How to Analyze the Veracity of Investment Newsletters
When trying to analyze whether a promotional ad for an investment newsletter or a market timing investment trading system is worthy of investigation, the following questions should be asked: Does the strategy have a track record? Without this you are really allowing your emotions to be in play. All of us want to believe that if someone says something it must be true. Yet the sad fact is the truth is probably just the opposite. Most ads and promotions are put in print for self interests first, and all else second. One has to view anything on the web with a skeptical eye. The minimum that an investment strategy should give you is a previous track record. The longer the track record is the better. Something that has worked for a matter of months is usually not long enough in the trading world to be considered successful. Some promoters do not release their track records because they say that “past performance is not an indication of future results”. This is true but certainly no performance is not an indication of future results either. Some promoters do not release their track records because they say “we used to do a track record but subscribers got upset if the strategy lost money when they subscribed even though it made money over a yearly period.” That may also be true but it is also part of the game. Subscribers can not expect to make money from day one when trading a long term strategy. However, that should be self evident in the track record. And some promoters do not release their track records simply because they don’t have one or they have a bad one. It’s as simple as that no matter what they say. Is the track record that they are promoting in real time or was it simulated in a computer based on past data? What does this really mean? Real time means that the trading signals that were used to produce the track record results were actually generated at that specific moment in time. In reality. Most track records on the investment web sites are not real time even when they say they are. Even if they did not use a computer and it was done by hand, if the data taken from the last five years but the web site is only a year old then it can’t be so. Why is this so important? Because trading is not trading if human emotions are removed. No greed, no complacency, no panic, no hysteria. Almost all computer-generated trading programs fail miserably when actually implemented because either the data was too short a time period or the human factor was ignored. That is assuming the human that input the data did it without human emotion. I once had an acquaintance who told me he had a system that returned 80% per month for the last 6 months. He said he implemented it 6 months in real time. I asked how much he had invested in this strategy. He said nothing because he was paper trading. I said that there is no such thing. He proceeded to tell me what paper trading was. I replied that I knew what he thought paper trading was but it is not trading because when you paper trade your emotions are not in play. Human greed and ego has a way of making you believe something to be real without looking objectively at the data. But once actual real money is at risk the complexion of the situation dramatically changes. How can you tell if the track is in real time if they lie about it being in real time? This is not always easy but there are some basic tell tale signs. If it is a short term system that risks very little and trades often, say 10-50 times per month. Yet it has an 80-90% trade success ratio, which is almost impossible statistically. Most day traders and position traders are doing well if they are winning 40-50% of the time. If they risk more and do not use tight stops, then the win loss ratio goes up but the size of the drawdowns or the size of the largest loss has to go up. Longer term trader may have a slightly better win loss ratio but only if their risk is also larger. To make a general statement, the larger the win loss ratio is the more I would be skeptical. What if the track record is a combination of partly historically back tested signals and partly real time signals. How should I analyze that? The first thing to look at is if the win loss ratio has changed dramatically over the track record time period. For example, if it is a 5 year time period, and the promoter claims that the trade signals went live 2 years ago yet the win loss ratio changed dramatically only 6 months ago, beware. The hardest thing to detect on the web is when you’re being conned about a hypothetical track record because there is no real way to tell when a web sites track record was edited deleted or revised. Some web sites use an independent tracking site but there are no real ways for a consumer to know other than that. I hope that the previous ideas will help to determine fact from fiction in the world of investment newsletter promotions.
