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FAQ How Can I Distinguish Between Scams and Reputable Vendors?

T2W Bot

Staff member

In a nutshell - it takes experience
Granted, this is something of a catch-22 for newbies as they don’t have any! Hopefully, this FAQ will bridge that gap and enable you to remain one step ahead of the rogue vendors. In the trading world, scams come in a multitude of different hues. Amazingly, many of them are legal(ish). Of course, there is the clear cut illegal variety: a confidence trick designed to defraud victims of their money. Think Barlow Clowes back in the 1980s or, more recently, Bernie Madoff. At the other end of the spectrum there are what could be described as ‘legal scams’ . . .

A legal scam – what’s that?
Technically, a ‘legal’ scam isn’t a scam as such because, by definition, scams are illegal. However, the worst of them are as unethical as their illegal counterparts and the consequences of them are much the same. Namely, victims end up feeling swindled and out of pocket. The trading and investment industry is largely unregulated, leaving the door wide open for anyone intent on parting you from your money. A legal scam stays on the right side of the law - just, but it’s still a scam in the eyes of many. Customers are fooled into thinking that a product or service will improve their trading performance and / or turn them from unprofitable traders into profitable ones. In reality, it almost certainly won’t. The focus of the Long Answer is on this type of scam. This is because they are so insidious, ubiquitous and, superficially at least, often very credible in the eyes of many T2W members.

What will this FAQ will do for me?
This FAQ will show you how to navigate your way through the minefield of trading vendors and distinguish the reputable ones from the myriad of disreputable ones running (mostly) legal scams. Additionally, a list of useful tips is provided which will help to ensure that the only people who get their hands on your money are those that truly deserve it, by providing quality products and services that you want, at a price you can afford. Please note – this FAQ does NOT address the issue of what a good trading course, coach or mentor will – and won’t – do for you. If you’re considering going down this route, check out the bespoke FAQ entitled Can you Recommend a Trading Course, Coach or Mentor?
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T2W Bot

Staff member
This is intended to be as detailed and as comprehensive as possible - hence its length. If you're considering buying a trading product or service, then 20 minutes spent reading this FAQ now – plus the one linked in the Short Answer(above) - could save you huge amounts of angst and money later on.

The good, the bad and the ugly
When considering purchasing trading related products and services, there are 3 categories of vendors: reputable vendors (good), legal scams (bad) and illegal scams (ugly). The Long Answer kicks off by outlining a classic illegal scam and what distinguishes it from a legal one. After that, the next question to address is what separates a legal scam from a reputable vendor. Unsurprisingly, this is much more subtle, which is why legal scams can be harder to spot and why reputable vendors are often tarred with the scam brush. Lastly, a checklist of useful tips is provided. No guarantees are provided but, if you follow the suggestions in this FAQ, it will greatly reduce the probability of you falling prey to an illegal scam or, more likely, to a legal one.

The illegal scam: a ‘Ponzi’ scheme
A classic example of an illegal scam is a ‘Ponzi’ scheme, such as the one perpetrated by Bernie Madoff, in which he defrauded $62 billion from investors. The scam is named after Carlo (Charles) Ponzi who is credited with devising it in the early 1900’s. He offered to pay investors a staggering 50% return on their money after just 45 days, or 100% after 90 days! In all Ponzi schemes, the money received from later investors is used to pay earlier ones, while the perpetrators cream off fabulous profits along the way. Early investors are deliriously happy with their returns and duly tell their friends. The friends then tell their friends and so on. Everything goes swimmingly until there’s a financial crisis and suddenly there are no new customers able to join the scheme, and all the existing ones want to withdraw their money. That’s when the whole house of cards comes tumbling down. The money was never invested and the fabulous profits never existed. A word of caution: if the idea of setting up your own Ponzi scheme sounds appealing, make damn sure you have an exit strategy when (not if) it falls apart! The powers that be don’t like serious fraud, evidenced by the fact that Bernie Madoff is currently serving a 150 year jail term at the Metropolitan Correctional Center, New York.

So why is it illegal?
The answer to this question might seem obvious, but it’s worth highlighting the similarities - and differences – between this classic illegal scam and a ‘legal scam’ . . .

Illegal scams: These tend to involve getting people to invest in a fund or company – knowing that some or all of the investors will lose their money. A Ponzi scheme is a good example of this as it doesn’t generate enough money to pay the returns it promises to all the investors. In fact, it may not generate any money at all. The profits paid out to early investors aren’t profits at all; more a case of borrowing from Peter to pay Paul. This is distinct from a genuine speculative investment where the potential for profit exists for all investors.
Legal scams: By contrast, legal scams rarely offer investment advice or invest their client’s money. This puts them beyond the radar of most regulatory bodies. For the most part, they offer ‘educational’ advice, as opposed to specific investment recommendations. The perpetrators aren’t accountable as it’s up to their customers to decide whether the advice is good, bad or indifferent and what to do with it. Furthermore, the scammers include legal disclaimers which protect them from any unhappy customers who shout ‘foul play’. (NB: reputable vendors also include a disclaimer so, in itself, the disclaimer isn’t always helpful in identifying the bad guys from the good guys.)

Illegal scams: Illegal scams all have an inherent flaw which results in the perpetrators making money at the expense of their victims. For example, all Ponzi schemes must fail sooner or later, as new investors dry up and existing ones want to withdraw their money. So, even if the early investors make handsome profits, they do so at the expense of later investors who stand to lose all their money.
Legal scams: These don’t operate in this way and don’t suffer from this basic flaw. Each individual customer pays for education, information or alerts etc. that has no intrinsic value. The value is intellectual and is based on what the market as a whole will stand and what individual customers are willing to pay.

