Felton Trading is day trading educational company offering custom indicators and a live day trading room. Roger and Beverly Felton, a husband and wife team are certainly not scammers, and are doing their best to offer a quality product. My main gripe is that Roger does not trade with a live trading account. I find it troubling, that after so many years of selling trading products, he has not been able to transition from trading educator to actually trading with a live trading account. Another problem is that Roger and Clint, both excessively use limit orders, which we were not able to consistently replicate using best efforts. Not a cheap product. Not an excellent product, not a terrible product. Perhaps useful for newbie traders. Performance claims are 100% marketing baloney.
Thanks for reading today’s review of Felton Trading
What is Felton Trading? Felton Trading is a futures day trading educational school that is owned and operated by Roger and Beverly Felton. The business is located at a residential address in Victoria, Texas.
The day trading school has three components: a live day trading room, video lessons on technical analysis, and a suite of indicators that have been developed by Roger Felton.
The pricing is as follows:
- $1,495 which includes unlimited support by Roger or Clint, access to the educational video’s, unlimited access to the trading room, and 1-month usage of the Roger’s special indicators.
- $300 per month to lease the special indicators, Or
- $3,900 one-time fee for unlimited usage of the special indicators.
The live day trading room operates from 8:00-12:00 CT, Monday through Thursday. Friday’s are reserved for paying customers.
A quick review of Archive.Org reveals that FeltonTrading.com came online in late 2006, or early 2007.
A quick review of the Felton Trading website reveals a clean, functional, and well maintained website. An online search for any negative information on Felton Trading was also conducted. Hardly any dirt could be found. Considering that Felton Trading has been active since 2006, I would of expected to find more negative material and negative customer posts. Hardly any could be found. Felton Trading also maintains an accredited business listing at the Better Business Bureau. Since 2010, Felton has no registered complaints at the BBB.
Felton Trading maintains a spreadsheet of all of the trades that Roger and Clint make inside of the live trading room. Felton Trading claims that since June 1, 2014 through July 2016, Roger made a little over $500,000 day trading, and Clint made $340,000 day trading. The following is a screen shot of the supposed equity curve:
If you are looking at this equity curve, you might be tempted into thinking that this looks absolutely beautiful. Perhaps even too beautiful. These equity curves are so smooth that you could ride a skateboard upon this beautiful ramp. Naturally, I was very suspicious and so I reached out to Felton Trading and asked for additional proof. Specifically, I wanted to see an account statement from either Roger or Clint, that matches these performance results.
Unfortunately, after speaking with Beverly Felton, she explained that no account statements could be given. And that these results were strictly hypothetical. After pressing and pushing, she admitted that Roger is only trading from a simulator.
Truth be told, I found Beverly, Roger and Clint to be quite personable. Very nice people. They are soft spoken and have very much a “down home” southern attitude. Roger is getting up there in years, and I don’t want to call him ancient, but my impression is that Roger is probably in his 70’s or early 80’s. Since Beverly and Roger are quite honest and open about trading on a simulator, I felt like the best option would be to attend the live trading room (using an alias), and record the trades over a two week period.
The Live Trading Room
During the month of June 2016, TradingSchools.Org recorded approximately 8 of the live day trading sessions. Each session was recorded and a spreadsheet was maintained to record performance. On average, Roger and Clint were recording about $1,000 per day in profits. However, my assistant Reyna was only able to replicate about 50% of the trades.
During the course of the trial period, we did manage a profit. However, there were some serious red flags. The first is that neither Roger or Clint are deducting commissions. The second was that many of the trades could not be replicated.
The problem with replication
The problem of replication was plainly evident on day 1, and was easy to isolate and identify. Roger and Clint are using limit orders to enter and exit trades. Some of the markets that they traded were highly illiquid and were of such light volume that Reyna found it highly unlikely that an actual fill could be obtained. For instance, on a soybean trade, the price “kissed” and then ran away for a huge profit. There was no possible way to match the entry price. While Roger claimed a big profit on the trade, Reyna was never able to actually get filled. Some readers might be tempted into believing that they could replicate using market orders, but this is simply not possible. Especially when a market like natural gas begins quickly ripping away from the initial entry price.
