Anton Kreil Annihilates Retail Brokers and "Trading Educators"

just so welcome everyone to this seminar hosted by the Institute of trading and portfolio management we're lucky enough to have Anton crea with us here today managing director of the company who's flown in from Singapore especially to give this presentation and it wasn't long ago that I was sitting there in your position listening to one of Anton's presentations back in 2012 with little or no trading knowledge myself and just looking for somewhere to learn and Anton certainly been a great mentor to me over the years as I'm sure he will be with you guys going forward so that being said it's my pleasure to introduce our speaker for the evening mr. Anton creel hi guys welcome so we're short on time today it's a huge presentation we're not going to be able to take questions during the presentation but we're gonna be in the pub later you can see all the some of the mentors here as well from the Institute so you can ask a lot of questions there later we're gonna aim to get finished by around 9:00 9:15 so without further ado let's get on with it so here's the schedule for today the first thing we're going to look at we've called it the other side of the fence professional trading knowledge that professionals do not want retail traders to know some of the things you're going to see today are very harsh and aggressive home truths and you might not like some of the things you see but it's honest it's truthful and you've just got to deal with it there's things that professional trainers don't want you guys to know so they are at an informational advantage in the financial markets versus you guys we're going to look at some of the market participants the broker the educator and the retail trader how your side of the industry works so basically not the professional side I'm gonna look at the differences we're gonna look at something called the inversion narrative so why the vast majority of retail traders in the UK Europe and Asia lose money and why the vast majority of retail traders in the u.s. lose money there's some subtle differences and we're also going to look at Charlotte and educators fake traders how these guys create a story about themselves and suck naive retail traders into believing what they want you to believe so I'm gonna show you how to spot these guys and then we're gonna look at how you actually go about getting consistent profitability as a retail trader so let's get started first things first why the hell do we care how many people here have actually traded who's got a brokerage account okay so that's quite a lot 40% of the room who hasn't who's who's never who's never ever tried it okay so minority of the room has never actually pushed the button okay so that's quite interesting so why do we care well people have tried and the vast majority lose money but if you haven't tried if you haven't done anything in the retail trading world whether you like it or not you are in the finance industry if you participate if you've got a mortgage you're in a business you own a home you've got a bank account a credit card a debit cards whatever you are in the finance industry whether you like it or not you are a participant in the economy but there's another reason as well pensions the pensions infrastructure that was essentially set up in the 70s has failed the Western wealth what's the pensions question the pensions question is can I get income in retirement can I live my life in retirement and the pension solution is to provide that income but no one can retire what's the average pension number in the United Kingdom average pension balance it's about thirty thousand pounds in the u.s. in dollar terms it's about 6070 thousand dollars in Europe it's about the equivalents of the UK about thirty thousand pounds so about forty thousand euros Asia there's varying degrees so for example Singapore have the highest pension values in the world the average pension value is three hundred and thirty thousand dollars but there's reasons for that which is another lecture but essentially in the Western world pensions have failed so what's happening boomers and Gen Xers are desperate because they know they can't retire so people are always looking for a solution and this is why people come to seminars like this but you've got to be warned you're not the only people that have realized this everyone's realized it and also an entire industry has been built around a narrative to provide you with solutions to this problem essentially catered to the desperate middle-class full now this idea of learning how to do everything yourself it's a noble idea but it's fraught with dangers because there's a lot of bad people in the world who wants a caters of the middle-class fool and those bad people do things that are not good for you they're only good for them an arker or continuous campaign at the Institute is to basically first show you guys how it actually works show you basically how the landscape how the industry works so you can figure out how not to lose money how not to fall into all the traps how to make all the classic errors as a trader or an investor and then the second thing we do is actually teach you how to then go make money so the first thing you have to do as a retail person in this industry is to essentially make sure you have no downside don't do all the stupid things learn how basically to avoid all the mistakes then it's about learning how to make money over time and we've been providing the information in this seminar for example for close to five years in closed seminars so it's never been publicly available and this is why we're filming today because we're now gonna stick this on YouTube and the whole world's gonna see it and this is why you have to if you've heard of this phrase be woke okay what you're gonna get taught today pretty much every retail trader will never ever figure it out and it's pretty simple straightforward stuff but most retail traders the vast majority will never figure it out and even if they do