Illegal scams: Victims of scams like a Ponzi scheme are encouraged to invest based on deceit. In the case of Bernie Madoff, he was a former non-executive chairman of the NASDAQ stock market, a position he used to full advantage to gain the confidence of his clients. The returns he promised them were better than average but, unlike Carlo Ponzi, they weren’t staggering. This combination of being a well respected Wall Street veteran and offering modest but consistent gains was the prime reason investors had confidence in him and why he avoided detection for so long.
Legal scams: This is the main common denominator between illegal scams and legal ones. Both types of scams attract custom by offering something they can’t deliver. Ironically, more of Bernie Madoff’s customers will get what they were expecting than will customers of most legal scams. However, in the case of the latter, no promise of specific returns is ever given. It’s all hypothetical and therein lies the legal loophole. Who can say – for example – that a simple moving average crossover system won’t generate the huge profits that the vendor claims it will? It almost certainly won’t, but it’s difficult – if not impossible - to prove.

A ‘legal scam’ – putting flesh on the bones
Ponzi schemes are completely illegal, as are boiler room ‘pump & dump’ scams. (For more information on the latter, see Useful Links in post #3.) While anyone could be a victim of such scams, these are not the scams that retail traders (i.e. typical T2W members) are most susceptible to. They are much more likely to fall for a legal scam. Some T2W members would argue that, just like its illegal counterpart, a legal scam is also a confidence trick designed to defraud victims of their money. The difference is that the perpetrators don’t break any laws in the process. They might skirt around the edges a bit, but they don’t overstep the mark enough to attract the attention of the Securities & Exchange Commission (SEC) in the U.S. or the Financial Services Authority (FSA) in the U.K. For the most part, the amounts of money involved are relatively small, ranging from a $99.00 e-book, to a course for several thousands of dollars. In some respects, the legal scams are more dangerous than their illegal siblings. This is because the law actually protects the perpetrators - rather than the victims. Anyone who criticizes the vendors is threatened with legal action for slander and libel. Websites like T2W get caught between a rock and a hard place: either critical posts are removed, or the site is forced to commit to a costly and time consuming legal defence claim.

Unregulated industry
To a greater or lesser extent, the prevalence of legal scams is the result of an industry that is largely unregulated. Pretty well anyone can set themselves up as a vendor offering e-books, tips, alerts, coaching, mentoring and a host of other trading related products and services. Some of them are run by legitimate vendors with expert knowledge, years of experience and a fabulous trading record of consistent profitability. Sadly, they are the exceptions. The majority are run by internet marketers who have minimal knowledge of trading and investing. Many of them have never traded anything in their lives – let alone profitably. How then, you might ask, can they sell something which, supposedly, will make the purchaser a better or more profitable trader? The answer is simple: there’s no industry regulator or law to stop them and there’s good money to be made. In other sectors, they wouldn’t get away with it. Take medicine for example. Approval by the Food & Drug Administration (FDA) is necessary if you want to sell medicines commercially. If you fake approval you’re committing fraud and you’re liable to be prosecuted. In the trading and investment community, there is no agency equivalent to the FDA to protect wannabe traders from unscrupulous vendors. Sure, there’s the SEC and FSA but, for the most part, they go after the big fish and their remit is restricted to individuals and companies offering specific investment advice or investment products, e.g. pension funds. Most legal scams don’t do this, so they don’t attract the attention of these regulators. Consequently, legal scams are omnipresent and flourishing. Here’s a fictitious example of how one works. Real life examples similar to this can be found all over the internet . . .

‘Mega Stock Market Profits: how to make $100s every day from only 10 minutes work!’
An internet marketer decides to produce and sell an e-book with this catchy title. Lazy authors won’t even write their own text, they’ll copy and paste it from sites like T2W. They’ll doctor it just enough to avoid copyright infringements, but accusations of plagiarism they can live with. Add in a few pretty charts and some free clip art and, hey presto! – one e-book that’s gotta be worth $99.00 of anyone’s money. The irony is that depending on how much research they do and the sites they plunder for the content, much of the e-book might actually be okay. Not original, obviously, but okay. It’s the hype they use to sell it and the inflated price they charge that makes it unacceptable and warrants the ‘legal scam’ tag. It must be stressed that there’s nothing inherently wrong with either internet marketing or e-books! There are many excellent e-books out there with a fair price tag with original content written by seasoned traders. Fear not, in due course, you will learn how to distinguish the genuine article from the shiny, expensive, and ‘too good to be true’ fake.

Characteristics of ‘legal scams’ and why they’re not illegal
Here are 10 reasons why many such products and services warrant the ‘legal scam’ tag and why they are not illegal. We’ll stick with the e-book example, but the basic principles apply to most other products and services marketed by ‘legal scams’ . . .

If one e-book costing just $99.00 really could do what ‘it says on the tin’, two things would happen: most wannabe traders would hear about it and buy it and, secondly, many of those that did would become rich. Inexperienced newbies will assume this is the case. Experienced traders know otherwise.
It’s not illegal because . . . anything is possible. No one can prove that existing customers failed to benefit from reading the e-book or that future customers will do likewise. The fact that they haven’t – and won’t – is not relevant.

The e-book isn’t worth $99.00. The marketing hype preys on the gullibility and greed of inexperienced newbies. People pay the $99.00 because they believe the advertising copy and think they’ll recoup the cost in next to no time. They rarely ever do.
It’s not illegal because . . . good business dictates that you charge what the market will pay. It’s the dirty face of capitalism. Besides, some folks would argue that greedy people deserve what they get. By way of example, victims of Ponzi schemes don’t always get much sympathy.

