You may be thinking, as I did, that if you could just find a good trading room or alert service you could just follow their trades and make a lot of money even if you don’t know how to trade yourself. There is some truth to that idea, but it is not as easy as you might first think. First, even with good trade alerts you need to be able to follow the trade plan and exercise good risk management. Second, it is actually fairly hard to find honest trade rooms but there are some out there. I’ve spent a lot of money trying many services and rooms over the last few years and hopefully I can save you some time and money with these tips.
- Be very careful of any service that wants a large up front payment for lifetime access. One of the first sites I came across that did this (and I almost signed up) is the now infamous schooloftrade.com which was shut down by the SEC for fraud. Some of these sites may be legitimate, but I would make sure to do a lot of research before trying it out.
- Before signing up for a service, see if the guru in question has a track record of profitable trading on profit.ly,which is a site that connects to traders’ brokerage accounts to verify and track their trades.
- Read some reviews of the service. I am writing reviews of several services for prosperityhunt.com (click here for a list of my reviews), but other good sources of reviews are investimonials and futures.io.
- Be very careful of any site that doesn’t offer a free trial. There are a few quality services that don’t do this (like Investors Underground) because they may feel they have a good enough reputation that they don’t need to. However, in my experience, sites that don’t have free trials want you to pay first so your are more likely to buy their expensive educational course that you ‘need’ to take advantage of their trading room that you have already paid for.
- Be careful of any service that doesn’t have the option of a monthly plan for the same reason as #4.
- Be careful of any site that doesn’t offer a refund unless they offer a free trial period.
- If the service offers specific alerts, see if they have a track record on their website. Even if they do have a track record, keep in mind that those can be faked. There was one site I tried that had a track record but the alerts that were sent out often left out one key piece of information (like the stop or target or entry price) which made it easy to fake their tracking spreadsheet to show a nice profit as they would fill in those missing data points after the fact to create profitable trades.
There are valid reasons why some very good traders may not offer tracking sheets. For example, some may have a harder time trading if they have the added pressure of performing to make their tracking spreadsheet look attractive.
8. Realize that a lot of trading rooms don’t provide alerts but instead mostly offer commentary on the daily price action. If they are experienced
9. Some trading rooms have a screencast of the trader’s desktop so you can see exactly how they are trading. This reassure some people that they aren’t getting scammed, but what many operators do is trade live on a simulator account and they don’t reveal that to their members. They are good enough traders to make money on a simulator, but not in a real market. Simulators are easier to be profitable on because they don’t take into account the cost of spreads and slippage. For example, they may exit a trade at their target of $103.10, but you also have a target of $103.10 but your trade never exited. That could happen because the market would usually need to trade ABOVE your target of $103.10 for your limit order to be filled. But the simulators don’t take that into account.
10. You need to realize that even if you find a trading room run by real traders that are making money, you may still have a hard time making money just because they trade in a style you don’t like, or you can’t put your orders in fast enough, or you can’t follow their plan.
After reading all that you may be discouraged. BUT THERE ARE SOME GOOD AND HONEST SERVICES OUT THERE. Read some of my reviews to get some ideas you may want to investigate further.