they've been on a journey where they've lost so much money to figure it out it's now pointless so here we're literally saving you a lifetime of losses or if you figure it out up to ten years a decade of losses so this is really useful information first thing you have to do when entering any industry whatsoever if you were going to set up a new business the first thing you would do is through an industry appraisal who are the winners who are the losers how's the industry set up what parameters can I operate in how do I be successful what mistakes do I need to avoid if you were going into any industry you would do that as a small business person why would you not do it in trading it's the first thing you have to do and there's been some major trends in the last thirty years that really affect retail and they're very important they have significant consequences the first one is how the market set up who owns the exchanges the exchanges is where all the business is cleared every time you press the button it goes the order goes down a pipe through a broker through an investment bank to the exchange who owns all the exchanges well there we have it IntercontinentalExchange ice own NY I see in Euronext that's the majority of business in the market the Chicago Mercantile Exchange owns the Chicago Board of Trade nymex and Comex so basically we have a monopoly slush duopoly what does that mean what do we think it means who does economics here monopolies do we like them what's the negative of monopolies hmm potentially pricing pricing power and control so we'll come back to that later but the exchanges are now basically owned by a couple of companies and by having a monopoly they can control the market if they want to how the market is set up how the players must operate who they incentivize parameters like this will come on to it later again second technology obviously technologies played a major role in the last 30 years first things first infrastructure massively increased retail trader participation 30 years ago you'd be on the telephone calling your broker and just accepting the price on the phone whatever you got what have you got now well Internet penetration internet capability speeds very low power with very low barriers to entry everyone can trade from their bedroom or their phone very easy access is that is that necessarily a good thing if you have access does it mean you're good of course not hardware microchips processing speeds massively increased and then that's affected the the penetration of retail traders much lower cost of production again lower very lower barriers to entry software connectivity to financial markets and everything being organised for you so making life easier none of it actually means that the trade is going to be profitable it just means you're supposedly you're you're supposed to have better access and better capability it's supposed to help you more but it doesn't necessarily mean you can make money regulators every problem we've had in the financial markets in the last 30 years the regulator's done nothing to stop it before it's happened it's always happened afterwards the regulator is always passive and reactionary in pretty much every geography in the world so in 2010 one of the main instruments that retail traders use are contracts for difference they were banned in the United States why because too many people lost too much money too quickly also in 2010 IB contracts which will come to you later does anybody know what IB stands for if you do it means you're in the industry and you're on the brokerage side introducing broker contract are you a broker congratulations you're not gonna like this mo okay so I B stands for introducing broker we'll go into the details on those later but essentially it means that people introduce retail traders on to the brokers platform and get a kickback for doing so they were banned in Singapore in 2010 why do you think they were banned why do we think they were abandoned Singapore because their great conflict of interest hit the nail on the head loads of bad people were turning up into Singapore like they do all over the world and teaching people absolute nonsense putting them on trading platforms and everyone was blowing up and losing their money so the regulator government stepped in and ban them and this is very typical of regulators they do it after the event so what does that mean if you're a retail trader well history tells us as a retail trading you have to regulate yourself because the regulator is not going to save you their passive reactionary you'll lose all your money then they might change your law afterwards doesn't matter you're done you're out the game financial markets volatility volatility in all the major asset classes since the financial crisis so Oh 8 oh nine so from oh nine onwards has been crushed what does that mean for traders sure so volatility for traders is the lifeblood of a trader a trader is a slave to volatility because without volatility you don't have any risk and you don't have opportunity and risk an opportunity are two sides of the same coin it's called volatility and if volatility gets crushed risk and opportunities get crushed which means returns over certain periods of time over certain time horizons Peter to 0.so wise financial market volatility being crushed in all the asset classes well the first main reason was the monetary policy after the financial crisis so if you remember the Fed was implementing QE quantitative easing what does that do guaranteed buyer of bonds suppresses yields permanently that feeds our over into other asset classes because money keeps buying other asset classes to chase yield which suppresses yield so it goes all the way through the asset classes obviously they stopped a few years ago but there's other reasons as well technology why does technology and access for retail traders suppress volatility because there's more market participants why there's more market participants suppressed volatility because it increases a liquidity why there's more