The hype gnaws at the inquisitive nature of newbies. ‘Learn the secrets that only the pros on Wall Street know’. Naturally, everyone wants to know the secrets only known by Wall St. pros! So, out comes the credit card. Of course, the secrets aren’t secret at all and probably aren’t even true. ‘Wall St. traders look for stocks where the 50 day moving average has crossed the 200 day moving average’. You’re kidding, is that it – is that what I’ve paid $99.00 to discover? Yup, afraid so. Is it true? Who knows – who cares. The point is that even if there is a Wall St. pro who successfully trades moving average crossovers – this knowledge is highly unlikely to enable you to do the same and make $100’s every day from just ten minutes work.
It’s not illegal because . . . as before, it’s tough to prove a negative. It’s conceivable that there is a Wall St. pro trading moving average crossovers. It’s unlikely, but not beyond the realms of possibility.

The e-book contains no new or original content and, if it does, it’s likely to be opinion. After all, different opinions are what make the market. Opinions of expert traders may be worth paying for, perhaps even $99.00. Second hand opinions with no provenance, copied and pasted from who knows where have little value. Why? Because, almost certainly, the e-book vendor didn’t pay good money to market experts for those opinions. If they had – they’d make a point of telling you. Instead, they’ve plundered their content from free sites on the net.
It’s not illegal because . . . there’s no law which says you have to be an expert in a subject to be able to express your views about it in an e-book (or endorse someone else’s) – and then sell it. Everyone is entitled to an opinion - no matter how daft it might be - and to do what they want with it.

Plenty of people the world over work in areas they know little about. In itself, this isn’t a problem because most of them don’t pretend to be experts and are honest about their minimal knowledge and lack of experience. On the other hand, many vendors of e-books want you to believe they are market experts and experienced traders. 9 times out of 10, they aren’t.
It’s not illegal because . . . gilding the lily is the norm these days. As one commentator wryly observes, “The truth in advertising is as stretchable as a limousine”. Prospective customers are expected to see through overly flowery advertising copy. In the 21st century, being naive is a bigger crime than being economical with the truth.

Anyone who has ever worked in sales will have heard the expression ‘sell the sizzle, not the sausage’. In other words, the salesperson focuses not on the product or service itself, but on what it will do for the customer. In the case of legal scams in the trading and investment arena, there’s precious little sausage. It’s 90% sizzle, mostly about the life you will lead when you’re not trading: the Mediterranean villas, the flashy cars and relaxing on the world’s beaches with scantily clad young lovelies etc. It’s only when you receive the e-book that you discover the information that’s supposed to finance this lavish lifestyle is thin on the ground, out of date and, in some cases, completely wrong.
It’s not illegal because . . . who can prove that the information (the sausage) won’t generate the income to buy all these luxury items (the sizzle)? Most legal scams are information based. Even the ones that aren’t – like an EA (expert advisor) – are legal as they’re based on past results. When they fail, it’s because market conditions have changed. So, it’s not the fault of the EA that it doesn’t make any money; it’s the fault of the market!

Legal scammers are interested in selling their products and services; that’s how they make their money. If they told the truth and said that very few traders succeed and those that do often spend years learning and practicing – their sales would evaporate. People believe what they want to believe. Making lots of money very quickly for very little effort is high up on most people’s fantasy list.
It’s not illegal because . . . no product or service would ever get bought if the whole truth and nothing but the truth was told. Sales are the engine of the economy. Imagine what would happen to sales of sausages, pies and pasties if the packaging explained exactly what went into them! Scammers make trading sound much easier than it really is, but cover themselves legally with an ‘Earnings Disclaimer’. At the foot of the page there’s some (very) small print saying something like: ‘Any earnings or income statements – or earnings or income examples provided in this e-book – are only estimates of what we think you could earn’. Note the words highlighted!

An e-book author who expresses an opinion is not required to offer any proof to support their claims. Consequently, anyone can make wild and unsubstantiated comments and get away with it.
It’s not illegal because . . . the onus is on everyone else (i.e. the customer) to prove the claims are without foundation, and proving a negative is next to impossible. Trying to prove that it’s not possible to make a consistent month on month profit from moving average crossovers is even harder than proving that you can.

Vendors of the e-book don’t need to know much about trading in order to write and sell their product. Trading knowledge and experience are way down the required skills list. Infinitely more important are IT skills and internet marketing skills.
It’s not illegal because . . . vendors word their claims carefully. They suggest, hint and imply; leading prospective customers to arrive at their own (false) conclusions. Naturally, they only discover that after they’ve bought the product or service. In today’s society, this is considered an art that is highly prized and rewarded, not a malaise that needs to be fixed.

A good example of the above is a $99.00 e-book currently being marketed on the net. It has a section in the sales pitch with the heading: ‘Is this Working for Other People?’ The vendor then claims that over a quarter of a million people in 154 countries have ‘used the program’. These are great stats and very reassuring to prospective customers. Surely, that many people from that many countries can’t be wrong? In the famous words of Abraham Lincoln: “You can fool some of the people all the time, and all of the people some of the time, but you cannot fool all the people all the time”.
It’s not illegal because . . . the vendor doesn’t say that a quarter of a million people in 154 countries have actually bought the e-book; merely that they’ve ‘used the program’ – whatever that means! It’s entirely possible that the site has had that many hits - but not that many sales. If it had, the revenue from this one e-book would exceed $25 million, making it one of the most successful e-books ever! Dodgy statistics like this scream one thing only: ‘legal scam’.

