A lot of people ask me, “who has the best trading room, is the best educator, or mentor?”. This is a tough question to answer. All I can do is give you the answer that works best for me. Which requires that I take a step back in time. Need to give you a little history.
About My Trading
I started off trading the mini Dow back in 1997. At that time, the contracts were traded in the open outcry format, within the trading pit at the Chicago Board Of Trade. Of course, I got into this business like many others, I got something in the mail that promised huge profits with little effort. I immediately grabbed onto the idea of fast and easy money. This then lead to a copy of Stocks and Commodities magazine, where I caroused through the classifieds section looking for someone to teach me how to trade. I could do this trading thing, I just needed someone to teach me.
Finding A Mentor
I had no idea how futures contracts worked. The idea of going short was a foreign idea. I was hungry for knowledge, starving for it. I wanted to learn so bad. Finally, after calling every single ad in the back of Stocks and Commodities, I decided to purchase the day trading course, RS Of Houston. These guys were professional traders operating out of Houston, Texas and specialized in trading the big SP500 pit traded contract. For a fee of $3,000, I would travel to Houston and learn all I needed to know to become a professional trader. And so I paid my fee and jumped on a plane to Houston.
Three Days With RS Of Houston
I spent three days in Houston with Ron and Valdi, both mormons, and really nice guys. The first day, we went over how the markets worked and the specialized indicators that they had developed. Day two, we went over hundreds of charts and trade sets ups. And day three we did live trading. Day 4, I went home to San Diego, armed with all the knowledge I needed to make a living day trading. I was so excited.
My First Day Trading The Mini Dow
On my first day, my very first trade, I did exactly what I was taught in the workshop. I waited for the set up and called my broker to place my order in the pits. My account was funded with $25,000 at Mann Futures. I called and told the broker to sell one mini Dow at the market. After about 5 minutes, called me back with the fill price. Yes, you are reading this correctly, he called me back 5 minutes later.
A little while later, my trade was going in my favor and I called back to the broker and told him to sell my emini at the market for a profit. He called me five minutes later and informed me of my fill price. I was ecstatic, my first trade for a profit of $50. Unfortunately, if read this message closer, you would of read that I sold one contract, and immediately sold another, which gave me a new position of short 2 contracts. Instead of flat.
During the course of the day, I bought and sold about a dozen times and had spent spent nearly $200 in commissions. At the end of day one, I asked my broker to confirm that I was flat for the day. He informed me that I was long June and short September in multiple contracts. Of course I had no idea what he meant. Apparently, the day I was trading was the final trading day of the June contract, and the volume had been now been moving to the September contract.
Long story short, I thought that I had made money. It turned out that I had actually lost $1200 and spent $200 in commissions. I remember walking to 711 for a slurpee, I was literally in an emotional stupor. Day one was a disaster.
Day One Lesson Learned
I learned on my first day of trading that my $3000 dollar education, and my traveling to Houston Texas to learn to trade was not enough. I needed an education on the basics, like contact months, and confirming with the broker, and how to properly place an order.
The Next Six Months Of Trading
For the next 6 months, I followed the trading plan to perfection. I did exactly as I was instructed. Everyday, I would take the trades and maintain a trading journal of my trading. I would even mark my trades up on paper, then fax them to Ron and Valdi in Houston, they would reply and give me advice on what I did right and wrong. At the end of the six months, My trading account had ground down to $10k. I had lost $15k. The biggest winner was the broker. I dont remember how much in commissions, but it was more than the trading losses. What I learned during this 6 months of trading was the something was wrong. I was told by Ron and Valdi that my technique would improve and that I needed to execute better.
Back For More Education
After 6 months of losing, I contacted Ron and Valdi and told them how poorly I had performed. They told me that I need more education and that they would like to invite me to their newest trading course for a reduced fee of $1500. They assured me that I was close to turning the corner and that a little more education would get me over the hump. And so back to the RS Of Houston trading workshop.