liquidity equal less volatility in most cases it means there's more willing buyers and more willing sellers at every price for an asset which means if you have an infinite amount of willing buyers and willing sellers assets don't move create zero volatility so this idea of trading now being like it used to be 15 25 35 years ago where you can just turn up day trade and we used to call it scalping is not existence anymore it hasn't existed for a good six seven years and this is why day traders have basically not made any money or lost money over the last six years so this is a big this has had a huge impact on retail traders because there's there's less opportunities over shorter time horizons so the professionals have totally changed their approach in the last seven years why because professionals do what the market tells them to do not the other way round and we get this message through the Institute probably ten times a week exactly the same question through the website and it's literally worded the same all the time I am a Forex day trader can the Institute's Education help me what's wrong with that statement why is that we think it's the most stupid statement or question anyone can ask as a trader why do you think that is exactly so the person is literally saying I only trade one asset class and I only trade over one timeframe that's all I do now think about it like this euro dollar most liquid Forex pair in the market what's euro dollar done in the last 18 months 104 to 113 that's been the range what happens if euro dollar is 106 from now to over the next 250 trading days and every day you buy it at 106 and sell it at 106 what happens can you make money well of course not so this idiot is going to be sitting at his desk for the next 250 days saying I am a Forex day trader can the Institute help me what what mistake is that person made they've limited their opportunities because they're only trading one asset class one time horizon and they don't have any ability to trade anything else over any time horizon that's the first error everyone makes in retail trading what you have to do in your first 1 to 2 years as a retail trader is to learn how to trade everything and get yourself a proper Educational Foundation so you can follow the volatility or predict where it is and go where the money is so if you're over one time horizon in one asset class and it stops working you can shift and move you don't define yourself by one asset class over one time horizon and the only way to do it is to emulate what professional traders do and that's what they've done so on the left hand side we've got pretty much all the behaviors of a professional trader and on the right hand side all the behaviors of a retail trader what's the approach of a professional trader systematic mostly long-short portfolio management across multiple asset classes no narrow definition every trader wishes they could have an infinite discretionary mandate to be able to trade anything at any time in any way they wanted so they could just follow where the money is so this idea the popularized perception of a trader as in you see lots of guys screaming on a floor like in the movies it doesn't exist anymore it's complete nonsense but there are people in the world that wish it was the case but it's all pretend it's a narrative that people use to get you to do things that you don't want to do the pro trader approaches 80% fundamental 20% technical in the vast majority of cases investment banks prop desks and hedge funds retail traders what's the approach what the retail traders tend to do when they approach the market short time frames everything's over one day four hours two hours five minute candles one minute candles always looking for quick returns that potentially don't exist because they're not actually monitor volatility correctly what's the outlook of risk for a professional trader this is where they differ as well investment bank prop desks and hedge funds will have multiple positions long and short and they will build portfolios usually position sizes are five to ten percent of portfolios so you're looking at 10 to 20 positions in a portfolio and they'll trade correlation within the portfolio and not one position will be allowed to blow them up that's why they have position limits like this what's the retail trader approach what happens when you open a typical retail trader account well actually a very very high percentage of retail traders don't have any positions there's a massive problem in the brokerage industry and we get asked to try and solve it all the time which is dormant accounts guys who go to seminars with brokers and educators they get convinced to open a trading account they deposit a couple of thousand dollars or ten thousand dollars or 25 grand they go home and they realize they don't have the confidence to pull the trigger why because they realize that what they've just learnt is a load of nonsense and then they leave their money there it earns no interest and every month they pay in activity fees to the broker what does the broker wanted to do the broker wants them to trade of course what about the rest of the guys if you open up their account typically two or three positions their favorite Forex pair long or short because it's on it's in the news every minute of every day short the S&P 500 because they're reading doomsday research online I'm watching too many YouTube videos and usually their favorite cheap stock which they bought two years ago it's now down 50% and they're moving it over to their pension because they can't bring themselves to sell it that's a typical retail trader account think of all those mistakes they're really really common profession traders don't do that it's all about portfolio management and getting consistency in return which is the next point with pro traders consistency means risk adjusted returns risk adjusted returns what does that mean let's let's think about this booth with two traders as an example trader one and let's say you're pitched to invest money in either