The Trading Bible Blog Uncovering Fake Trading Gurus - Avoid Getting Scammed
Uncovering Fake Trading Gurus - Avoid Getting Scammed
By Stefano Treviso, Updated on: Apr 07 2023.
The Internet is plagued with people offering to teach you how to become a “successful trader” and generate a “secondary income”. Literally everywhere you go there is an Ad that somehow promises something like this is possible through trading even if you have 0 experience at all.
All of these statements are lies and during this article we’ll make sure that you understand exactly who they are, how they operate and why everything they tell you makes no sense at all.
Oh, and before we start, you could be asking yourself: How do I know that this website isn't also a scam?
Very simple, we don’t make fake promises to anyone, just take a look through our whole site. We aim to be one of the world’s leading sources of information in the trading arena by providing quality education that prevents people falling victim to scams and teaching them the fundamentals they need to make their own decisions using logic. The more you read through the website and everything we offer you’ll realise it’s made with pure love and good intention.
Here’s a brief overview of the main subjects we’ll talk about:
- What is a Trading Guru?
- How to spot a Fake Trading Guru?
- What do Fake Trading Gurus usually offer?
- Why Trading Gurus make no sense at all
- How do market prices get determined?
- Who are the favourite Victims of Fake Trading Gurus?
- How are Fake Trading Gurus making money?
- How to Avoid getting Scammed by Fake Trading gurus
If you’re in a hurry and want to jump straight to the main explanation, click here:
But we really recommend you read everything top to bottom.
What is a Trading Guru?
A Trading Guru is someone that usually claims he knows how to make a lot of money trading and wants to sell his techniques to people in the form of educational content.
How to spot a Fake Trading Guru?
In present times we can find them anywhere, usually on the main social networks (Youtube, Instagram, Facebook) or their own custom websites.
Their main characteristics are:
- Flashy lifestyle involving exotic cars, stacks of cash.
- Videos, Articles and Posts claiming to know secret methods that can make you rich.
- Complex storylines that show them as the underdogs that made themselves millionaires through trading coming from nothing.
- Live trading videos where you can never see account balances or verify statements that actually prove they’re profitable.
The number 1 common point in all the Guru’s stories is that somehow they got tired of all their trading success and now they decided to share it with the world to make others rich.
What do Fake Trading Gurus usually offer?
Trading Gurus specialise in educational content. Usually the main types are:
- Online Trading Courses
- Trading Signal Services
- Live Seminars
- Live Trading Sessions (with hidden account info)
The main point in all these offerings is that somehow they will always claim they can teach you how to make money, get rich, quit your job, be successful in life, live the life of your dreams, etc. Remember, fake trading gurus are specialised in overpromising.
Now let’s get to the best part of the article, why all of this is B.S.
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Why Trading Gurus make no sense at all
The markets have an evil nature by default, in order to make money you literally have to take it from someone else’s hand, meaning that there will always be a sucker in the game.
The only way to make money trading is by using analysis through logic, finding out something that hopefully not so many people know and using it.
If everyone knew a particular strategy and used it at the same time that would render it useless, let’s analyse why:
How do market prices get determined?
The financial markets move due to the actions of buyers and sellers. At any given time for a particular share of a company being traded, there are people buying and selling at market price and also people with limit orders (orders at a price different than the market price, could be higher or lower to buy or sell) that provide liquidity and different price availability.
The best way to take a look at this is seeing an exchange’s order book, but since it’s usually not that easy to find them, take a look at a simple drawing we made:
When you look at the order book, you get a feeling of what is available and at what price.
Now, when you’re trading real assets such as shares, every trade has an impact on the markets, as you slowly move through the order book and consume the available assets at each price level thus making prices change.
So now, imagine that a trading guru tells you he has a strategy that he shares with thousands of followers and it works, then try to think for a second:
How can the strategy work if we all go at the same time to the market and do exactly the same thing????
We would end up pushing prices up or down and none of us would be on the winning side, as someone needs to be on the losing side.
Hedge funds make money when they know something that other hedge funds don’t know.
Usually this Guru scammers use their followers to try and move the markets when they’re trading a very small illiquid stock, and what the guru ends up doing is the old pump and dump.
They accumulate stock previously during some time, then they deceive their followers into buying using their signals, chat rooms, live trading and of course when prices shoot up, they unload the shares on their followers at a nice price.
The Guru’s followers are providing liquidity for him to execute his manoeuvres.
Who are the favourite Victims of Fake Trading Gurus?
The ironical thing with all of this is that usually people that end up scammed are not rich, but rather poor people.
Gurus target desperate people that find themselves in a bad financial situation trying to find a way to make some money.
It’s the savings of these humble people what the Gurus are after, and if you stop and think about it for a second, usually people that have a good financial situation are not googling for secondary income courses or any of this crap.
How are Fake Trading Gurus making money?
Remember, fake trading gurus are masters of deceiving, everything you see is a carefully crafted marketing lie.
Their income comes usually from:
- Affiliate Programs with brokers: they refer people to the brokers and get commissions. Sometimes they even refer people to unethical brokers that destroy people’s lives, but these guys don’t care as long as they make a commission.
- Course Income: they sell highly priced courses that actually teach you nothing really valuable that you could end up finding everywhere online at a much better price or free.
- Expensive live seminars or classes: they group a bunch of people and “teach them how to trade”.
This is how the money is being made for them, the rest is all lies. They’re not successful traders, in fact, here’s what they do when they are pretending to be good at live trading, it’s called: "hedging".
The fake guru will have 2 different brokerage accounts and open exactly the opposite trade in one of them, so if he goes long on 100 Apple shares, he will go short on 100 Apple shares on the other one.
In the end you never see one of the accounts, you only see the one in profit if he hits by luck and that way he ensures he’s always covered for losses while only paying commissions.
How to Avoid getting Scammed by Fake Trading gurus
Literally by using logic and common sense.
If something looks weird to you, it’s because IT’S WEIRD!
Whenever you hear these words:
- Secondary Income
- Live the life of your dreams
- Be financially free
- Make money from your laptop while traveling
Then please, RUN!
Trading is risky, money can be lost in seconds (specially if you don’t know how to manage risks). It’s not an easy way to make money.
Whenever we talk to people in a bad financial situation we clearly tell them, learn to trade for fun and play with Demos! If you don’t have money that you can afford to lose then trading it’s not for you at this current stage of life.
You can trust websites like ours or few others that literally just want to explain concepts and provide clear information to you without fake promises, and this is the key, avoid FAKE PROMISES.
Anyone that claims to be able to teach you how to trade and be rich is a liar by default, as if they were able to do so, these people would be rich, living on a boat and having fun while they trade. Why would anyone want to deal with online students and charge them a few hundreds when you’re making millions trading supposedly?
Remember, common sense, logic and trusting your intuition can get you out of these funky fake trading guru situations.
We wish you good luck and stay safe!