timsk
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Recently, on another thread, a member posted this comment: "Listen only to people with verified live results over a substantial period of time." On the face of it, it makes a lot of sense and, indeed, many members over many years have posted something very similar.
The problem though is that while it sounds great in theory, it doesn't pan out too well in practice. If everyone followed this advice, T2W would be done for, good content would be ignored, along with all the 'official' forum FAQs and Stickies. The reasons being that it's very rare for anyone ever to publish verified live results over a substantial period of time. And the (very) few who do tend to have an agenda of some sort - usually to sell trading related products and services.
All of which begs the obvious question: how do members (especially newbies) decide who to listen to and who to ignore? What follows is an extract from a book soon to be published here on T2W that addresses this thorny issue. It's a starting point: hopefully we can build on it to develop a robust approach that will enable all traders - regardless of their experience or ability - to separate the wheat from the chaff, the class acts offering pearls of wisdom from the ne'er-do-wells leading traders up the garden path or down black holes to financial armageddon. Here's the extract:
Novice traders face many difficulties in the early days. High on the list is knowing who to listen to and who to ignore. You are - or soon will be - bombarded with trading information and advice at every turn. Unfortunately, much of what you read, listen to and watch is poor advice at best and, at worst, is seriously detrimental to your financial wellbeing. Similarly, much of the so called information available is grossly misleading; misinformation would be a more accurate description in many cases. Separating out the good from the bad, from the downright ugly, can be the devil’s own job for the novice trader. So, what to do? The first thing to do is to separate out fact from opinion . . .
FACT OR OPINION?
Serious contributors of trading advice and information (herein referred to simply as info’) will provide a link to the source of any facts they mention. Sadly, they are few are far between. However, worry not, as real facts are nearly always verifiable from another source. That leaves perhaps 70% or more of info’ that is just opinion; the usefulness and value of which you must determine for yourself. The purpose of this appendix is to help you in that endeavour. Much of the info’ that’s out there is presented as if it were fact in the hope that you will accept it as such without question. If you’re not sure which side of the divide it falls on, play safe and put it in the opinion pile. Here are a few examples . . .
‘The New York Stock Exchange (NYSE) is open from Monday through Friday 9:30 am to 4:00 pm Eastern Standard Time.’
This is a factual statement that is either true or false. It’s easy to check by referencing another reliable source - the best of which obviously is the NYSE itself.
‘The Dow will drop down to major support at the 19,000 level - at which point buyers will pile in and price will shoot up from there.’
This is 100% pure opinion. No one knows what will happen in the future, so no source exists that can verify this statement.
‘The correct way to draw a trendline on a chart is to connect two or more higher lows in an uptrend, or two or more lower highs in a downtrend’.
This is presented as fact, but it’s really just opinion. Although many traders will, broadly speaking, agree with the statement, that doesn’t make it a verifiable fact. There will be variations; some traders may require three or more connecting points and some traders may use the open or close price instead of the high and low etc. Only you can decide which way is the best way - or the ‘correct’ way for you - based on your studies of price behaviour and your beliefs about the markets.
So, real facts (as opposed to opinions masquerading as facts) are usually easy to verify. That leaves the majority of trading info’ which is just opinion. What follows are ten criteria to help you determine the usefulness and value of opinions, be they posts on forums like T2W, blogs, tweets or YouTube videos etc. Knowing which opinions can be embraced wholeheartedly, and which are best rejected out of hand, is an important skill to acquire.
OPINIONS: 10 CRITERIA TO EMBRACE OR REJECT
1. Question the Value of Everything
‘How do I know if the info’ offered in the 3 Step Guide is worth the virtual paper it’s written on?’ This is a very legitimate question to which the short answer is that you don’t! Subsequent criteria will enable you to answer this for yourself but, for now, just take on board that there are zero exceptions, regardless of the integrity of the source. So, question the value of all trading info’ you come across - this guide included.
2. Assume Nothing
‘Assumption is the mother of all **** ups’ is a blunt and crude saying - but very applicable to traders. The famous quote from Anais Nin adds some refinement: “We don’t see things as they are; we see them as we are”. Seeing trading info’ for what it really is can be very tricky. Great pearls of wisdom are often obscured by poor grammar and typographical errors. Conversely, toxic info’ can be beautifully presented and very well written. So, assume nothing or, if you must assume anything at all, assume the info’ is worthless until you’ve proven otherwise. The one caveat is that it’s imperative to remain open minded at all times, as ideas of value can be found in the most unlikely of places.