of these traders trader one takes 50% risk per annum annualized volatility in their portfolio you can measure the volatility of a portfolio very easy 50% risk a year and gets 25% return and trader 2 takes 10% risk per year and make 16% return who's the better trader of course trader 1 you can't invest in it's whatever you put with trader 1 he could blow up literally in six months and your your your investment is zero with the other guy he could lose 10% in a year but he's knocking in 16% his return is higher than the volatility of his portfolio he's an efficient Optim optimized trader and a lot of these hedge funds are literally employed to do that so they will have a volatility cap on their portfolio that they can't go over they're not mandated to take the market risk they're mandated for example to take 10% risk that's why their investors are investing so if they don't beat the S&P they don't care because that they're signing up to take 10% risk no more what a retail traders do everything short short term binary so they'll have no positions or one or two positions they'll sit around for three weeks waiting for the non-farm payroll number and then they'll take a bet three minutes into it or two seconds after it and the vast majority vast majority of time they're cutting afterwards and that's probably one of the stupidest trades you'll ever do because all the professional traders have got a very very good idea what the numbers going to be and when a retail trader reacts to it the professional traders have already predicted it and retail traders are providing the liquidity to the professional side to get out of the trade so professional traders have predicted that number for a month before and even if it's higher or lower than consensus which is economists the professional traders have predicted that it's going to be higher or lower than consensus it's called the whisper number and the market moves on it's only because of retail traders professional traders don't trade on it and initiate positions they use the liquidity to get out so it's all short-term binary for retail traders and the short term binary approach provides liquidity for the smart guys who are predicting the future it's providing liquidity for them to get out what's the outcome of a professional trader what do they want to achieve well the first thing is capital preservation and then growth the retail trader wants to achieve big money very quickly and not necessarily consistency and the outcome is they just blow up capital destruction so the key difference is here they're professional trainers have realistic expectations and targets and their target is to get rich slowly and they want to trade forever or at least until retirement or until they die retail traders very unrealistically high targets and they never meet their targets so they stay poor get pork wicker expectations are never ever met targets are never met and they just blow up that's the typical scenario now I want you to think about this in terms of a retail broker a professional traders broker is the investment bank that's an institutional broker let's think about a retail broker who's got ten thousand retail clients and 90% of them lose money how does the how does the business grow let's think about the reality of this business if you own the brokerage company how do you grow it if 90% of your clients lose money you have to spend a significant amount of the money that you make from the guys blowing up and it's usually between 30 and 50 percent on marketing to get new guys to open accounts to replace the accounts that are blowing up and closing down that's the only way you can actually stay at the same level if you want to grow you need to open more accounts than the ones that are being closed down so imagine you have 9,000 out of 10,000 clients down at any one time what would you do if you had access to 9,000 traders who always lose money come on someone think outside the box here there we go you take the other side of their trades won't you why because then you'd have a 90 percent win ratio you'd be the best trader in the world so what we're going to show you here applies mostly to international markets outside the US as we mentioned earlier us CFDs were banned so we're going to look at CFDs mostly how these contracts operate how the brokers operate within that industry we'll have a look at u.s. brokerage companies later us guys mostly trade options so we'll concentrate on outside the US as in the rest of the world so we're gonna be looking at UK Europe Hong Kong Singapore Middle East Australia New Zealand South Africa what we'll show you here initially is what happens in all of these territories all the same brokers are in all the same places so I've mentioned this briefly again the nineteen ninety ninety phenomenon who knows what that stands for yeah 90% let's be specific of how it works 90% of retail traders said the retail brokers clients lose 90% of their deposited margin within 90 days so what is margin it's the money you put in your account and you get leverage when trading CFDs but what is the CFD well you don't actually own the asset CFD is contract for difference so if you were to buy a CFD on a stock it's a contract that is supposed to mirror the price of the underlying asset as in the real stock so when the real stock goes up a point the contract is supposed to go up a point at exactly the same time that's what it's supposed to do so when you're on the platform and you press the button to buy on a CFD platform you don't own the stock you own a contract that mirrors the price and that's why it's called a derivative because the price of the contract is derived from the underlying asset and there's two types of margin there's the initial margin that you put in your account and then once you have a position what we call variable margin how much your margin is going up and down how much you're making or losing because what happens at the end of the day if you buy the contract and the stock goes in your favour the broker pays the difference