Other Trading Tips Articles
Who You Should & Shouldn't be Trading Links With Most people agree that a good and free way of getting traffic to your site is by exchanging links (reciprocal linking) with fellow webmasters. This is also agreed to be a good way for moving up the search engine results page for your chosen keywords.However webmasters are often confused as to which sites they should exchange links with. ...Keep Your Powder Dry In A Market Like This Do you remember the “frenzy” or “froth” moves that were among the wildest aspects of the late-1990s bull run?In those days it was common to see gains of 20 and 30 points or more in one session. A stock might open at 120, promptly run to 150, settle back to 130, and then sprint to 150 or higher at the close.The true frenzy plays pop ...Currency Trading Psychology - Controlling your Emotions The fact is, the majority of traders lose because they cannot control their emotions - and their emotions cause them to make irrational trades and lose.Trading psychology is one of the keys to investment success, but its impact is not understood by many investors, who simply think they need a good trading method, but this is only part of ...Arbitrage Trading or E-currency E-currency? If you are reading this you most be wondering what way is better to make money E-currency Exchange or Arbitrage Trading?Lets first look at how both systems work, and if these systems will still be around in 5 years or so.Arbitrage Trading Is and unknown way to make money on the Internet. Very few people know little or no inf ...Best Auto Loan - Tips for Avoiding an Upside Down Loan If you are new to the car buying process, the likelihood of acquiring a bad auto loan is high. For this matter, car buyers must familiarize themselves with how the financing process works. A common problem that arises with buying a car is obtaining an upside down loan. This occurs when the amount owed on the vehicle is significantly higher than ...Top 7 Tips to Recognizing Bogus Expert Business Articles How can you spot an expert business article writer or knowledgeable business consultant from a wannabe pretender self-proclaimed marketing guru? It is difficult to separate those with actual business experience from those who are self-promoters of nothingness. I have developed the Top 7 Tips in spotting the bogus expert business articles and unc ...Killer Forex Trading Strategy for Beginners If you've just begun trading Forex, you probably want all the help you can get. Though Forex trading can be very lucrative, you'll want a Forex winning system that will work for you. There are several Forex killer systems available just as there are in marketing, sales, and other forms of business. You must find the Forex strategy that works for ...10 Leadership Tips for Lawyers Even if you don’t have your own firm or if you are not a partner, you can be a leader of your team or even yourself. All lawyers need a vision, mission, goals and business plan/marketing plan to be successful. If you are part of a larger organization your plan must feed into the firm plan. Practice being a leader of a small group and your lea ...Amazing Arbitrage Trading Home Business If you are reading this you must be interested in the hottest new home business to hit the Internet. Arbitrage trading is the new hot home business program for 2006. Just do a search for it, and you will find millions of people that are making money using it. You can be one of those people very easily.If you have struggled t ...Top 7 Advertising Tip Myths of Marketing Self-Proclaimed Experts Have you ever bought a book on business marketing to help you in your own business? Well many of us have and we have probably also bought tapes and other helpful materials to help us in our advertising. After reading hundreds and hundreds of marketing books over the 27-years in my business, it became rather obvious that much of what these market ...Why Asia Owns America The Forgotten Benefits of the Gold StandardOne of the benefits of the gold standard, long forgotten, was that it acted to regulate imbalances in trade. Under the gold standard, trade imbalances between countries were unsustainable because they would self correct over time. Here is an example of how that worked: When a country would export ...Learn to Invest Money: Investing Made Fun For Teenagers (Part Two) Do you hate your after school job and wish there were easier ways to make money? In this article, I’ll tell you how. In Part I of this article, you learned five rules to help you win at investing and dating. In Part II, I’m going to tell you the last five rules.To start, let’s review the definition of a stock again.Stock – A way t ...Choosing A Forex Trading System – Part 6 In our last installment we discussed the super-important performance measure called maximum drawdown. Today I have another measure who’s importance may not be immediately obvious to you. That measure is the actual length of time over which the trading systems results were achieved. Some of you may identify this as the length of the trading syste ...Day Trading Basics A means to survive, an avenue to progress and vista to exchange thoughts, ideas and feelings… ‘Trading’ is perhaps as old as human existence on earth. It all began when the primeval man began swapping small useful items with each other in order to live and fulfill many of his needs. The time that followed saw a persistence and enhancement of thi ...Options Trading An option is a contract that gives the buyer the right (but not the obligation) to buy or sell a specified quantity of a given asset, at a specific price, on or before a specified time. Unlike futures trading, the purchaser of an option is not obligated to buy or sell at the exercise price, and will only do so if it is