. There will always be people out there who think they can get something for nothing.

“The pockets change, the suckers change, the stocks change, but Wall Street never changes, because human nature never changes.” – Jesse Livermore

 

 

Andrew Mitchem Forex Trading Coach – You Must Be Joking, Right ?

Someone sent me an email asking for my opinion on Andrew Mitchem. This person wanted to buy his forex course but was of two minds about it – on one hand, with it being priced at $2,500 he thought that it must be valuable, on the other hand he wasn’t quite ready to part with his money before asking around first.

After just a little bit of research, my thoughts could be perfectly summarized by the title I chose for this article. But unfortunately for the poor saps who end up paying extortionate fees to this guy, it’s not a joke. This fact led me to writing the present article, instead of just a short email reply. There are so many ridiculous, false, misleading claims on his website, and he charges such large amounts of money that I felt I have to give a warning not just to one person, but to the general public.

All right, so who is this Andrew Mitchem ? In his own words he is a ‘full-time currency trader, investor, private funds manager and trading coach’.

Fund manager: He operates the corny sounding site wealthwithforex.com where he offers managed accounts if you have a minimum $20k to ‘invest’. Although he supposedly offers ‘a low risk trading strategy that provides consistent and profitable results’, there is no third-party verified performance track-record on the website.

Trading coach: He offers a $2,500 online forex course  and a $20,000 (!) one-on-one private coaching at your home or office,  for one day, wherever you are in the world. After seeing this, it’s easy for beginners to mistakenly equate high price with high value when in fact all that Mitchem does is to sell the trading dream for a very expensive price.

Let me go through some of the most ridiculous, false and misleading statements that prompted me to write this article. On the homepage the latest video is called ‘One trade makes more money than keeping your savings at the bank for a year’. Really ? This is like comparing apples and oranges and it’s totally ridiculous. Even if you don’t make any return on your savings, you know that at the end of the year that money will still be there whereas in trading there’s no guarantee you’ll finish the year in the black.

Also on the homepage, Mitchem boasts that “Forex traders from over 48 Countries have taken my course and the success rate of those students has been incredibly high”. Not only is that an unsubstantiated claim, but there’s no proof that Mitchem himself is trading forex successfully. Bear that in mind before giving him $20k of your money.

In the FAQ, he says that he’s making 5% per month trading h4 and h1 charts (of course there’s no proof of that). A couple questions below, he says that it takes 1-3 months for a student to learn his system effectively, thus implying that after only 3 months one could be making 5% returns monthly. That’s akin to saying that after 3 months of med school, a student will be a better brain surgeon than the ones who’ve been operating for decades.

Then there’s the pitch with the new trader who follows his free advice and he’s already averaging $100-$150 daily with his $3500 account. If he keeps compounding that 3-4% daily return I guess we’ll find him in Forbes 100 in a few years. :)

Andrew Mitchem’s sales pitch

Browsing through his website I noticed that Mitchem repeatedly says how he only risks around 0.5% of account on any trade. That supposedly makes him sound professional. Don’t be fooled though, because that aspect of money management, by itself, is meaningless. You can still lose your account even when risking just 0,5% of equity if you don’t have an edge – it’s called ‘death of a thousand cuts’ .

To conclude: Don’t fall for the hype! Andrew Mitchem calls himself a trading giant – at least that’s how he is known on ForexPeaceArmy. But as far as I’m concerned, he’s just a snake-oil giant.

Update December 2015:

I was made aware that Andrew Mitchem has a Christmas sale, another opportunity to see the real sleazeball masquerading as professional trader and fund manager.

Christmas sale

Christmas sale

So if you decide to fork over $2000 to Mitchem you not only get a 40% discount, but guaranteed 20% performance for next year. Imagine your luck ! :)

Now, let’s look through the facade, shall we ? First of all, you’d be better off spending the $2k on a nice vacation during Christmas and New Year. That discount is a mirage – you can’t discount a bucket full of horseshit because it’s worthless to begin with.

Secondly, you can’t call yourself a trader anymore (let alone ‘professional’) if you talk about guaranteed results.

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fine print

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fine print

Reading the terms&conditions we can quickly realize the sleight of hand Mitchem uses with his 20% guarantee: what he practically does is to send out daily trading recommendations. It’s up to the customer to decide which ones he follows and how exactly he implements them. If after one year, the company (Mitchem) doesn’t achieve 20%, then the customer can ask for a refund within 4 weeks.

But here’s the bait and switch: the company doesn’t do any trading !! It’s one thing to say buy EUR/USD, sell USD/JPY and USD/CAD for instance, and a totally different thing to actually take the trades. When the customer will say that his performance is negative, Mitchem can very well retort: well, I only took the EUR/USD and I’m profitable now.

I’m going to repeat myself: don’t be deceived by the shiny website or the smiling face of this scumbag.

Since 1875 S&P500 Has Never Risen Seven Consecutive Years in a Row – Really ?

buybuysellsellI’ve seen the claim in the title in my Twitter feed and there’s also a Business Insider article about it. Not only that, but when we supposedly last had six consecutive positive years (1898-1903) what followed was an 18% correction in 1904.

This would be a strong point in a bear-case scenario. If it was true. But what amazes me is that no one seems to question the accuracy of those statistics. It just gets shared and re-tweeted as if it was gospel truth.

After looking at the actual data though, we get a different picture. The S&P500 was first up six consecutive years between 1947-1952 and then 1953 came with a -1.21% correction. Then we had the ‘greed is good’ eighties when the S&P500 managed eight consecutive positive years (1982-1989) followed by a -3.06% correction in 1990. In the nineties S&P500 made a record with its longest winning streak, nine years (1991-1999) followed by a -9.03% fall in 2000.

I’m not making a case for the S&P500 bulls here. I just think that before we get excited and spread the word about some ‘first time in history’ event, we’d better make sure that it really hasn’t occurred before. Otherwise we’re just like the characters in the drawing above. :)