into your account contract for difference if you have the reverse situation the broker takes money out of your account if you're losing money and what happens when your margin goes to 0 you get a margin call you have to deposit more money in your account and if you can't the broker will stop you at the position and you're done your accounts blown up so that's why we call them contract the difference because the difference is taken out or put in typically in 4 X obviously 4x is a very popular instrument for a popular asset class for retail traders typically in forex whatever you deposit in your account you are allowed to borrow up to 100 times that what you put in your account so what does that mean well it's 1% variable margin which means if you lose 1% it goes to zero so let's say you put $1,000 in your account you'd be allowed to take up to $100,000 of risk equivalent in the currency pair that you're buying or shorting and if you lose 1% you're gone but what if you put 10 grand in your account so in that scenario you lose a hundred percent of your margin what if you put 10 grand in your account and had a hundred grand risk well if you lost 1% you'd lose 10% of your margin that's how it works so what do most retail traders do what do you think the average balance of a retail traders training account is in the UK Europe so this is in rest of world outside the u.s. it's a couple of thousand dollars and what are they doing taking two hundred thousand dollar positions in forex and blowing up in days hundred times leveraged we call it with stocks commodities ETFs you're looking at 10 times leverage so the numbers work exactly the same if you lose 10 percent you're at but think of all these guys on the platform trading in the way that we've discussed in the opposite way the way that - the way we tailed professional traders do it wouldn't be amazing if we ran a company where we could just take the other side automatically every time they trade it we'd win 90% of the time and this is the big problem the way the brokerage industry works is that there's major conflicts of interest with with retail traders so major conflicts of interest between the broker and their clients that we the retail trader that create a scenario where that literally happens because those guys wanted to happen the infrastructure has been built not for your benefit your objective is to turn up and make money that's not their objective their objective is the opposite to yours which is to take your money so the first two conflicts of interests are really obvious there's four main conflicts of interest spread and commission so spread what spread well if you buy something you're buying it in the market for example at six and if you sell it you're selling it at five so the broker makes one you pay the spread so if the broker has two clients the broker can buy it at 5 and sell it to you at six so one seller one buyer they make a spread so make a spread on every trade and take turns we'll use this phrase again in a second the word turn taking a turn is buying something at five and selling it at six so the spread and commission so spread happens in forex there's no Commission in forex you pay the spread in forex you pay the spread in stocks but in stocks you also pay Commission so you'll pay a percentage Commission to trade in and trade out so those two a really obvious conflicts of interest but everyone tries to ignore them for some reason so what does that mean those two things mean that the broker by default is absolutely 100% incentivized by volume and frequency so they want you to trade in the biggest size possible as frequently as possible so put two and two together why do they lend you a hundred times what you put in your account because they get paid the next two are not so obvious the financing turn and the OTC game does anybody know what OTC means over the counter right so CFD contracts are over-the-counter contracts okay and when they take the other side and make money it's called an OTC game first incentive we'll just get it down now first retail broker incentive volume and size trading as frequently as possible in the biggest size possible that's how they get paid the other two not so obvious this is how it works so the first one financing turn who finances the leverage with brokers does the magic money fairy from the sky come down and give brokers money to lend to you what does it come from comes from investment banks so if you want to set up a retail brokerage company get yourself thirty fifty million dollars go to an investment bank use that money to collateralize some debt and ask them to borrow two hundred and fifty million dollars as soon if you can borrow two fifty you get yourself a revolving credit facility build a build a trading platform and then farm out the credit on the platform to retail traders so you borrow at pretty much now this will be the case you borrow a two and three quarters farm it back out for a point higher so you take a financing turn on the debt but what else gets collateralized how do you get away with turning up to the investment bank with only thirty to fifty million dollars regulatory capital and then borrowing 250 how do you get away with that because retail train is going to open trading accounts and when they put their money in the accounts that money is collateralized as part of the revolving credit facility and then you're basically putting the money in your account and sponsoring the broker to lend you money at a point higher so essentially you're financing your own rape that's how it works now of course if 90% of clients lose money and you want to take the other side you want to borrow as much as possible so you can take that other side so of course you're going to lend out as much as possible teach people how to trade as frequently as possible in the biggest size possible so they pay you you take a point on the financing and then you get the gain on the other side when they lose so retail broker incentive to provide third party financing with no risk or very little