I have this addiction to purchasing internet domain names that fit topics I am interested in. This blog is an example. I was looking for a domain name that fits my trading style, but alas it had already been taken.
The domain name in question is lazytrader.com which leads to a dead site. According to a whois lookup, the site originated in 1999. It looks like the domain is owned by a Frank van der Lugt out of Canada. I’m sure he hopes someone like me comes along and is willing to pay for the domain. I can respect that, but am not going to offer the $2000 asking price for it. I don’t have that much of a need for it. Someone else can pay it.
I became curious as to what happened to the lazytrader.com site. I did a little bit of internet stalking by searching for Mr. Lugt’s name and website. I came across a US Government Investigation titled “Day Trading: Case Studies and Conclusions“. Basically this was a study done in 1999, by the US Government, regarding people selling deceptive information to consumers. In other words, new traders were being sold snake oil medicine with the guarantee that you can become a successful day trader in the stock market. This was one of the first governmental studies done to begin a discourse on stock market reforms so consumers would not be taken advantage of. It appears this study needs to be updated as the internet has exploded since then and there are even more scammers using this tool to scam.
I looked on the Internet Archive Wayback Machine and found Mr. Lugt’s site archived. Here is his “Who I Am” page. It is about is the same as I would write about myself, except I am not selling anything.
To be fair to Mr. Lugt, It looked like he was an actual trader and was only selling what he knew. I can respect that. He also responded to the US Oversight Committee and explained how his system worked. He did not have to since he was a Canadian citizen. I can also respect that.
In my US capitalist system, people are pretty much free to sell whatever they want as long as they are not deceptive about it nor is it something illegal. Mr. Lugt’s trading system was nothing more than simple price action trading. He did put disclaimers on his site, but they were deemed deceptive by the US government. Of course, that is debatable. He was not the only person selling these Trading “Systems” at the time. The study named several other sites and companies that were selling trading systems. It appears every one of those sites are gone.
I have been trading for over 20 years and have seen charlatans come and go. It appears with our latest pandemic and people sitting at home bored, these charlatans are raising their ugly heads again and coming out of the woodwork to sell unsuspecting new traders the latest greatest snake oil medicine on how to day trade. There is way too much free information on the internet and too many wonderful books written on the subject of day trading for people to have to pay for this information.
I always hear people say that 80% of daytraders lose money or go bust. I wondered where that stat came from since nobody really makes reference to the source. It seems to be an accepted known number that is thrown out in trading circles. More than likely it came from this 2004 study “Do Individual Day Traders Make Money? Evidence from Taiwan“.
Another study that was done for the US government Congressional Hearings in 2000 was titled ” DAY TRADING: EVERYONE GAMBLES BUT THE
HOUSE“. This study states that 10 of one bank’s clients made money. Another brokerage stated that no one made money and those customers that day traded lost an average of $50,000.
Psychologically, people take comfort in giving snake oil salesmen their money. These salesmen will tell you to want to hear. They like to use fancy terms and graphs to show you how you can become the next big trader. They exploit our human vulnerabilities in that we think we are smart, optimistic, and good things will come to us. A psychology today article, “Why We Still Fall for the ‘Nigerian Prince’ Scam” talks about this. Folks, like me, that have been in this game a long time, just roll our eyes.
What most of these scammers have to sell are all smoke and mirrors. I will not go into their techniques here. There is plenty written on how scammers operate. I provided a link below to one such site. To use a worn-out cliche, “there is a sucker born every minute”. Below I have listed some red flags and ways to tell if you are being scammed.
The take-a-ways from all this is obviously to be aware that there are lots of scammers out there trying to take unsuspecting new trader’s money. They will give false hope that you will become rich day trading stocks.
Below are just a few things, off the top of my head, to look out for. I will add more as I think of other things.
1. Claiming they got rich Trading
Can these trading gurus provide verifiable results? Reputable traders selling their wares, which are few, will provide their verifiable trading results. If they do not provide you with broker statements or certifications from their CPA then ask them for it. If they refuse to provide it, I think you got your answer whether or not they are reputable.
2. Do a bit of internet stalking
In this day and age, it is easy to find information on the internet. Simple searches (not ads) will usually lead you to information about the site, person, or system in question. Sometimes these scammers are slick and will pay people to put disinformation out on the internet to discredit those who complain or they will hire shills to write false articles and fake responses. I can easily pay someone on freelancer.com to write articles about my site and propagate false positive information to the net.
A good site to search if your salesperson or site is questionable is on https://www.tradingschools.org/. The owner of that site went to prison for scamming traders and now he calls out deceptive people on what he used to do.
3. Flashing lots of cash
First, what brokerage trades with actual cash? All my trades are done in my brokerage account. Stocks are not traded with hard cash. Of course, I am being facetious. Second, where did these trading gurus get their cash and why in the world would they flash it online? The only people I know that have cash lying around like that are drug dealers and thieves.
There are bad people out there who will gladly find you if you flash that kind of cash on the internet, break into your residence, and steal it or worse. I know these things because I work in the legal system with drug dealers, thieves, and murderers. Youtube and Facebook ad feeds are chock full of these videos of people flashing cash trying to sell you their system. If it is too good to be true then it probably is too good to be true. These folks do make money. They make money off selling to naive new traders.
4. Do they have a phone number and a real address?
If I am giving someone money, they better provide me with a phone number and address I can reach them. If someone is selling you something they should have a real address, not a post office box or just some random address listed. Phone numbers can be spoofed to any number so that is no guarantee it is a legitimate business.