Reputable vendors
Having looked at the characteristics of legal scams and why they’re not illegal, the next thing to look at are the hallmarks of reputable vendors and what separates them from the scams. The same list of characteristics will be used and applied to reputable vendors to see what they do differently, followed by a suggestion to help you to differentiate between the two.

Reputable vendors are all too aware that the scammers promise the world and deliver very little. Consequently, they tend to make relatively modest claims.
Suggestion . . . Ask yourself whether the claims made sound too good to be true. Keep in mind that this won’t work on really clever scammers like Bernie Madoff only offering a 15% return per annum.

If you search for trading books on Amazon, you’ll find they’re very expensive. Even so, very few cost $99.00, especially e-books. Reputable vendors tend to charge a more realistic price around the $40.00 to $70.00 mark. Some even offer reasons why you shouldn’t buy their book! Here’s an example: www.nobsdaytrading.com
Suggestion . . . Ask the vendor what you’re getting in the e-book that you can’t find for free on sites like T2W. Keep in mind that the answer might be nothing, but all the information is neatly packaged together in a logical step-by-step format which will save you many hours of surfing the net. Whatever product or service you’re buying; check that the price is in line with others. If it’s way under or over par – alarm bells should start ringing.

Good vendors don’t need to resort to tacky gimmicks in order to sell their products and services. Their sales copy is likely to be factual and to the point, e.g.: ‘learn how to keep from being whipsawed’, ‘how to determine real support & resistance’ and ‘which economic numbers are important and how to trade them’.
Suggestion . . . Run a mile from vendors who refer to magic formulas, secrets and inside information etc. ‘Learn the secrets that only the pros on Wall Street know’ screams one thing: ‘legal scam’.

To be fair, most vendors do this, so separating the good guys from the bad guys can be tough. Their view of the market and how it functions could be unique and quite brilliant, or it could be delusional and based on fantasy and ignorance. Some vendors can appear intimidating to inexperienced newbies. However, good ones will welcome your questions and won’t mind being asked to qualify their opinions.
Suggestion . . . You’ve got to separate the ones with insight from the fantasists. Ask them how they arrived at their views and what evidence they can provide to support them. Is their explanation logical, clear and comprehensive? Does anyone else agree with them and, if so, what are their credentials? Does their trading practice support the theory, have you seen their accounts or watched them trade live? If not, ask if you can.

Reputable vendors won’t pretend to be experts in all aspects of trading and investing. It’s waaaaay too big a subject. All that matters is that they know the market(s) they specialise in. You want to ask searching questions to ensure they know their stuff and are not just trying to fob you off with a load of old baloney.
Suggestion . . . If you’re a newbie, you’re unlikely to know what questions to ask, so find someone who does. On a forum like T2W, you won’t have to look far. You will need to spend time getting to know members to separate those who are knowledgeable from those that are not. Avoid putting all your eggs in one basket. If you want to find out about a particular vendor, canvass the views of 2 or 3 people and look for a confluence of opinion in their comments.

Be extremely wary of any vendor who focuses on the sizzle and not the sausage. Good vendors pay scant regard to sizzle; they focus on facts and the cold hard realities of trading.
Suggestion . . . Good vendors are passionate about the markets and how to trade them well. They tend not to be overly interested in money and will rarely talk about the lifestyle enjoyed by successful traders. Here’s an excellent pastiche of the kind of thing you should avoid like the plague: 115% Profitable System!!!

No reputable vendor will tell you that trading is easy or that you can make loads of money for little or no work. That’s the classic hallmark of a scammer. Equally, unlike many legal scams, no reputable vendor will tell you that their methodology has a ‘100% success rate’ or ‘no losing trades’. Again, these are classic hallmarks of scammers. There are good traders who enjoy a success ratio of 70% or better and average win : loss ratio of 2 : 1 or more. However, they are few and far between and the probability of you replicating their success is slimmer than a very slim slim thing.
Suggestion . . . The easier the vendor makes it sound, the greater the likelihood that their product or service is a ‘legal scam’. However, keep in mind the cliché: ‘trading is simple, but it’s not easy’. Don’t confuse the two. Many reputable vendors will tell you that what they do is not rocket science and that their methodology is simple. That’s very different from being easy. For greater clarification on this important point, please read the sibling FAQ: Can you Recommend a Trading Course, Coach or Mentor?

Good vendors will be happy to provide evidence to support their claims. If it’s something they’ve stated in their advertising copy, they ought to be willing to produce this before you commit to buying their e-book – or whatever. Scammers will probably refuse in the hope that you’ll take the bait and fork out your credit card.
Suggestion . . . In the example of a moving average crossover system, this will only work in trending markets and fail dismally in rangebound ones. A genuine vendor will have a solution to this age old problem! Even if they aren’t prepared to tell you about it before you buy, they will at least acknowledge the issue and offer some sort of guarantee that it is addressed in the e-book. The secret is to spot potential flaws such as this in advance, before you part with your money. If you haven’t got the necessary experience to do that – ask someone who has.

First and foremost, the majority of reputable vendors are traders. Marketing their e-book or coaching services - or whatever - is a sideline. Consequently, their knowledge of the markets and experience of trading them is extensive.
Suggestion . . . Ask the vendor if he or she is an active trader. If they aren’t, ask them why not. Be extremely wary of any vendors who make their income solely from selling e-books and courses etc. and has little or no actual trading experience. Keep in mind that some rogue vendors can talk a very convincing talk and spotting them can be very tricky. If in doubt, walk away or get a 2nd opinion.