The Next Six Months Of Trading
After receiving my refresher course, and replenishing my account, I went back to the markets and promptly lost another $15k. After a complete year of trading, I had spent $4500 with a trading educator, spent several thousand in trading commissions, spent $2400 for the year in a live data feed, and spent $2000 on Trade Station trading software. Oh, and blown my trading account down to parking meter type money. At that point, I threw in the towel on the RS Of Houston method of day trading method. I felt like a complete and total loser.
The Truth Revealed
In the year 2000, I finally found out the truth. The CFTC has filed a fraud allegation against RS Of Houston. They had subpoenaed the trading records of Ron and Valdi. After reviewing the records, the CFTC discovered that both Ron and Valdi had always been losing traders. And not just one or two years of losing, but every single year for year upon. The entire RS Of Houston trading education was based upon fraud and deception. Their entire trading methodology was based upon their own losing experiences, and they taught me how to lose.
They had created this entire scheme to dupe rubes like myself out of $3,000 for a trading education. I had spent an entire year attempting to execute successfully, what was flawed from the beginning. I had lost everything. The $3,000 was not much, what I really lost was an entire year of my time and nearly $50,000 in savings and this was the real damage.
How To Pick A Trading Room
This leads us back to our original question, how to pick a trading room. What you should be really considering is not the cost of the trading room, what you really need to consider is the time opportunity, and the money you could possibly lose if you pick a fraudulent trading room. You could spend months of trading room fee’s, commissions, and lose thousands upon thousands of dollars on a trading method that simply cannot work.
So What Should You Do?
The first thing you need to find out is whether the person running the trading room actually trades. This might seem like a ridiculous question, but you would be shocked at how many trading rooms that I have reviewed where the person touting the product does not even trade. Of course, they never admit it, but I press and press until I get the truth. Its not easy, but I always get to the core truth.
Once you discover that the trading room is being sold by an actual trader, you then want to interview the trader and ask a lot of questions about personal experience. About previous trading success and failure. I have found that the best trading products are presented by educators that have tasted failure. And they love to talk about their trading failures. Anyone that talks about the pain of this business, is someone probably worth paying money. Another thing I ask for is an annual profit and loss, I don’t ask to see every single trade, just a monthly break down of performance. The honest educators have absolutely no problem showing these numbers, if they balk and make excuses, its because they are likely a fraud.
After you discover that they are 1) Are Currently Trading, 2) Disclosed Actual Annual Results, you then need to do the most important thing…determine if your personality and resources match the trading product. For instance, if a trading room is operating 16 hours a day, and they have a great track record, then you better be willing to devote 16 hours each day to taking each signal. Or, if you purchase a trading room package from a mentor and the mentor regularly experiences an annual draw down of $15k, then you better have a trading account larger than $15k because the next big draw down is always in front of you.
How To Pick A Trading Mentor
I have found that the best trading mentors are not day traders, but are active position or swing traders. Probably one of the best I have found is Matt Davio of market profile trading academy. Matt actively trades. He is quite honest about his successes and failures, and he possesses a long history of trading success that has been proven in many different markets and environments. What make a mentor like Matt really special is that he has a proven track record of mentoring people that have also made the jump to full time professional trading. Once again, the most important thing is that the mentor is actually trading, has been around different trading environments, is open about his failures, and most importantly has a few offspring to prove that his methods can be taught.
Wrapping Things Up
There is nothing wrong with purchasing a trading room, or hiring an educator to teach about the markets. Of course, the problem is that in our quest to achieve immidiate success at trading, we forget to properly verify and substantiate the persons running these trading educational companies. Like myself, you can put all of your hopes and faith into an educator, spend thousands of dollars on educational materials and then lose thousands of dollars because the product or person was a fraud from day one. So make sure that you verify, verify, verify. Ask questions and demand proof.
And if you are on the fence about a product, please send me an email and simply ask my opinion. Sometimes the extra voice of friend in trading can make all the difference between success and failure.
Well thats it for now. Please leave comments below. I really appreciate your opinion, good or bad. And please let me know how I can improve.