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TESTING THE LEARN TO TRADE EDUCATORS - CAN YOU REALLY GET RICH QUICK?

                                                                                                                                      20 January 2015 07:15


Our Financial Correspondent Martha Jones examines if you can really achieve “financial freedom” by spending a few hours at a seminar on stock market investing. She attended three seminars and spoke to four “Gurus” to find out the truth.


Tony turned £3,000 into £47,000 in just nine weeks and has retired at the age of 50. Awia was a "bored mum", but is now earning a good living while being "100% there for the kids". Samet made 30% on this first trade, and each day his profits rise. These are just some of the glowing testimonials posted on "learn to trade" websites, which hold out the promise that anyone who spends just a few hours at a seminar can look forward to a future relaxing on luxury yachts in the Caribbean sipping strawberry daiquiris. All you have to do, it seems, is follow a few easy-to-apply trading strategies.


Almost every day in hotel suites across the UK a new crop of would-be stock market millionaires sit down to hear from the "professionals" the secrets of trading in stocks and currencies. Over the last few months I've been one of them. Not only that, I decided to put down some of my own money and see how far I'd get following the advice of the so-called experts.


What did the seminars tell me? That investing for the long term, buying low and selling high in the style of Warren Buffet, is old hat. Instead, I should jump into the world of "spread betting", going "long" and going "short", with mini-bursts of activity based on the zigzag of chart patterns. This, I was told, is the "recession proof" way to make money.


But relatively little time was spent actually teaching me about investing. Instead, I and my fellow attendees were encouraged to go on "elite" courses and "mentoring" programmes where we'd learn about how really to make big money – but at a cost of up to £13,000.


It left me feeling that the only people getting rich from the learn-to-trade industry were the learn-to-trade companies themselves.


But as an out-and-out beginner in the world of investment, I admit I have learnt a few things. I have begun trading, albeit with just £500. But am I making any money?


The Wealth Training Company


My journey begins by getting thrown out of the first event I attend.


Hi-energy pop blasts out of the speakers as attendees arrive at a "live trading day" run by industry veteran Darren Winters on a muggy Tuesday afternoon. "Raise your hand if you want to make a load of money," says Winters, who is in his early 40s, dressed in a T-shirt and jeans, and sports a goatee. About 15 people at the seminar in Bermondsey, south London, have turned up for what is advertised as a £400 one-day workshop, but which I received for free after entering a Wealth Training Company competition.


Winters is something of a controversial figure. In the mid-2000s his company held events up and down the UK. However, his promotional claims led to a reprimand from the Advertising Standards Authority. In recent years he has had a lower profile, but he is now back teaching stock market trading.


If you type "Darren Winters" into Google it's not difficult to find negative stories. I decided to fudge questions on the course application form about my reasons for attending. Was he really that bad?


He proves to be an engaging presenter and provides some standard advice: stick to stocks in the S&P 500 and the FTSE 350 – there is more liquidity and therefore more likelihood of predictable trade patterns. Always place the same number of trades long (speculating that prices will rise) and short (that they'll fall) so you're covered whichever way the market goes. And never forget to use a "stop loss" to minimise any losses.


But it transpires that he is also seeking volunteers for his "Elite Apprentice Programme", which starts costing as much as a new car, but rapidly tumbles in price – if people sign up today.


A few hours into the seminar my constant note-taking arouses Winters' suspicions. He really does not trust journalists. "The media never reports on us fairly," he says, as I am booted out at the half-way point. So, despite being promised that I'd discover how to "copy our graduate who made £9,940 tax free in seven days", unfortunately I'll never find out. What I do know is he doesn't like hacks sniffing round his business.



Knowledge to Action


The following week I'm at an introductory stock trading seminar run by Knowledge to Action in a plush mahogany-panelled hotel near Westminster Bridge. It opens with a slick video presentation accompanied by a driving soundtrack. The message is clear: the greatest opportunity in the history of mankind is here for the taking.



"How many of you would like to make money from the next stock market crash?" says smooth-talking company representative, Gurdas Singh, to the 35-strong audience. "My guys on the trading floor like it when the market crashes because they see it as an opportunity."


Knowledge to Action's "trading floor" has space to teach beginners, Singh says – and with the right training a "rookie trader" can soon pull in £2,000 a week. "Anyone can do it," he says, "but if you want to be a pilot you've got to learn from a pilot."


The talk is punctuated with references to dream holidays and flashy cars that are within everyone's grasp, although he does stop to outline his trading rules: never risk more than 1% of your account on any one trade and aim for a risk-reward ratio of 1:3 or better.