profitable; if the option ...Natural Gas - Make Massive Profits From The Next BIG Bull Energy Market! We have all seen crude oil soar to all time highs making huge profits, but this huge move could be repeated, or even exceeded as natural gas soars in value, based upon increased demand and limited supply.If you are a seasoned trader or one who has never traded before, this article is for you. We will show you why natural gas is set to soa ...Handicapping the Pacers Trade of Ron Artest - Part 1 The Jerome Bettis “Super Bowl in his last year” press is a great story. But what if Ben Roethlisburger jumped into the stands and ruined everything? That is what the Pacers have had to go through the past year and a half. Indiana’s serious title shots have been obliterated since the Mallace in the Palace incident. How could a team that beat near ...Why Not Buy the Dips? Every so often we get a question asking why we don't "buy the dips" more when we are looking at possible stock plays and the answer is really simple. It's not "our" style. That isn't to say it's wrong, or that you shouldn't do it, we just don't find it works as well for us.Let me explain. In the world of trading there are a zillion styles ...Globalization At the beginning of this century the world society has faced with various crisis phenomena and their consequences of different character: international, systematical, social and economic, political, ecological etc. Such processes also take place in social and cultural, religious and inter confessional relations, in difficult interaction of mora ...Link Popularity Building Strategies and Tips Link PopularityLink building has always been a hot topic. In the beginning of the web hyperlinks were virtually the only way to get visitors to a site, because search engines were in their infancy. When search engines grew to be the major source of the web traffic, links didn’t lose their weight, as search algorithms star ...Mobile Car Wash Companies; Trading Tips If you run a mobile car washing firm we recommend trading for as many products and services as possible. You should trade for both personal and business items. You need to keep in mind that your gross sales will go down as you do this because money will not be taken in for these services you perform. You will however, notice a significant inc ...A Short Term Tactic for Capturing More Profits It is called "dividend capture". This strategy is executed when a trader buys a stock just before the ex-dividend date, so that he or she will be a shareholder of record on the record date, and will receive the dividend. Because the stock falls by the amount of the dividend on the ex-dividend date, the strategy calls for the trader to then wait ...Former Enron Chief - Kenneth Lay, et al - Society's Lesson Lay 'Shocked' by Enron Verdict—Former Enron Chiefs Convicted in One of the Biggest Business Scandals in U.S. History--headline for one of the first articles written about the verdict of former Enron Chiefs Kenneth Lay and Jeffrey Skilling By Kristen Hays, the associated press, jumps off the page with stark clarity.One wonders how either ...Guide to Lubeck, Germany Unique pointsLubeck is a charming Hanseatic city, surrounded by a canal and a river. It has plenty of parks trees and open spaces. The best known symbol of the city is the Holtesten gate, built in 1477. Unfortuntately the gate was covered in scaffolding during my visit in June 2005, so I didn't get any photos! The town hall (Ratha ...Your Guide to Learning a Forex Trading System There are a great number of people in America that are interested in investing in order to make a tidy profit. There are many ways to invest and many ways to make profits by investing. One method that has been gaining in popularity is that of the Forex trading system. If you are unsure of what this is, let me explain. Forex stands for foreig ...Card Trading: Risks and Precautions You can trade your cards in two different ways: face to face, or by postal mail. The first type of trading is performed at tournaments, at schools, or at the local comic shop, and you arrange the trades by checking the other person's cards directly, holding them in your hands. Otherwise, cards are traded by mail when the parties can not meet bec ...Ten Ways to Build Client Trust Clients work with professionals whom they trust. Building trust is an ongoing process. Here are 10 ways to build trust with both old and new clients.1. Keep your agreements with your clients – If you promise delivery on a particular day, make sure to deliver when it was promised. Even something as small as the time you have sche ...Top Tips For Affiliates – If Only You Desire Success I am sure that you are reading this stuff because you already know that some people are earning fat checks monthly from affiliate programmes and you probably want to duplicate their success story. However, your case has been different and opposite. Affiliate programs have never put enough money in your bank account; rather, all your efforts are ...Top 7 Things They Do Not Teach You in MBA School Often when I give speeches at MBA schools I am flabbergasted by some of the questions that I get from the students. It is often as if the students have no concept of reality and that is very scary for a potential employer. It is even more scary to think that they are being taught by a professor who has never actually been in business but only ...Ten Tips for Successful Currency Trading Here are 10 tips for successful currency trading, and if you can implement them in your trading plan, your chances of trading success will be greatly enhanced.1. Desire to Succeed - All the great traders have a burning desire to succeed and will do whatever is necessary to succeed.2. Work Smart, not Hard - The amount of effort you ...
|