We noticed this pattern of entering and exiting on limit orders to be highly unrealistic. Especially on crude oil, gold, copper, natural gas, and the grain markets.
The only way to know for sure if Roger’s magic trading indicators are worth the $3,900 investment would be if Roger and Client could actually earn real profits, using real trading accounts. Unfortunately, neither were willing to supply this. And so we had to use our best estimate, using our simulated results that require full pass through on price.
Yes, requiring full pass through on price is a conservative use of a trading simulator. But it is also the most realistic and presents the worst case scenario of how a trading method is probably going to work in the future. Factoring in the full pass through method, while attempting to replicate Roger and Clint’s trades yielded profits of a little over $200 for the trial period. Once commissions were deducted, we broke even. While Roger and Clint made thousands of hypothetical dollars, we managed to barely escape at break even.
Zero proof of concept
The big problem with Felton Trading is that (it appears) Roger or Clint are not actually trading with a live account. And I personally find this perplexing. The supposed trading figures that Felton Trading look wonderful. So why not drop a few thousand dollars into an actual account and take the trades? Its not like Roger and Clint are couple of young guys with no money to risk. These are mature guys that should be able to actually trade with a live, real money trading account. These guys have been doing this for many years, and after so many years, they still cannot execute with a real money account? Seems depressing to me. Also suspicious.
The real problem of limit orders
Many newbie traders are not aware of what a limit order actually is. Let me give a crash course on limit orders. And then transition this information into an actual trading system that is using limit orders.
What exactly is a limit order? Quite simply, a limit order allows a person to buy a security at a discount of the advertised price. Suppose that the emini SP500 is currently trading at 2000. If a person is looking to immediately buy the emini SP500, then they can buy immediately at 2000.25. This is a market order and it lifts the price by .25 or $12.50.
If a person is looking to sell the emini SP500, then they can immediately sell at 1999.75, which conversely drops the price by .25 or $12.50.
This .25 in either direction is what we call the spread. Its the price of participation. Its what makes markets move up and down. However, a limit order allows a person to execute an order to buy or sell, without moving the price higher or lower. Its buying or selling at a discount. The markets are very efficient, and they simply do not allow a person to easily buy or sell at a discount. This is the fundamental problem with Felton Trading. Since Roger and Clint are trading with simulators, and they are always buying and selling at a limit order discount, then they are always able to get filled at a better price than a person using a live, real money trading account.
This is the reason why Reyna, using a simulator that requires full pass through of price was not able to replicate the trades of either Roger or Clint. They could always get filled, while Reyna could not get filled. Its subtle and hard for the newbie to understand. And unfortunately, most newbies have to learn the hard way that using a simulator and using a live real money account are like riding a race horse vs riding a unicorn. A race horse is fast, agile, and will throw your ass off in a second. A unicorn dances on rainbows and can be ridden by little girls eating twinkies.
Real world example (Super Scalper Trading System)
Lets take a look at a real world example of how trading educators and live trading rooms use limit orders to their advantage to create the perception of amazing profits, while the users of their products are consistently losing money. The following trading system we shall name, Super Scalper Trading System. And it only costs $3,995.
The Super Scalper Trading System is simple to understand and the hypothetical results are of the unicorn variety.
Rules for the Super Scalper Trading System are as follows:
Establish a simple price trend: If the price of the emini SP500 is greater than the open of the day’s trading session, then we are in an established and verifiable uptrend. Since we are in an uptrend, we are only looking to buy.
The system is simple, we simply buy a single emini SP500 futures contract at the open of every 5 minute bar, at the market price. Once the order is filled, we are looking to profit at $25 per trade. There is no stop. And if we are not able to get filled for a profit of $25 for the trade, then we exit the trade at the end of the day. We exit on a limit order once the trade reaches $25 in profit.
Conversely, we will apply these exact same rules to the short side. If the market is below the open of the day session, we will short and look for a profit of only $25.