3. If it Sounds too Good to be True . . .
Then it’s probably rubbish. Novice traders have a tendency to believe what they want to believe and to disregard the rest. As a general rule of thumb, that which you find difficult and challenging is more likely to hold value and contain grains of truth than that which is music to your ears and easy to accept. An example of the former from this guide: “Trading can be simple, but it sure as hell ain’t easy! Run a mile from anyone who tells you otherwise.” An example of the latter taken from a high profile vendor selling an expensive two day training course: “. . . a course that will:
Show you how to make consistent money from trading the Forex market.
Build unlimited wealth using our powerful Forex trading strategies.”
4. Gut Instinct & Common Sense
If you’ve read the guide, then you’ll remember reading about this early on in Step 1. Although traders - especially newbies - are inclined to be ruled by their hearts, there’s usually a little voice inside their heads urging caution. Hopefully, by now, you’ll know that a $0.99 e-book is unlikely to be all that stands between you and financial freedom. That’s not to say that it won’t contain anything of interest or value - it very well might. Be guided by your gut instinct and common sense - especially when it comes to bold claims.
5. What’s the Agenda?
The producers of all trading info’ tend to have an agenda of some kind. Ask yourself whose interests are best served by the info’ on offer - yours or the person / company providing it? In the case of the vendor offering the Forex course, they want you to buy into the dream of making money consistently to build unlimited wealth. If you do, then you’re more likely to purchase their course. That’s clear enough. It also gives you good reason to question its value. Can a two day course really deliver all that? Usually, vendors are easy to identify. However, what isn’t always so straightforward is determining if they are reputable, offering quality products and services, or if they are rogues who are out to fleece you for every penny. To help you to work out which side of the fence they’re on, check out this bespoke FAQ: How Can I Distinguish Between Scams and Reputable Vendors?
Besides vendors (see the addendum and link at the end of this appendix), there is mountains of info’ out there - much of which is free. However, free doesn’t mean necessarily that there’s no agenda. A lot of it is low grade content that gets recycled over and over again by people who know little about trading and who care very little - if at all - about you. Then there are forums like T2W, which occasionally attract huge egos, hell bent on being big fish in a relatively small bowl. Even those who genuinely want to help have an agenda of sorts: altruism. They want to help others so that they then feel good about themselves. Once you suss out where someone is coming from, i.e. what their motivation is, it will help you to evaluate the value of their info’.
6. Source & Pedigree
This is something of a minefield for everyone - but especially for novices. There is a tendency to bestow great importance and significance on info’ that comes from a prestigious source or someone famous. The reverse is also true. For example, reference is made throughout the 3 Step Guide to Warren Buffet, who is a famous and fabulously wealthy investor. However, that doesn’t mean you should accept everything he says without question, or assume that what works for him will also work for you. By the same token, just because you suspect that a post on T2W is by a spotty teenager - who’s not yet old enough to drive, let alone have a brokerage account and trade - it doesn’t automatically follow that his comments are without value or merit. So, try to assess the source and pedigree of the info’ as best you can and, having done so, be aware of being too biased either in favour or against it. Most importantly, always keep an open mind.
7. Amateur or Pro
Following on from the above, many traders put a lot of store by people they perceive to be industry professionals and/or those they believe to be profitable traders. However, distinguishing between the seasoned pro’ and a teenager with attitude isn’t always easy. The secret here is not to get too hung up about it. Someone else’s success - or lack of it - has zero bearing on your future success. Besides, hanging onto every word uttered by the pro’ might not be so wise. Here’s an analogy to explain why. Suppose you decide to take kite surfing lessons; would you want to learn on a starter kite or on a killer beast used by experienced adrenaline junkies for maximum speed and power? Advanced tools in the hands of novices can be a recipe for disaster. Additionally, you’ll be inclined to adopt market beliefs that may not sit very comfortably with your own and you’ll be disinclined to think for yourself. Ultimately, this could undermine your confidence and prevent you from trading with conviction.
It’s common for traders to want to distinguish between the pro’s and the amateurs in the mistaken belief that if they only ever listen to the pro’s, then they’ll lick the markets in no time. The idea that a novice trader or, even, someone from another discipline altogether, never offers anything of value - is as ludicrous as the idea that pearls of wisdom cascade in a continuous stream from the mouths of the pros. Try to remain neutral and evaluate all trading info’ based on its merits; not on your perception (which may be completely wrong) about how successful or experienced the person responsible for it may be.