risk take a turn out the financing and use the credit facility to encourage retail traders to trade as frequently as possible in the biggest size possible and take the other side of all the trades not a bad business and again why we looking at this you need to understand the realities of the industry step one this is how it works step back for a second and think how long it takes you to open a trading account quite a few of you have open trading accounts before how long did it take you someone shout out ten minutes what did you provide to open the account passport utility bill so identify yourself utility bill confirm address you are who you say you are what else did you have to do you'll sign some terms and conditions because they'll qualify you as someone who's got money did you read the small print shook and we're assuming everyone's non-professional so in the terms and conditions what are you actually doing when you sign them off the only line that matters is one line and it'll be in there somewhere I'm happy to lose all my money and the broker is not and the broker it's not his fault brokers got nothing to do with it it's a risk disclaimer I'm happy to lose all my money so that's all you do passport utility bill fill out the terms and conditions sign it off I'm happy to lose all my money then what happens you've got a trading account you've got access a total stranger who's never met you is willing to lend you a hundred times what you put in your trading account because you provided them a passport utility bill and said I'm happy to lose everything welcome to the world of retail trading but what why are they doing that why is it so simple and straightforward well think about the regulator's passive don't care they react retail brokers clearly with these conflicts of interest are absolutely incentivized to create a narrative around the infrastructure that increases your chances of losing money in fact the infrastructure itself is self-perpetuating think about it like this if you own that company where you've got 10,000 clients and 9,000 always lose money and you're spending thirty to fifty percent of your money to replace them every month the ones that are closing down what happens when a new guy opens their account well you know you've only got 90 days to rape him so what do you do do you wait 90 days no you get on with it you do it as quick you do it as quickly as possible before he disappears you've only got 90 days to take the money and make and take the ownership of that money from his account to your cash so it becomes self-perpetuating it's a very negative feedback loop so they're very very heavily incentivized to make you believe in short-term trading and to trade in the biggest size possible so they can make the for revenue streams spread Commission financing turn OTC gain so write them down and make sure you don't forget them this is how the industry works the volume and sizes incentive spread and calm third party financing with the turn and OTC gain and this is what the industry looks like this is what the trading industry looks like the infrastructure on the left-hand side we've got exchanges in investment banks and everything to the right of that is retail brokers trading educators retail traders we've put a few labels under each so the investment bank what are they doing they're providing the credit facility and clearing to the brokers and that order flow goes through them electronically down to the exchanges and trades it all happens within within less than seconds what's the retail broker doing but the retail broker if we skip the educator for a second the retail brokers providing the access so platform and software financing leverage and liquidity now that's important because it without the brokers you wouldn't have liquidity so that's the positive that retail brokers provide to retail traders you can access liquidity that you wouldn't get anywhere else as a retail trader so what does that tell you it's a necessary evil to use retail brokerage platforms as a retail trader you have to use them we'll come back to that later but what type of education do you get from brokers well there's an incentive there's a conflict of interest you're not going to get education that helps you make money you're going to get education that makes you behave like a monkey press the button as many times as possible per day until you blow up and it'll be wrapped up in some sort of strategy usually a technical analysis strategy very short term less than a day in hours in minutes follow this line on a chart every time that every time this line crosses this line from below by every time this line crosses this time from above sell signals very typical you're not going to get education that works so they're providing this is the retail trader what have we called the retail trader dumb money why because they believe everything that the broker tells them and on the left hand side we've got the smart money investment bank traders on prop desks why do we call them smart money because they believe nothing that anybody tells them in the market who has conflict of interest we'll go into more detail on that later they do the opposite of the dumb money what's the retail trader paying spreading Commission what are they providing they're providing the demand for the financing the demand for the false narrative and the demand for losing trades so they're providing the liquidity for all of those conflicts of interest and we have the acronym their CEO I so if you see that in the presentation later the acronym CRI conflict of interest and the education is a false narrative we're going to go into a little bit more detail on how this works in terms of the OTC game and how all of the conflicts of interest work help the drivers of conflict so spread Commission financing turn on OTC believe it or not it actually happens automatically it's now all being set up to be automated it's been going on for seven eight years already so if you're only learning this now you're well behind well behind think of the