Statistics can be massaged in all manner of ways, so don’t pay too much attention to them unless you really understand them. For example, it’s possible to lose all your money with a 90% success ratio or to make a fortune with only a 30% success ratio. The vendor with the higher success ratio is not necessarily a better or more profitable trader.
Suggestion . . . Don’t be impressed by any statistic just because it sounds good – especially if you don’t understand how it’s calculated and how it can be manipulated to provide a very misleading impression. Some stats don’t require any trading knowledge to work out that they’re fake, such as the example of the e-book vendor who implied he’d sold over quarter of a million copies.

Useful tips before you buy
The final part of the FAQ provides you with 10 more practical tips that will help to ensure that you don’t get ripped off. There’s no one to protect you from the rogues, so it’s essential you conduct due diligence to ensure your prospective purchase is from a reputable vendor and not an unscrupulous legal (or illegal) scammer. As a default position, it’s not unreasonable to assume that all vendors are in the ‘legal scam’ category, until you are completely satisfied to the contrary.

1. Vendors on T2W
There are quite a few T2W members who are also vendors and can be identified as such by the cash register icon beneath their post count. It looks like this (circled in red):

T2W Bot.jpg

Please note that the icon merely identifies them as vendors, it’s NOT an endorsement of their product or service. T2W does not have the resources to check them out and, as the site is free to join, they could be rogue vendors. If you’re considering buying something from a T2W vendor, you would be wise to:
A. Read as many of their posts as possible. Collectively, do they impress? How do they respond to questions and criticism from other members? Be wary of anyone new to the site that is not known by established members.
B. Is their product or service listed in the Reviews section of T2W? Most of them will be under ‘Websites’ > ‘Courses & Coaching’.
C. What comments do other T2W members post about the vendor? Are there any members who appear to know the vendor well and may have bought their products or services? If so, PM or e-mail them and ask if you can chat. They probably won’t want to give you their private phone number or incur the cost of phoning you. You can get around this by joining Skype which is free.
D. Regardless of whether you’re reading a post on a discussion thread or a review, beware of extreme praise or criticism, especially from new members with a very low post count. They could have joined and posted at the request of the vendor or a competitor intent on trashing the competition.

2. Can you Recommend a (Forex) Alert Service? Check out the ideas listed in this FAQ under the section entitled: ‘How to Avoid the Rogues and Find the Pros’. Additionally, check out the websites listed in post#3 ‘Useful Links’.

3. Don’t accept anything at face value
Be aware that in the world of trading products and services, it’s not difficult to show impressive looking profits. Even official statements from reputable brokerage firms may not be what they seem. Here are 3 examples ranging from A) misleading, B) unethical, and C) illegal.

A) Never closing a losing trade.
Some vendors open multiple trades and only close the ones in profit and keep open the losing ones. This masks the true state of their account, but impresses anyone who doesn’t understand account statements (assuming the statements are genuine). If you don’t know how to spot this basic ruse – find someone who does. Rogue vendors don’t care whether or not the losing trades ever return to break even or make a profit, as the account is a simulated one, using paper money. If possible, ask to see a statement of a live account – trading real money.

B) Running two parallel accounts.
The vendor places opposing trades in each account, i.e. long FTSE in one account and short FTSE in the other account. Sooner or later, they string together a succession of winning (and losing) trades. In reality, they’ve actually lost some money on the spreads. However, the customer only gets to see the winning trades and the fabulously profitable account. It’s a very simple trick that’s reaped $1,000s in income for the scammers. Clearly this is totally unethical because prospective customers don’t know about the losing account, and the ‘profits’ are based on luck rather than skill and judgement.

C) Adobe Photoshop.
What an amazing bit of kit! Doctoring account statements really is child’s play. It’s illegal, obviously, but difficult to prove. Brokers are unlikely to verify or deny the validity of a statement because they don’t want any adverse publicity that might result, based on a possible breach of client confidentiality.

4. Luck
This is very tricky to spot for the newbie as the vendor themselves truly believes in their own abilities and the value of their product or service. These people aren’t really scammers as such and, consequently, that’s why they are difficult to spot. They may even be genuinely profitable, but only as a result of good fortune, rather than any real trading ability. For example, many traders of NASDAQ stock were able to show consistent gains month on month during the tail end of the 1990s. However, when the dot com bubble burst in spring 2000, many of them ‘blew up’ – traders jargon for losing most or all of their account. Would you want to hang on to every word uttered by a trader who simply got lucky by virtue of being long in a bull market? The solution is to double check everything. Ask an experienced T2W member if they can spot any flaws in the vendor’s trading record. Ideally, you want evidence that the vendor can make money in bull markets, bear markets and rangebound markets alike.