8. The Message & the Messenger
Whilst trying to separate the pros from the amateurs is unlikely to benefit you and may even hinder your progress, making the distinction between the message and the messenger will help you enormously. If you’re reading a post on T2W for example, try to forget about the individual who wrote it and just focus on the content. This will make evaluating it much easier. A lot of time and energy is wasted when the focus shifts from the topic being discussed to the people discussing it. Time spent surfing the net - especially on forums like T2W - will be much more rewarding and far less frustrating if you simply focus on the message and not the messenger.
9. Beware of Promises & Intentions
You’ll come across a lot of info’ based on promises and intention. Sometimes the intention is to enlighten, sometimes it is to mislead. Either way, what matters is the actual outcome, not the initial promise or intention. For example, you’ll often read something like: ‘In this thread / blog / tweet / I’m going to provide live trading calls to show you how to make 50 pips consistently every day.’ Are the calls really live? Is every trade shown - or just the winning ones? Are trades actually taken on a live account, demo account or not at all? Are slippage and commissions factored into the figures given? Are statements provided as evidence to support claims made and are they consecutive - or are there some unexplained gaps? The list of questions is endless. To actually deliver what is promised in the statement of intent will require a lot of time and effort. Nine times out of ten, the outcome rarely matches up to the initial promise or intention. If you don’t know about the tricks people play or whether or not the outcome lives up to the promise, ask someone who does.
10. The Acid Test
Most info’ you come across will either be fact or opinion. Before long, you’ll have all the major exchanges, regulatory bodies, market commentators and brokerages etc., etc. bookmarked in your browser to enable you to quickly check whether factual statements are true or false. That’s the (relatively) easy bit.
Working out if opinion based info’ is going to enhance your trading or send it into a tailspin is a little more complicated. You need a benchmark against which it can be judged. In other words, you’ll need to formulate opinions of your own about the markets and how they function. This will provide context - and context is king. The task then becomes easier, as you’ll be able to determine whether the info’ complements or negates your views. However, this presents an obvious catch-22 for novice traders. How do you evaluate opinion based info’ in the first place - in order to form a benchmark against which you can then assess other opinion based info’? The solution is to use the criteria above to filter out and adopt info’ that feels right intuitively, and to discard that which doesn’t. Inevitably, you will make mistakes in the early days. That can’t be helped. As your knowledge and experience builds, be prepared to do a u-turn in your thinking, so it’s important not to get too entrenched in your views. Info’ that you adopt early on will then be replaced by fresh info’ as your views and understanding about the markets evolve. This process is difficult at the start but, gradually, things will fall into place. Just be patient and take your time.
The problem though is that while it sounds great in theory, it doesn't pan out too well in practice. If everyone followed this advice, T2W would be done for, good content would be ignored, along with all the 'official' forum FAQs and Stickies. The reasons being that it's very rare for anyone ever to publish verified live results over a substantial period of time. And the (very) few who do tend to have an agenda of some sort - usually to sell trading related products and services.
All of which begs the obvious question: how do members (especially newbies) decide who to listen to and who to ignore? What follows is an extract from a book soon to be published here on T2W that addresses this thorny issue. It's a starting point: hopefully we can build on it to develop a robust approach that will enable all traders - regardless of their experience or ability - to separate the wheat from the chaff, the class acts offering pearls of wisdom from the ne'er-do-wells leading traders up the garden path or down black holes to financial armageddon. Here's the extract:
Novice traders face many difficulties in the early days. High on the list is knowing who to listen to and who to ignore. You are - or soon will be - bombarded with trading information and advice at every turn. Unfortunately, much of what you read, listen to and watch is poor advice at best and, at worst, is seriously detrimental to your financial wellbeing. Similarly, much of the so called information available is grossly misleading; misinformation would be a more accurate description in many cases. Separating out the good from the bad, from the downright ugly, can be the devil’s own job for the novice trader. So, what to do? The first thing to do is to separate out fact from opinion . . .
FACT OR OPINION?
Serious contributors of trading advice and information (herein referred to simply as info’) will provide a link to the source of any facts they mention. Sadly, they are few are far between. However, worry not, as real facts are nearly always verifiable from another source. That leaves perhaps 70% or more of info’ that is just opinion; the usefulness and value of which you must determine for yourself. The purpose of this appendix is to help you in that endeavour. Much of the info’ that’s out there is presented as if it were fact in the hope that you will accept it as such without question. If you’re not sure which side of the divide it falls on, play safe and put it in the opinion pile. Here are a few examples . . .
‘The New York Stock Exchange (NYSE) is open from Monday through Friday 9:30 am to 4:00 pm Eastern Standard Time.’
This is a factual statement that is either true or false. It’s easy to check by referencing another reliable source - the best of which obviously is the NYSE itself.