ten thousand clients broker example what happens when a losing client comes onto the platform and presses the button well at 7:00 a.m. all the losing clients whose accounts are down go into one liquidity bucket and all the guys who make money go into another liquidity bucket the guy who loses money comes on presses the button they provide the liquidity automatically instant take the other side they could if they want hedge it they could go into the market the real physical market and purchase the physical underlying asset so then they spesh the brokers short the contract and they buy the underlying asset but they don't they say short the contract retail trader losses comes back sells the contract back to the broker broker buys closes out the position retail traders closed out brokers close that broker makes money takes the difference out the account what have they made on that trait they've made every revenue stream spread calm financing and OTC gain and literally it's all automatic it's a it's automated software it happens in a second so the hedge if they choose to put it on will happen automatically down the pipe through the investment bank it's just a two-way pipe now what happens if it's a guy who makes money well the guy trades buys the contract on the platform broker shorts automatically hedges by buying the underlying asset the guy makes money comes back sells the contract broker pays the difference into the account after unwinding the hedge has the broker lost money no so what's the broker mate they've made spread Commission and financing turn so they haven't made the OTC game what else has happened that what else has happened in that trace look at the green bar they've hedged they need money to hedge winning clients are annoying for two reasons to the broker one because the OTC gain is eliminated so they only make money on three revenue streams but two they have to commit twice as much as twice as much capital relative to a losing trader because they have to hedge so winning guys cannibalize the brokers capital so they're annoying losing traders are fantastic because they get the full revenue streams and they use X capital to trade with that client winning traders are annoying because they make less money and commit twice as much capital to X so remember this trend over the last 30 years the monopolies duopoly situation where's the credit coming from it's coming from the investment banks this is the value chain or supply chain of liquidity in the trading and portfolio management industry who owns the narrative who's the what's the perfect retail broker to lend money to one that pedals the narrative why because the investment bank can lend them money and make money out of it forever so it's starting to add up there's a monopoly duopoly situation with exchanges and investment banks who are the biggest clients of exchanges investment banks more on this later but smart money and dumb money this is why we labeled smart money on the professional side investment banks prop desks dumb money on the right hand side as the retail traders smart money understand how the financial markets work they understand conflict of interest it's professional trading 101 it's the stuff you get taught in your first couple of months at Goldman Sachs or any firm that's good they avoid trading in the way that other participants in the market who have conflict of interest want them to they avoid it and they do everything in the opposite way to the way we tell traders do it what a dumb money do believe everything they're told and rely on the infrastructure provided to them by financial market participants with conflict of interest believe that the infrastructure has been built for their benefit when it's actually been built for the opposite purpose they trade in the way that they're told to trade and they do everything in the opposite way so the way professional traders do it but there's a catch we talked about it earlier with the non-farm payrolls example that's very typical smart money requires dumb money to exist who's supplying the credit facility the investment banks who's the perfect broker the one that pedals the narrative who's the perfect client the climb that believes the narrative and it creates the negative feedback loop and the professional traders win we can also have add hedge funds and pension funds into here so in the grey box on the Left hedge funds are smart money they're basically exactly the same as investment bank crop traders pension funds are slow money they're investing over a long time but the key here is is they are the market participants that are on the professional side and they are the biggest clients of investment banks and combined investment banks hedge funds and pension funds are the biggest payers of exchange fees on the planet and two companies own 90% of the order flow on all exchanges in the world it's a monopoly so what you're looking at ladies and gentlemen on the left hand side is Wall Street and if you don't think they all work together you've got your head up your ass there's not many of them six or eight investment banks control 90% of the volume and everything on the right is dumb money and the inversion narrative so everything we've discussed regarding the structure of the industry outside the US actually applies in the u.s. too but that CFDs were banned in the u.s. in 2010 so what's happened since retail traders have been moving more towards trading options in the US so they obtained their leverage through essentially implied leverage or implied volatility through trading options if you wanted to actually trade normal physical assets in the US the margin requirements is pretty high so you don't get much leverage you'd have to it would be 33 to 50 percent margin requirement overnight so two to three times leverage and why do you think it's restricted in that way if they banned CFDs and that replaced it and then everyone's going for options to get leverage index Forex and commodity futures there's lower margin requirements but the tradable set is pretty