Investing Scammers


I've probably seen it all when it comes to online scammers in the investing arena. In this article, I will explain some common scams used by scammers (who believe they are more intelligent than they actually are).

One common scam, especially by those making videos, is to leave stuff on the cutting room floor, so to speak. That is, they are only showing you exactly what they want you to see. This is like those cool trick shot compilation videos. What those trick shot compilation videos don't show you are the 100 times the trick shot failed for the 1 time they got it right. Related to this, are scammers removing evidence of failures, including failures in other investing related areas they tried, and only showing winning trades. One scammer whose videos I watched off and on for years (gotta keep up with the latest scams) had many videos on MLM scams, lower your cell phone bill scams, cryptocurrency scams, and precious metal scams that he would try and convince you to get involved with (each sending some cash his way, of course). Once those things went kaput, there was no apology, no "I made a mistake", no nothing - the scammer simply removed those videos from his channel, and someone new to his channel would have no clue of his past scams. A related tactic used is to occasionally show a real loss or two. Then the scammer can semi-truthfully say "I show my losses too", even though he still obviously isn't showing his full trade history. Another tactic is for scammers to make make $X per day or how to turn $X into $Y type of videos, implying they can reliably do that, but then never carry out that process repeatedly, like through a year or more. Who really cares if you make $X a day but only do it for 2 or 3 days? Also, a variant is to show decent performance for only one account, but the scammer has multiple accounts they are not profitable on, and/or use friends' accounts. The cost of doing this is less than the profit they make from scamming.

Scammers often rely on testimonials from "members" or "students" (ie. customers, other scammers, or the scammer themself). If the videos are from actual students, we run into the cutting room floor issue again (they are only showing you want they want to, not talking about actual losses, and we don't hear from students that dropped out). Related to this, is the scammer implying consistent profit is being made because there are X number of customers signed up, in a chatroom, getting the newsletter, etc., as if the number of paying customers doing something equates to profit. The answer to the scammer's "would people be doing it if it wasn't profitable" question is simply "YES". In addition to this, scammers pretend they are not recruiting when in fact they are recruiting, but just not naming it that. Scammers also use fake profiles and fake reviews to talk up their activities. Scammers want more newbies to trade because that supplies easier people to trade against.

I've also seen scammers use a demo account to show trades, but are too stupid to hide it properly. Many trading platforms have "demo" and "live" accounts. On the demo account, fake money is used so the potential customer can get used to the platform and market, test strategies, etc., and see if they want to get involved. The live account is for real, and uses the customer's real money. What the scammer forgot to notice when they try and pass off their demo account for a live account, is that somewhere on their screen it will literally say "demo", or have an account number shown, or partial account number they forgot to totally hide, that is only associated with demo accounts. Or, the screen layout or options will be those only associated with the demo account, such as only having 5 currency pairs to trade, whereas the live version has 50 currency pairs. One way around this is for the scammer to show trades using a real, live account. However, even doing that goes back to the cutting room floor issue of them only showing you what they want you to see. This is like practicing fantastical martial arts drills against a practice rubber knife when you know full well they wouldn't work against a real knife.

I've heard scammers talk about their large winning percentage as if that is evidence of their success, unaware that just a percentage tells the listener nothing informative whatsoever. If I say my winning percentage is 80%, is that good? It depends if I am profitable or not. I could win $10 8 times, but then lose $100 2 times, for a total loss of $120 (=$80-200), but an 80% win rate. And 80% and profitable, over what time frame? If I do that for 5 years that is highly impressive. If I do that for only 10 trades and then can't replicate it, who cares? Also, someone could only have say a 40% win rate and be successful, it just depends, again, on how much you lose on the losers and how much you win on the winners.

The main thing all scammers do, is never, ever show an actual profit/loss statement. I have seen quite a few amusing example of scammers typing their claimed profit/loss into their webpage. That is, they are trying to convince you that words and numbers they typed for their HTML is actually their real trade performance. Scammers will never show you this (even with private information redacted) because then their scam is over. They will whine, bitch, and moan, and harp about you trying to invade their privacy and waste their time, which is amusing because they may have a thousand videos which took a ton of time to do over many years, but cannot manage a simple screenshot of a profit/loss statement, regarding profits they claimed many times to have made.

Scammers often pass off their account balance as their investing skill. If their account balance is $50,000, does this mean they made $50,000 from trading skill? Not necessarily. They could have simply made deposits along the way.

Some scammers say they have vaguely worked for some trading company, and usually ones that are now defunct which are harder to verify. Really? What years? What was your title? Can anyone confirm? That is the basic information. However, even if true, just having worked as a trader for a company doesn't mean anything. If you claim you worked at Bear Stearns 30 years ago, which no one can verify, that magically means you're not a scammer? I don't think so.

The self-proclaimed experienced veteran trader scammer wants you to listen because of the claim of being old and/or experienced. Actually, I tend to think the opposite of these people. They have, they claim, been at it for so long, and are so experienced and know so much...yet they are still not wealthy from it? Wouldn't that indicate that the method they are trying to sell does not work very well? One scammer loves to talk about how it was back in the day, how trading has changed, implying he is an experienced veteran of the markets (and again, implying he is successful at it). I guess anyone is then, since that scammer is as old as I am. And, of course, anyone can just look up that information on how retail trading has evolved.