The seminar is promoting a two-day course that starts costing £13,000 – but ends up being offered at £2,400. Charlotte, a businesswoman sitting next to me, is not altogether impressed. "It all sounds too good to be true," she says.


Knowledge to Action was founded a decade ago by former IT consultant Greg Secker and has trained more than 100,000 people around the world. Students are taught by professional traders on live trading floors, the company says.


I put out some feelers on internet forums used by traders. Had people who attended managed to make any real money? The first to come back to me was a former employee of Knowledge to Action.


"There is very little real trading going on there," he said, in a recorded interview. "The so-called professional traders haven't come from investment banks. They are more likely to be ex-double glazing salesmen."


I was also contacted by Stuart Rice, former marketing head at Knowledge to Action, who said that the two-day training courses, which can pack as many as 60 people into a room, are followed by three half-hour one-on-one coaching sessions. "It's not enough," he says. "The majority of clients leave the courses unhappy."


John Crawley, who attended the two-day stock trading course, told me he struggled to apply some of the techniques he was taught. "I found I was missing basic information," he says. "It was supposed to be followed by one-on-one sessions but this never materialised. The best I got was someone on Skype, but they couldn't really answer my questions. It wasn't worth the money."


Amy Leveson Gower, chief operating officer of Knowledge to Action, disputes these claims. She says: "We are extremely proud of the quality of our education – in 2012 and 2013 Knowledge to Action was awarded best education provider by World Finance Exchanges and Brokers Awards.


"We are concerned you have clearly only spoken to a limited group of ex-employees and clients which will not represent a fair and representative sample of opinion across the thousands of people Knowledge to Action has trained worldwide over the past 10 years.


"There are hundreds of genuine, verifiable, positive testimonials. These are openly and neutrally posted at http://learntotradeblog.blogspot.co.uk, many of whom have left their contact details."



THE TRADING ACADEMY - UNIVERSAL PRIVATE EQUITY - David Carmichael


I found David Carmichael through searching the Internet and looked through his website. As with the others, his website is offering training courses and an apprenticeship program which can run into thousands of pounds. This training and mentoring is delivered by David Carmichael. He seems to operate in a slightly different way from the others as he doesn’t have a free one day introductory course, where he is just exposing you to a hard sell for his more expensive offerings.


I emailed him after going through his website at www.davidacarmichael.com and we arranged a time to meet and have a talk about where he feels the truth is regarding the potential of achieving financial freedom through trading. We met at his office and I started the interview.


“It’s not easy until it becomes easy” David said and then makes an analogy comparing learning to trade with learning to swim.


“When you’re a non swimmer it so difficult to swim, and even though you can see people around you swimming it feels like the hardest thing in the world to do until you actually learn it. Once you learn it it then feels so easy and you don’t understand how you could have ever found it so difficult”


I must say that while speaking to David Carmichael I found him very engaging and knowledgeable but the real question was could anyone actually make themselves financially free through trading.


“Yes, but you have to learn to swim first and with trading you’ll do better if you learn to swim with the sharks”. He smiled


“The thing is a lot of people who teach trading don’t actually trade themselves, which doesn’t really bode well for the learner. I’ve taught many people who had already spent thousands of pounds on courses through other trainers and found that they were still losing money or struggling to make money. After learning through me they’ve found it a lot easier. All you have to do to determine anyone’s trading skills is to ask to look at their live trading account to see if they are making money or not, I’ve never had any issue in showing mine because I know what my capabilities are”


So I asked him to show me, and without hesitation he did (this I was not expecting). He logged into his account (and it was a live account) and true to his word I could see that we was making a considerable amount of money. I must say I was pretty impressed. I even spoke to one of his mentees who told me that David had the nickname “The Nostradamus of Trading”..I can see why..



Investment Mastery


A retail park in a humdrum Hertfordshire commuter town is an inauspicious place to seek your fortune, but at 9.30am Investment Mastery's office in Elstree is heaving with people, in spite of the Saturday morning sunshine.


"Is everyone excited and wanting to make some money?" asks Allan Kleynhans, a South African in grey slacks and black shiny shoes, who is leading the seminar. On the walls of the low-ceilinged function room are quotes about unleashing your inner potential and colourful images of golden eggs. The 40-stong multicultural audience, aged from teen to pensioner, mumbles back in agreement. "You won't make any money today," he informs us, "but we'll help you to learn.


"You can make money three ways," he continues, as a stock market graph flashes up on the screen. "Markets can go up, they can go down, but they can also go sideways." The trick, he claims, is to seek out trades that follow predictable oscillating chart patterns – and get in and out at the right time.


"You don't have to understand electricity to flick on the lights," we're told at the end of a complex section about "Elliot waves" in the market. "The point is to put a system in place and follow it no matter what."