5. Ask (the right) questions!
This is especially important for anyone who is considering a trading mentor, coach or course. You must ask the right questions – the ones that most prospective students don’t ask. In no particular order . . .
A) ‘What does the tutor expect from you?’ The rogues will only be interested in your money and their answer will be very little – or nothing. Reputable tutors will be genuinely interested in your success and be much more demanding. This applies to mentors especially, who will be investing a lot of time and effort in you. Good ones won’t want to waste their time on wannabes who are only interested in the rewards and aren’t prepared to put in the work that’s required to achieve them.
B) ‘How do you charge for your services?’ Understandably, everyone asks what they charge, but few people enquire how they charge. If possible, get your tutor to agree to an hourly rate. If, after an hour or two, you don’t like your tutor or what they’re telling you, you can cut your losses with minimal financial loss. The tutor ought to be happy with this arrangement too, as it avoids the potential of the student forking out $1,000s and then complaining on forums like T2W that they’ve been ripped off. Keep in mind though that this won’t work for a tutor who has to travel a long way to see you or invest time in preparing materials ahead of your tuition.
C) ‘What can I expect as a result of your coaching, mentoring or course?’ Hopefully, by now, you know what to do if your prospective tutor replies along the lines of ‘make $100s every day from only 10 minutes work’! You’re looking for very basic down to earth answers that probably don’t involve money. Almost invariably, newbies have unrealistic expectations. It’s better to lower your expectations and be pleasantly surprised than it is to have overly high ones and be bitterly disappointed.
D) ‘Can I audio and / or visually record training sessions to review later?’ A refusal by a prospective tutor should set off alarm bells. Many tutors will provide all kinds of written material and possibly videos etc. However, having your own recording will prove invaluable. Good digital voice recorders are widely available and start from around GBP £30.00.
E) ‘How long have you been a tutor and (roughly) how many people have you taught?’ Seasoned tutors aren’t necessarily the best but, if their offering is really poor, chances are you’ll come across dissatisfied customers and bad reviews etc. Beware of the ‘Jonny-come-latelies’, especially those who have impressive websites and lots of flashy advertising. These outfits tend to be focused on building a training business selling courses and often employ non-traders. Their products and services are unlikely to be as good as the professional trader who supplements their income with some coaching or mentoring.

6. Vendor visibility
How did you find your vendor? Are they all over the internet? Are there links and ads for their site everywhere you go? Broadly speaking, this is a bad sign. That’s not to say that all high profile vendors of trading services and products are to be avoided like the plague – just tread with extra care. Really good people don’t need to promote themselves; their clients do it for them via word of mouth. This especially applies to companies that provide training, coaching and mentoring services. Be wary of firms that spend lots of money on media advertising, have links with (or backing from) data providers / brokers etc., or claim to offer tuition by top investment bank traders earning multi-million dollar incomes. They are sales operations who make their profits from flogging training – not from trading. Broadly speaking, they are to trading what the ‘Greasy Spoon Cafe’ is to gourmet cuisine. If you are contemplating any such training - ask for a sample video of what you will get for your money. Any company or individual should be able to provide such a video, and not just a promo’, but a snapshot, however brief, of what is actually on offer. Remember, the rogues comprise the large and very visible haystack; vendors of needle sharp products and services are much harder to find and are less likely to be a (legal) scams.

7. Be humble and play smart
If you’re new to trading, excited and full of enthusiasm, be aware that there might be a tendency to see what you want to see, as opposed to what’s actually there. This is natural; it’s not a criticism of you or your intellect. Once you’ve read and applied these FAQs and done your own research, you’ll have a shortlist of prospective vendors. Accept the possibility that in spite of your past achievements - be it as a successful businessman, architect, dentist or whatever; you may not spot the equities trader who got lucky in a bull market or the vendor who cleverly massages their trading ratios. If you’re a bloke (and chances are that you are) you’ve got to do what most blokes hate to do: acknowledge that you’re lost and ask for directions. Pride comes before a fall, so swallow hard and ask for help! Latch on to someone who (as far as you can tell) has nothing to sell, no agenda to promote and seems approachable and helpful.

8. Take your time
There are no entrance barriers to trading and the potential rewards are high. This attracts a broad cross-section of wannabes. Those that get taken in by legal (and illegal) scams want short cuts. Many of them (but not all) are grail hunters who tend not to be genuinely interested in trading per se – only in what it brings. This is not to say that victims of scams get what they deserve, far from it. But, wannabe traders who are focused, patient, honest (with themselves), hard working and disciplined – are not as vulnerable to scams as those who are merely hoping to get rich quick. Of the list of attributes, in the early stages, probably the most important one is patience. Don’t rush it: take your time.

9. Know what you want and why you want it
A characteristic of a high percentage of entrants to the trading arena is a desire to trade for its own sake, rather than taking the time to learn how to do it properly. ‘dbphoenix’, a former high profile member of T2W, made this comment on another forum: “I realized long ago that beginners don't want to make money; they want to trade. If they really wanted to make money, then they'd do whatever was necessary to make that money. But they don't. They'd rather trade. So instead of making money, they lose it. As far as they're concerned, it's all a big casino, only without the all-you-can-eat buffet.” It’s essential that you’re clear about what you want and why you want it. Do you want to trade because you get a rush and it’s a bit of fun regardless of whether you win or lose? Or do you want to learn how to do it properly and become proficient at it with a view to earning a 2nd income or turning it into your full-time profession? Most (legal) scams are aimed at the former category. So, if this describes you – tread with extra care!

10. If in doubt – don’t buy it
Treat buying trading products and services a bit like overtaking when driving. Only do it when you’re 99.9% sure it’s safe. Even when you ‘go to checkout’ and reach for your credit card, be mindful that in a week or a month’s time you might regret your decision. If that thought is too much to bear, don’t proceed. It’s the same principle as only trading with money you can afford to lose. Lastly, if the worst does happen and you get scammed, console yourself with the thought that you’re not alone. Some of the scammers are extremely knowledgeable and are able to dupe even very experienced traders. Chalk it up to experience and move on!

That’s it – good luck. Oh, one more thing - don’t forget to check out lots of useful links in the next post!
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T2W Bot

Staff member

If you find other threads, Articles or sites on your travels around the net that are relevant to this FAQ, please add a link to them in this thread, outlining what it is that you like about them. Thanks!

Boiler Room Scams

Forex Scams - How to Spot them a Mile Away by John Bekian
Although this article focuses on a full-on illegal scam, many of the points made also relate to legal scams and not just to the forex market.