There are those scammers that have advertising disguised as education. This is extremely common, especially for exchanges/brokers. The webinars, videos, articles, etc., just are funnels to get people to their webpage and get them signed up. This is a very obvious tactic. "Education" providers can even have contracts with exchanges for example. In other words, they are being paid to advertise and drive people to the exchange.

Probably all of the scammers sell stuff: running ads, selling self-published books, "merch", newsletter subscriptions, signal services, and trading room subscriptions. That is, they are making the majority of their money from things besides the thing they are trying to convince you is a money maker. Is the $5,000 they show in their trading account from trading profits, or from $40/month newsletter payments? Good on them for having a business, but don't try and pass it off as investing or trading skill. Question, why do scammers need to sell in the first place? If they could actually consistently make a large amount of money per trade or day as they claim, why would they even need to sell a newsletter for $30 per month? It makes very little sense. It is almost as if their trading is not successful and they make money elsewhere...

The majority of scammers have vague emphasis on mechanics and over-emphasis on psychology or lifestyle. Things like psychology, discipline, and lifestyle are quite easy to bullshit about. The technicaly mathy things are not as easy to bullshit about (but still possible). Scammers also tend to emphasize a social aspect of investing. Again, this is a bullshitting alert. Why would a total stranger on the Internet have anything to do with my money situation and needs, family, and retirement? Scammers emphasize you need their education so you are reliant or dependent on them.

Related to lifestyle, are scammers showing off bling or implying they have bling. This strongly suggests that you will be like them and have these things if you just trade like they do by buying their product/service. Of course, the big players with bling use rented cars, houses, movie money, and fake jewelry. There have been several literally caught doing this. Did you know that there are websites where you can buy realistic looking movie prop money? Some probably rent cars for say a month and then shoot as many videos as possible, in different locations, times, and with as many different wardrobes and hairstyles as possible, and feed them slowly to their viewers over the year, to really sell the idea that they own the car. I remember one scammer who would use a thumbnail of an expensive car (and not any car he owned) for his videos. Related to this is their claims of having profits from trading replace their former salary, but in fact their spouse is probably the one paying the bills.

All scammers are, or act, highly offended when skeptics ask for actual evidence of performance. This is not surprising whatsoever, and I suggest to keep asking. Real people have no problem whatsoever providing actual evidence for their claims.

Scammers try to persuade you that the information they provide is secret or high level information. Actually, the opposite is true. No information available to retail traders is secret.

Scammers often try to persuade you that regular ol university education is not as good as "real world" or "street smarts" for investing. Yes, clearly those with only "street smarts", whatever that even means, are winning Nobel prizes... Let's make a graph of net worth vs education. What do you think it would show? This is, effectively, a tactic to sniff out less educated people to scam.

Scammers always cater to investing newbies who are too naive to know better. Scammers do not try and sell to those with experience just like psychics don't try to perform in front of skeptics or magicians because they can see through their methods a mile away.

Scammers baffle you with bullshit, typically including dozens of indicators on a chart. Often these just redraw the price action and/or have no actual benefit to trading. But, by discussing them, the scammers sound mathematical and smart. They often refer to examples of these indicators "working" by cherrypicking past examples, and of course by remembering the hits and ignoring the misses.

Scammers will advertise their investing as new and/or exciting. Why newness or excitement should play any real factor in investing I have no clue.

Scammers pump and dump cryptocurrencies, penny stocks, just about anything. That is, they will hype something up for you to buy, but then they may be doing the opposite unknown to you, and you are left with the bag.

Scammers use self-given titles. I've heard from "CEO"s, "Founder"s, and so on, of course of their own methods or companies. I've also heard cute memorable nicknames like they are "also known as the ____ of Wall St."...yet they are the ones who gave themselves the nickname.

Scammers often persuade you to take on more risk and trade. Conversely, scammers try and convince you that things with no trading or fees or advertising are inferior investment options. They advertise that they are protecting you from losing money yet they are encouraging you to trade and speculate. Related to this, are scammers trying to convince you that everything is a trade, implying that their scam is not a scam since all forms of investing could loosely be considered trades.

Almost all scammers will not be licensed financial advisors or belong to any serious agency for which there are serious penalties if they are found to be scamming.

Scammers try and tell you that everyone has a scam. That is, if you, the skeptic, are scam-busting, you are also advertising your system or selling something. However, not all people that sell stuff are scammers. This is related to scammers getting angry at people skeptical of their claims, and trying to turn the tables on the skeptic. That is, if you are skeptical of the scammers, the scammers question you for evidence of your investing skill, and so on. However, the skeptic is not the one making the claims in the first place, pretending on the Internet, engaging in potentially illegal activities, nor selling bullshit to newbie investors.

Many unsophisticated scammers will not even have disclaimers. However, the presence of a disclaimer does not mean it is not a scam.

Lastly, scammers often engage in finance-related or other conspiracy theories, usually involving the "big banks", "Federal Reserve", or any big agency (all of them are big compared to a retail investor) that is involved with finance in some way. Scammers try and convince you that fiat money is worthless. Well, except for the fiat they love to collect from you that they need for medical bills, groceries, and mortgage payments, anyway.

I hope you found this information useful. Be sure to train your skeptical muscles when you consume investing material.

Thanks for reading!

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