‘The Dow will drop down to major support at the 19,000 level - at which point buyers will pile in and price will shoot up from there.’
This is 100% pure opinion. No one knows what will happen in the future, so no source exists that can verify this statement.
‘The correct way to draw a trendline on a chart is to connect two or more higher lows in an uptrend, or two or more lower highs in a downtrend’.
This is presented as fact, but it’s really just opinion. Although many traders will, broadly speaking, agree with the statement, that doesn’t make it a verifiable fact. There will be variations; some traders may require three or more connecting points and some traders may use the open or close price instead of the high and low etc. Only you can decide which way is the best way - or the ‘correct’ way for you - based on your studies of price behaviour and your beliefs about the markets.
So, real facts (as opposed to opinions masquerading as facts) are usually easy to verify. That leaves the majority of trading info’ which is just opinion. What follows are ten criteria to help you determine the usefulness and value of opinions, be they posts on forums like T2W, blogs, tweets or YouTube videos etc. Knowing which opinions can be embraced wholeheartedly, and which are best rejected out of hand, is an important skill to acquire.
OPINIONS: 10 CRITERIA TO EMBRACE OR REJECT
1. Question the Value of Everything
‘How do I know if the info’ offered in the 3 Step Guide is worth the virtual paper it’s written on?’ This is a very legitimate question to which the short answer is that you don’t! Subsequent criteria will enable you to answer this for yourself but, for now, just take on board that there are zero exceptions, regardless of the integrity of the source. So, question the value of all trading info’ you come across - this guide included.
2. Assume Nothing
‘Assumption is the mother of all **** ups’ is a blunt and crude saying - but very applicable to traders. The famous quote from Anais Nin adds some refinement: “We don’t see things as they are; we see them as we are”. Seeing trading info’ for what it really is can be very tricky. Great pearls of wisdom are often obscured by poor grammar and typographical errors. Conversely, toxic info’ can be beautifully presented and very well written. So, assume nothing or, if you must assume anything at all, assume the info’ is worthless until you’ve proven otherwise. The one caveat is that it’s imperative to remain open minded at all times, as ideas of value can be found in the most unlikely of places.
3. If it Sounds too Good to be True . . .
Then it’s probably rubbish. Novice traders have a tendency to believe what they want to believe and to disregard the rest. As a general rule of thumb, that which you find difficult and challenging is more likely to hold value and contain grains of truth than that which is music to your ears and easy to accept. An example of the former from this guide: “Trading can be simple, but it sure as hell ain’t easy! Run a mile from anyone who tells you otherwise.” An example of the latter taken from a high profile vendor selling an expensive two day training course: “. . . a course that will:
Show you how to make consistent money from trading the Forex market.
Build unlimited wealth using our powerful Forex trading strategies.”
4. Gut Instinct & Common Sense
If you’ve read the guide, then you’ll remember reading about this early on in Step 1. Although traders - especially newbies - are inclined to be ruled by their hearts, there’s usually a little voice inside their heads urging caution. Hopefully, by now, you’ll know that a $0.99 e-book is unlikely to be all that stands between you and financial freedom. That’s not to say that it won’t contain anything of interest or value - it very well might. Be guided by your gut instinct and common sense - especially when it comes to bold claims.
5. What’s the Agenda?
The producers of all trading info’ tend to have an agenda of some kind. Ask yourself whose interests are best served by the info’ on offer - yours or the person / company providing it? In the case of the vendor offering the Forex course, they want you to buy into the dream of making money consistently to build unlimited wealth. If you do, then you’re more likely to purchase their course. That’s clear enough. It also gives you good reason to question its value. Can a two day course really deliver all that? Usually, vendors are easy to identify. However, what isn’t always so straightforward is determining if they are reputable, offering quality products and services, or if they are rogues who are out to fleece you for every penny. To help you to work out which side of the fence they’re on, check out this bespoke FAQ: How Can I Distinguish Between Scams and Reputable Vendors?
Besides vendors (see the addendum and link at the end of this appendix), there is mountains of info’ out there - much of which is free. However, free doesn’t mean necessarily that there’s no agenda. A lot of it is low grade content that gets recycled over and over again by people who know little about trading and who care very little - if at all - about you. Then there are forums like T2W, which occasionally attract huge egos, hell bent on being big fish in a relatively small bowl. Even those who genuinely want to help have an agenda of sorts: altruism. They want to help others so that they then feel good about themselves. Once you suss out where someone is coming from, i.e. what their motivation is, it will help you to evaluate the value of their info’.