The system runs on 5 minute bars and since January 1, 2014 has yielded the following equity curve results:
As you can see, the Super Scalper Trading System is simply amazing! Trading only a single contract, a person can expect to make over $50,000 per year! All you have to do buy the system for $3,995 and take the signals from the screen. You too can immediately become a professional day trader!
However, before you send me your $3,995 for the Super Scalper Trading System, let me give you an honest bit of information. The exit for the system uses a limit order to take profits at $25. And this system does not require full pass through on price.
Now, lets go back and change the code on the system. Lets change just one tiny bit of code. This time, we are going to require that in order for the $25 profit exit to be considered valid, the price must pass through the $25 profit threshold. With this new bit of code, we are now requiring that the trade become profitable at just one additional tick, or $37.50. If the trade passes through $25 in profit and then actually touches $37.50, then we will count the trade at a profit of $25. This is the ONLY WAY TO VALIDATE, in a real world trading environment whether the Super Scalper Trading System is actually valid. Lets now take a look at the system, with the tiny bit of code change…
Super Scalper System (only $3,995) Real World Trading
The following is the results for our amazing Super Scalper System, when factoring in the one additional step of requiring a single tick, pass through on exit price…
Holy crap! What just happened? The system originally showed an annual profit of over $50,000 in annual trading profits. But now, we required that the limit order exit price must actually pass one additional tick. The system went from being a huge profit maker to being a huge loser. In fact, our Super Scalper Trading System, which showed such promise in hypothetical testing, is actually a horrible trading system. Just that one tick, that modification of one Limit Order changed the entire picture of the story.
This is the fundamental problem with trading rooms, and trading system vendors…they are using limit orders or simulator’s that create the impression of easy profits. But when a person attempts to replicate the strategy in a real world environment, they are quickly slaughtered.
Keep in mind, that my example is using a highly liquid trading instrument, the ES. Roger and Clint are trading everything under the sun. Stuff with very little liquidity. Stuff like natural gas and soybeans. There is no possible way that they can execute these limit orders in a real world trading environment.
Perhaps we now know the real reason why Roger and Clint are not trading with live accounts. Perhaps they know something that you are going to find out about, only after you pay your $3,995 for the Super Scalper Trading System. The real market is a fast and cruel racehorse. No unicorns.
A common tale
By far, the most common emails that I receive from persons that purchase trading products is that they cannot replicate the trades from the system vendor or the live trading room. Most people tell me horror stories of how they started off with hope and faith. How they purchased the trading system or magic indicators and then optimistically funded the trading account with $10,000 from savings. They begin trading. And then about a week or two later, they start to notice these tiny discrepancies. These little misses in price and execution. The trading vendor makes $100 on a trade, while they make $75. The trading vendor loses $100 on a trade, while they lose $125. After awhile, the miss in price starts to compound and stack up. The vendor is showing a profit of $800 for the week, while the customer has only broken even. These “degrees of separation” seem insignificant, like e coli bacteria, but they quickly multiply and compound. Eventually this tiny separation in performance grinds the account down, slowly and subtly. But grind it does.
The bottom line is that the trading vendor is riding the simulated results of a magical unicorn. They enjoy every benefit. They eat twinkies and their equity curve slowly moves higher. But the customer, whom is frantically attempting to replicate the results are slowly grinding the account down to zero. Its sad. I hear this exact same story, most every single day.
The moral of the story is to either require actual account statements from the vendor, or thoroughly test the rules of the system. Yes it true that some vendors do not trade, and that they only sell systems, which is OK. But in these situations, the code needs to be scrutinized and hardened against real world scenarios. Sadly, most people have no idea how to perform these tests. I plan on spending more time writing on this subject. And perhaps I can even convince some of my readers, that are actively trading with systems can write more on the subject.
That’s it for today. And Roger and Clint, thanks for giving me access to the trading room. I found both of you to be gracious and entertaining. Perhaps I can convince either of you to take the plunge and start trading with a live account. This way we can get a real world evaluation and a new review written. Would love to see if your stuff can actually perform in the real world.
Thanks for reading and don’t forget to leave your comments below.