Trialling 'learn to trade' stock market websites: can you get rich quick?
A well balanced article by Guardian newspaper writer David Robinson, in which he tries to separate the hype from the reality.
This site is a central point of contact for information about fraud and financially motivated internet crime, run by the National Fraud Authority - which is a U.K. government agency.
Ripoff Report
The tag line to this site reads: ‘Don't let them get away with it. Let the truth be known!’ Most of the trading and investment related reports and scams are listed under ‘Financial Services’.
Tips for Checking Out Newsletters
Microcap Stock: A Guide for Investors
Avoiding fraud
The 3 links above are all to pages on the official Securities and Exchange Commission website. Naturally, it’s very U.S. centric, but the ideas are applicable to everyone.
Money Made Clear
MoneyMadeClear is a website run by the Consumer Financial Education Body (CFEB), established by the FSA, and designed to provide impartial, factual information about money matters. As it says on the site: ‘No Selling. No jargon. Just the facts.’
Domain Tools
DomainTools combines the most comprehensive set of domain name ownership records available with important web hosting data to expose new opportunities in website improvement, domain investment and brand protection. DomainTools data reaches back through more than a decade of Internet history.
Companies House
The main functions of Companies House are to incorporate and dissolve limited companies, examine and store company information delivered under the Companies Act and related legislation and make this information available to the public.
Google Street View
This is a useful site to get an idea of the location of a company. Con merchants and scammers like to give the impression of occupying the top floor of Canary Wharf when - in reality - they are renting a grotty basement in the back streets of Toxteth. (No offense to residents of Toxteth!)
Public Access to Court Electronic Records (PACER)
This site is for US court cases, including bankruptcy. (A subscription required, but pboyles has one and may be able to assist you if you need something. Please send him a PM.)
Elektronischer Bundesanzeiger
This is the German version of the SEC in the U.S. or FSA in the UK.
Broker Check
BrokerCheck is a free tool to help investors research the professional backgrounds of current and former FINRA-registered brokerage firms and brokers.
Boiler Room (Pump 'n Dump) Scams
This Wikipedia link explains how these work. The premise is also the basis of the hugely successful film Boiler Room staring Ben Affleck, Vin Diesel and Giovanni Ribisi.
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Legendary member

I havnt been around much lately so maybe this question has been covered. Will T2W now take steps to ensure that people/companies that they issue 'partner offers' for are properly checked out. I believe this area was being reviewed after the Baghdady/LTG/K2A debacles.

I realise there are not the resources to check everyone with a vendors badge but when a company pays T2W for advertising/partnering then surely there is an obligation to ensure that the advert/partner offer is not dishonest. Apologies if this has been covered already, as I said I havn't been around lately.


Legendary member
Hi pboyles,
I confess I'm not up to speed on this - but I know a man who is - Sharky! One or other of us will get back to you in due course.


Legendary member

I havnt been around much lately so maybe this question has been covered. Will T2W now take steps to ensure that people/companies that they issue 'partner offers' for are properly checked out. I believe this area was being reviewed after the Baghdady/LTG/K2A debacles.

I realise there are not the resources to check everyone with a vendors badge but when a company pays T2W for advertising/partnering then surely there is an obligation to ensure that the advert/partner offer is not dishonest. Apologies if this has been covered already, as I said I havn't been around lately.

Hi pboyles,
Apologies for the slow response - better late than never!

In the past, rossored (T2W's Advertising Manager) was working independently of the rest of T2W staff and so was not always aware of the issues that were being discussed on the forums. We've addressed this problem and implemented a procedure whereby rossored informs Trader333 (T2W's Content Editor) of all prospective advertisers for him to vet. Additionally, Trader333 informs rossored of any suspect vendors that have been discussed on the forums. This will help to weed out unscrupulous vendors who do not offer a product or service that either is - or has the potential to be - of any tangible benefit to T2W members. Although it's early days, this initiative has already resulted in some advertisers being banned from using the T2W partner email facility.


Legendary member
Hi pboyles,
Apologies for the slow response - better late than never!

In the past, rossored (T2W's Advertising Manager) was working independently of the rest of T2W staff and so was not always aware of the issues that were being discussed on the forums. We've addressed this problem and implemented a procedure whereby rossored informs Trader333 (T2W's Content Editor) of all prospective advertisers for him to vet. Additionally, Trader333 informs rossored of any suspect vendors that have been discussed on the forums. This will help to weed out unscrupulous vendors who do not offer a product or service that either is - or has the potential to be - of any tangible benefit to T2W members. Although it's early days, this initiative has already resulted in some advertisers being banned from using the T2W partner email facility.


What about when existing advertisers are caught red handed defrauding customers. Will they be dropped? An example would be a company heavily fined by CFTC, NFA or FSA for a breach of law/rules. Would T2W continue to promote such companies and/or give them 'preferred' status?


Legendary member

What about when existing advertisers are caught red handed defrauding customers. Will they be dropped? An example would be a company heavily fined by CFTC, NFA or FSA for a breach of law/rules. Would T2W continue to promote such companies and/or give them 'preferred' status?

Hi pboyles,
Creating policies to cover every possible scenario that might occur isn't practicable I'm afraid, so each case will be considered on it's own merits - or lack of them - as and when it arises. Since the recent upgrade - I expect you will have noticed that the Preferred Broker page is no more - so this particular issue is now history.


Established member
Vendors of what?, signals?, systems?, methods?, EA´s? or brokers?
EA´s. Get rid of the idea. Under the right circumstances any EA can be "perfectly and professionaly made", but under the right circumstances can also be "a perfect scam". It will just be a matter of time, every system - consequently any EA - will show its own weakness, the difference is that when you operate manually you can realize the whole situation before its late, an EA will not, it will depend on the way its algorithm was set.
Signals and systems, get rid of the idea. It is the same as before, if you dont know what you do, you will lose money. Regarding signals it is worst, when a signal seller make a mistake it is your money nor he´s.
My best advice work hard to learn this thing and develop the best method to suit you.
Regarding brokers, since they are controlled it will be hard to find a scam.


