No registration required! (Why?)

Top Ten Dot Cons


Day Trading Ads: Cutting Through the "Bull"

No risk! Guaranteed profits! Financial freedom!

http://www.ftc.gov/bcp/conline/pubs/invest/daytrade.htm
Here is a good link to the ftc.gov web site about day trading investment cons:
http://www.ftc.gov/bcp/conline/edcams/dotcon/invest.htm

What they say:

The Bait:
Make an initial investment in a day trading system or service and you’ll quickly realize huge returns.
The Catch:
Big profits always mean big risk. Consumers have lost money to programs that claim to be able to predict the market with 100 percent accuracy.
The Safety Net:
Check out the promoter with state and federal securities and commodities regulators, and talk to other people who invested through the program to find out what level of risk you’re assuming.
Read Between the Lines
Learning the language of day trading can help you separate fact from fantasy when reading an ad or listening to a commercial.

If the ad promises... "The potential to make a six or seven figure annual income from trading is at the ends of your fingertips."

Remember that... It's dangerous to fall for extravagant profit claims. Many are based on hypothetical performance, meaning that no trades were ever really made. And it's far from certain that a bona fide trader will be able to place the same trades as the hypothetical trader. Actual results may not match the hypothetical performance - and even trading advisors with a long track record of success can lose a fortune suddenly.

If the ad promises... "The absolute best trading system with a profit-to-loss ratio of 12-to-1 and an average return better than 18 percent per trade..."

Remember that... Even if the system really has had such successes, past performance is no guarantee of future results and nobody - not even financial experts - can guarantee what the market is going to do from day to day or even minute to minute. No matter how strong the market may seem and how solid a particular company may appear, prices can skyrocket or plummet faster than you can say "Wall Street."

If the ad promises... "Our software signals precisely when to buy and when to sell a particular security, allowing you the opportunity to make money regardless of the market going up or down..."

Remember that... As tempting as it might be to leave your investment decisions in the hands of a software program, the ultimate responsibility for protecting your investment belongs to you. No matter how sophisticated a system for evaluating investments might sound, there's no way to guarantee the future performance of investments. If there were, you can be sure that the software developers would be making their money using their programs themselves, not promoting it to others!

If the ad promises... "Our recommendations returned an average annual return of 250 percent. If you can just follow our recommendations, you will make money."

Remember that... There's no fail-safe way to invest without any risk. High-yield investments tend to involve high risk. Be particularly suspicious of sales pitches that play down risk or portray written risk disclosures as routine formalities. Believe the risk disclosures that say you could lose your whole investment. Jumping on a "hot" investment tip is a good way to get "burned."

If the ad promises... "Timothy Smith, who used our system wrote to us, '... at night I work with your trading system for a few hours and am averaging more than $500 a day.'"

Remember that... Everyone loves a good testimonial, but it's smart to be wary of them. The story may or may not be true. And it's highly unlikely that the testimonial reflects the actual experiences of other people using the system or advisory service - or the result you're hoping for.