Day Trading Brokers? : Hot Topic

Selecting a Trading Service

Beware of Greeks bearing gifts

There has never been a time when people haven't been out there ready to take money from the unsuspecting person. Con artists and scams have existed for centuries and now with the internet they've moved into this medium. They say that a fool and his money are easily parted but I want to know how the fool and his money came together in the first place. The low barriers to entry in this industry makes it very easy for anybody with very little capital to start a trading advisory service.

How do you know if the trading service that you want to choose is for real and not a con? How do you know if this trading service will be right for your personality and trading style? How much money are you prepared to spend to find the answers to these questions?

Types of services

There are many different types of services available. They range from the trade calling services through to the educational classrooms that teach you to trade. The type of service that you select depends very much on what you want to get out of trading. If you have no intention of learning how to read the charts or a strategy or a system then a trade calling service is right for you. This type of service will tell you when to buy, when to sell and where to place your stop. All you have to do is execute the trades. You don't even need a charting package - just an account with a broker. There are some services that even short-cut your need to execute the trades. The trade calling service will issue the calls directly to the broker and the broker will execute the trades saving you the bother of even having to be at your screen. In fact, you don't even have to own a computer or have an internet connection. Sounds too good to be true doesn't it?

There are newsletters that are emailed out daily, hourly, when events happen and they'll give you all sorts of advice from support and resistance areas to general commentary on the economy and state of the market. They will tell you what happened in the market and where the prices reversed etc. Very useful if you can't read a chart and see for yourself where the price changed direction.

The first thing you need to ascertain is what and how you are going to trade. You need to select a market and a trading style that you think will best fit your personality. You may not choose correctly the first time and if you discover this then don't waste any time in changing. You must be comfortable and happy that what you are trading (e.g. gold futures) and how (e.g. swing trading - one or two trades a week). You don't have to select one market and one style. You can mix and match as many as you want so long as it is what you are comfortable with.

When it comes to selecting the tools of the trade they should match your style of trading. There's no point in selecting an intraday tick-by-tick charting package with all the add on analysis packages for $500/month if you're only going to be rebalancing your portfolio once a month. If you're scalping in and out of emini futures then you need a reliable broadband service.

You will need advice and help when you get started, after you've been trading for a while and even once you've become an expert. Markets are always in flux and you need to be at the bleeding edge to take advantage of the next change to keep yourself consistently profitable. That advice can be found in the forms of book, CDs, interactive software, video/DVD, and web sites such as this one. Keep abreast of the latest research.

Scam Busting

The internet is littered with trading services. The better the service sounds the less likely you are going to be successful with it. Exercise extreme caution and check out the claims. As an exercise, I went to a number of these services on the web and asked them about their services and checked out their results. Some of them were completely wrong. Others wouldn't verify their results. It is very easy to spot the shysters out there. As part of its performance history, one site even had a trade that had an opening time that was later than the closing time. In other words they were trading back wards in time. That can only be profitable!

Any service worth trying should offer (at the very least) the following:

  • A reproducible or verifiable trading record.
  • A free trial.
  • Trade signals that you can see and trade in real time - before the fact and not after the fact.

What service are you going to choose?

We hope that this little guide has helped you. In particular we hope that it encourages other trading services to provide relavant and verifiable material for traders.

Good luck with your trading!