The recurring theme of this £80 one-day workshop is the importance of having the right mindset: to make money you need to think positive.


"People often have a difficult relationship with money," explains Marcus de Maria, a business consultant who founded Investment Mastery in 2004. "They need to adjust how they think."


At the one-day seminar, Olga, a Polish lady from Hastings, looks confused. "It's going a bit fast," she says.


"Some of you may take up the opportunity to continue your education with us," Kleynhans continues. The details of a two-day course appear on the overhead projector. It costs £3,500. Then the price drops. And it drops again. Suddenly, it's £2,000 if people sign up today. I feel like I'm in Groundhog Day. At the desk behind us, staff members stand waiting with card readers. "Don't let the price put you off," Allan urges. "This stuff changes lives."


Petra Folkersma, an accountant living in the Netherlands, attended Investment Mastery's two-day stock market course last December. "I was a total beginner but the systems were clearly explained," she says. "And the follow-up support really helped." She spends a couple of hours a day researching the markets. "I am now making returns of more than 6% a month," she says. "If you put in the effort you can achieve results."


How did I get on?

It was time to put what I had learnt into practice. My starting capital was a modest £500, so I opened a spread betting account (the big operators are IG Index, Capital Spreads, and City Index). Spread betting allows speculators to bet on all the major markets, but without the need to stump up the full value of the transaction because they're not buying real stocks. A spread betting platform simply mirrors the market's movements, although this exposure can still lead to large gains or losses.


"Beginners can learn to trade," says Justin Urquhart Stewart of London-based asset management firm Seven Investment Management. "But it's a bit like giving the chemistry set to the children. They might be able to do a couple of things but they're also quite likely to set fire to the carpet."


To avoid calamitous schoolboy errors, some learn-to-trade companies advise clients to play around on a demo platform for a few months before they start trading with real money. (Online brokers such as OptionsXpress and FXCM provide free virtual trading platforms.)


"People blunder into trading thinking it's easy," says John Bartlett, 73, who has been teaching beginners to trade on his residential courses in Somerset for 15 years. "Nobody is going to become a trader after a two-day course, but they might be able to start trading on a demo platform and build up their confidence before they put their toe into the water with real money."


During my first month of trading I set out to increase my pot by 3% – an achievable beginners' target, according to Investment Mastery. It claims that by reinvesting these gains on a month-by-month basis, clients should have a tidy nest egg after about 15 years. "We are at pains to point out this is not a get-rich-quick scheme," said Investment Mastery's Marcus de Maria.


The first task was finding shares that met the criteria: predictable zigzagging patterns that hit resistance at one end of a chart and support at the other. (Learn-to-trade companies cannot recommend individual stocks for regulatory reasons, but many provide watch-lists to help clients narrow down the options.) After hours of carefully scrutiny, I plumped for a couple of obscure American energy companies, a communications operator and a British home merchandise retailer.


I knew nothing about these companies other than the stock looked poised, according to the charts, to make a sharp movement up or down. If the trade went against me I stood to lose no more than 1% of my account. But if I got it right the risk-reward ratio was – theoretically at least – 1:3 in my favour, as I'd been taught in the seminars.


One month later I have made four trades, two "long" and two "short". I made a loss on one trade but got a couple of others right and increased my account by 3% to £515. But that £15 was hard work, with at least a half day spent setting up my account and working out which trades to do. Over the same period (17 June to 15 July) the FTSE 100 rose from 6,330 to 6,586, a rise of 4% – so I actually did worse than the overall stock market. It looks as if it will be rather a long time before I can cash in and retire to the Bahamas.


What I've concluded is that the learn-to-trade can be an expensive way to learn information that is often found on the web for free. However, the classroom environment (and where applicable, follow-up support) can  help some beginners learn the basics. But it's only ever a first step on a long, rocky, uncertain road. As David Carmichael said “You have to learn to swim with the sharks”


"The most important attributes you need to be a trader are patience and discipline," Bartlett says. "Some people are simply not cut out for it. But that doesn't stop some companies selling dreams of easy riches – it's the easiest thing to sell in the world."


One of my colleagues here at Investment reporter has suggested that we create a trading competition or challenge to the top traders that we can find. This can then determine exactly what their capabilities are, with everyone trading on a level playing field. I’ll take it under advisement.


David Carmichael FX Trader Interview with Martha Jones of Investment Reporter.com, the Nostradamus of Trading, Learn to Trade Forex and the Money Markets. Testing the Learn to Trade Educators, Knowledge to Action, Wealth training Company, Investment Mastery, Universal Private Equity. David Carmichael Interview conversation impressive.