Legendary member
hey all

great thread.....best read for a long time ;)

perhaps the main protagonists on his thread should club together and create our own traders guide ?

perhaps contribute the proceeds to a decent charity - and ask T2W to Advertise it ?

I have a lot of respect for the names in this thread.. seeing them all as defenders of the faith in most of the new threads that appear here selling waffle

just a thought............and yes i'm a bloody vendor...so what ;)



Legendary member
Regarding brokers, since they are controlled it will be hard to find a scam.

Er I think you might have missed the news lately, FXCM were fined about $20 million and MF Global just went bankrupt with $1.2 billion in customer funds missing.


Junior member
as a vendor (proudly wearing the badge!) i thought i should offer my two cents. here are the 2 scam warning signs i use:

1. unprofessional claims: I use the word 'unprofessional' deliberately. people who are in accounting, legal, financial analyst or planning programs usually have to abide by a code of ethics and a standard of professional conduct. i of course can't speak for all the codes of conduct out there, but the ones that i know (and am apart of) do not let a person make promises of superior returns. so, if you see such claims, then you are either dealing with a group of unethical professionals, or non-professionals who are offering professional advice.

2. the price: as backwards as it seems, scams are cheap. they know that their product is suspicious, they want the customer to think, "it's only $10/month". if it's a recurring payment, 10/month can add up. and a lot of people aren't diligent about combing through their visa bills. a 10/month charge can sit on the bill for a long time before getting dealt with. i myself find old subscriptions on my bill every now and then. the point is that a good product should cost more. if you're not able to get the value out of it, then it doesn't necessarily mean that it's a bad product, just not the right one for you.

one last thing, i don't make this a separate point as it only applies to brokers (namely FX brokers). leverage: brokers that offer crazy leverage know that it's almost certainly not appropriate for their clients. they advertise more leverage as more power, but all they do is give you more and more fire to play with, knowing that you'll get burned. it's easy for the trader to blame themselves after getting burnt, but it is still unethical for the broker to hand out the kerosene and matches to begin with.
I think that I may have been bitten by a "legal scam", and am trying to find more information.

The system is called "SignalBot" is run by a guy called Gerry (Gerard Lannen) out of an office in Stevenage. Signal Bot - web based, system trader tool It appears to be exactly similar to Goldline Trading System Goldline Trading Systems.

It may be that SignalBot is a good thing, and I have just been unlucky (I have been using their system for three weeks, just "paper trading" with a demo account, and with a £2000 pot am down about £650). On the other hand, I may have been stupid (this is seeming more and more likely as time goes on).

I would like to make contact with anyone who has used either of these systems so that I can judge when it is time to suggest to Gerry that he might like to refund my fee.

If I find out anything of potential interest to members here, I will post it in due course.



Legendary member
Ladies 'n Gents . . .
FAQs and Stickies are tidied up on a rolling monthly basis to ensure they remain strictly on topic and I don't want members putting time and effort into otherwise perfectly good posts that later get deleted. Therefore, may I suggest that if you want to discuss Banners Broker - or any other company / scheme in depth - to do so on another thread or start a fresh one.

Thanking y'all kindly!


I think that I may have been bitten by a "legal scam", and am trying to find more information.

The system is called "SignalBot" is run by a guy called Gerry (Gerard Lannen) out of an office in Stevenage. Signal Bot - web based, system trader tool It appears to be exactly similar to Goldline Trading System Goldline Trading Systems.

It may be that SignalBot is a good thing, and I have just been unlucky (I have been using their system for three weeks, just "paper trading" with a demo account, and with a £2000 pot am down about £650). On the other hand, I may have been stupid (this is seeming more and more likely as time goes on).

I would like to make contact with anyone who has used either of these systems so that I can judge when it is time to suggest to Gerry that he might like to refund my fee.

If I find out anything of potential interest to members here, I will post it in due course.


This caught my interest purely because I'm familiar with Stevenage and my lunch time walk often takes me past the address where Goldline Trading Systems is based (Floor 2 Southgate House. St Georges Way, Stevenage. Herts. SG1 1HG). I never realised Stevenage was a financial hub of success :LOL:. The picture from google maps shows the building which they occupy and for several years the building has had the sign saying offices to let.

Of course, if their automated trading system actually worked they wouldn't be selling the service to the public.



Junior member
If this was easy, there would be no Madoffs ! Even the Priests were recommending him not because they were part of it but because M had first "seduced" them into believing him ! But a first step should be to ask for details of finances and backgrounds of Management personnel. It is more about reading between lines and listening to what is "not being stated". And Pray to God to save youself from on-ground Sharks !


Junior member
To distinguish between scams and reputable vendors read investimonials.com.

If you think that investimonials.com is not manipulated by shills, you are one heck of an optimist.

There is only one way to do your DD and that is by using your own brain and general principles of critical thinking. There is no substitute for that.

Look for the results. No results means that you can move on. If there are some, start investigating in earnest. That should save you a lot of time and money.


Well-known member
If it sounds too good to be true, it is. I have even fooled myself and wasted time pursuing many things that are too perfect. Trust only yourself, have faith in others. Don't let your faith be your eyes; keep them in your head.



Active member
Choosing to always trade in the regulated broker with a well reputed government agencies like that of in US, UK and Australia would be the best thing to do for the traders.
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