6. Source & Pedigree
This is something of a minefield for everyone - but especially for novices. There is a tendency to bestow great importance and significance on info’ that comes from a prestigious source or someone famous. The reverse is also true. For example, reference is made throughout the 3 Step Guide to Warren Buffet, who is a famous and fabulously wealthy investor. However, that doesn’t mean you should accept everything he says without question, or assume that what works for him will also work for you. By the same token, just because you suspect that a post on T2W is by a spotty teenager - who’s not yet old enough to drive, let alone have a brokerage account and trade - it doesn’t automatically follow that his comments are without value or merit. So, try to assess the source and pedigree of the info’ as best you can and, having done so, be aware of being too biased either in favour or against it. Most importantly, always keep an open mind.
7. Amateur or Pro
Following on from the above, many traders put a lot of store by people they perceive to be industry professionals and/or those they believe to be profitable traders. However, distinguishing between the seasoned pro’ and a teenager with attitude isn’t always easy. The secret here is not to get too hung up about it. Someone else’s success - or lack of it - has zero bearing on your future success. Besides, hanging onto every word uttered by the pro’ might not be so wise. Here’s an analogy to explain why. Suppose you decide to take kite surfing lessons; would you want to learn on a starter kite or on a killer beast used by experienced adrenaline junkies for maximum speed and power? Advanced tools in the hands of novices can be a recipe for disaster. Additionally, you’ll be inclined to adopt market beliefs that may not sit very comfortably with your own and you’ll be disinclined to think for yourself. Ultimately, this could undermine your confidence and prevent you from trading with conviction.
It’s common for traders to want to distinguish between the pro’s and the amateurs in the mistaken belief that if they only ever listen to the pro’s, then they’ll lick the markets in no time. The idea that a novice trader or, even, someone from another discipline altogether, never offers anything of value - is as ludicrous as the idea that pearls of wisdom cascade in a continuous stream from the mouths of the pros. Try to remain neutral and evaluate all trading info’ based on its merits; not on your perception (which may be completely wrong) about how successful or experienced the person responsible for it may be.
8. The Message & the Messenger
Whilst trying to separate the pros from the amateurs is unlikely to benefit you and may even hinder your progress, making the distinction between the message and the messenger will help you enormously. If you’re reading a post on T2W for example, try to forget about the individual who wrote it and just focus on the content. This will make evaluating it much easier. A lot of time and energy is wasted when the focus shifts from the topic being discussed to the people discussing it. Time spent surfing the net - especially on forums like T2W - will be much more rewarding and far less frustrating if you simply focus on the message and not the messenger.
9. Beware of Promises & Intentions
You’ll come across a lot of info’ based on promises and intention. Sometimes the intention is to enlighten, sometimes it is to mislead. Either way, what matters is the actual outcome, not the initial promise or intention. For example, you’ll often read something like: ‘In this thread / blog / tweet / I’m going to provide live trading calls to show you how to make 50 pips consistently every day.’ Are the calls really live? Is every trade shown - or just the winning ones? Are trades actually taken on a live account, demo account or not at all? Are slippage and commissions factored into the figures given? Are statements provided as evidence to support claims made and are they consecutive - or are there some unexplained gaps? The list of questions is endless. To actually deliver what is promised in the statement of intent will require a lot of time and effort. Nine times out of ten, the outcome rarely matches up to the initial promise or intention. If you don’t know about the tricks people play or whether or not the outcome lives up to the promise, ask someone who does.
10. The Acid Test
Most info’ you come across will either be fact or opinion. Before long, you’ll have all the major exchanges, regulatory bodies, market commentators and brokerages etc., etc. bookmarked in your browser to enable you to quickly check whether factual statements are true or false. That’s the (relatively) easy bit.
Working out if opinion based info’ is going to enhance your trading or send it into a tailspin is a little more complicated. You need a benchmark against which it can be judged. In other words, you’ll need to formulate opinions of your own about the markets and how they function. This will provide context - and context is king. The task then becomes easier, as you’ll be able to determine whether the info’ complements or negates your views. However, this presents an obvious catch-22 for novice traders. How do you evaluate opinion based info’ in the first place - in order to form a benchmark against which you can then assess other opinion based info’? The solution is to use the criteria above to filter out and adopt info’ that feels right intuitively, and to discard that which doesn’t. Inevitably, you will make mistakes in the early days. That can’t be helped. As your knowledge and experience builds, be prepared to do a u-turn in your thinking, so it’s important not to get too entrenched in your views. Info’ that you adopt early on will then be replaced by fresh info’ as your views and understanding about the markets evolve. This process is difficult at the start but, gradually, things will fall into place. Just be patient and take your time.
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