small as in your amount of opportunities to make money because of the amount of contracts or assets you can trade is very low so it's about 60 contracts typically on a retail brokerage platform and that compares to potentially forty two thousand stocks so your tradable universe is really small and this is why options contracts have become very popular in the u.s. because retail traders can deposit less margin and get potentially much higher return if they make money through trading the option of an asset and this is obviously a totally separate class in terms of options but the two most important variables to consider with an option of theta so time decay and volatility theta you have to be right by a certain date options adds this other element to a trade whereby you're not just long something and you can be long forever you have to be right by a certain date otherwise your option expires worthless the volatility why is volatility important well the more volatile something is if volatility goes up there's more opportunity to lose or make money well risk and opportunity in this in the asset so what happens when volatility gets bid up when volatility goes up options become more expensive I'm retail traders don't understand how to calculate volatility and opportunity properly so they always for example go long something and buy the buy the asset at a level of volatility that doesn't even exist in the real market so the odds are always massively against them so what happens in the u.s. is the vast majority of options expire worthless retail traders in the US use options as a proxy for simply going long or short the underlying asset without realizing that they have to be right by a certain amount of time or the volatility that they're either going long or short can't be bad by the underlying assets real volatility but there's a very obvious question here if 70% of options contracts in the u.s. expire worthless why don't you just sell options all day long easy money right wrong selling naked options as a strategy constantly just to take money in as in to get an income is super dangerous why unlimited losses on many of the trades yes so if you do that it's basically like picking pennies up off the railway track you're playing a very dangerous game if you don't have significant amounts of money to bail yourself out when you get one in ten wrong you're going to blow up very very quickly now that the brokers know this or not of course so if you go on the platform and start naked selling options a lot the broker is going to just stop you in your account from doing it and ask you to put up significantly more amounts of margin to cover the potential for any crazy losses you essentially have GAAP risk in your in your trait so you sell a call option hence giving the buyer the right to buy the underlying asset at a certain price before a certain date you take in a few hundred bucks congratulations go to bed wake up the next day the company's being taken over for a one hundred percent premium by one of their competitors and your bankrupt happens all the time so that's why it's not set that straightforward just because 70 percent of options in the United States expire worthless doesn't mean just go into the market and start selling options every day to make an income what people don't understand in the u.s. is that buying an option relative to buying a stock or a commodity or an index buying an option on those products there needs to be a marginal benefit in addition to owning the option than to just owning it outright and if there's no marginal benefit there's no point because you have to be right by a certain amount of time so the risk reward has to be much more favorable over the amount of time and you have to see catalysts that the market doesn't see and you have to trade in the right price if you're not trading at the right price the risk reward will never be in your favor so again this massive gap in education and understanding of how these things work exist in the United States so the options class is a whole different class but let's have a look at the inversion narrative we already know what the incentives are the conflicts of interest these conflicts of interest lead to what we call essentially a front door to the industry of lies and [ __ ] that's what the inversion narrative is you're being told the opposite of reality and the opposite of truth so you fall for the narrative and do everything that they want you to do and these lies and the [ __ ] is extremely intricate in detail you've got to have a very very well-trained eye and understanding in the industry to recognize some of the things that are going on what does the inversion narrative exist for it exists so they get paid and wealth is transferred from your pocket to this it's that simple first thing we'll look at introducing broker agreements this is infrastructure that was inside that chart that we saw of the industry and we briefly mentioned it the retail broker provides contracts to people called educators and these contracts are called introducing broker agreements now the broker has to do this in every country where there's regulation the broker has to provide a contract to somebody who is introducing people onto their platform what are those contracts typically state whoever you put on the platform whatever they pay us every month will rebate you twenty five to fifty percent of the money they pay us so what does that mean conflict of interest it means that the trading educator is incentivized by exactly the same formulaic process as the broker so what do they want you to do they want you to trade in the biggest size possible as frequently as possible and believe the inversion narrative and loose now in the u.s. this happens all over the rest of the rest of the world outside the u.s. in Singapore they're banned in the US a training educator can't get a percentage rebate they'll get a flat rate but the inversion narratives still exists why if you get paid by the broker as an educator whether it's a percentage or a flat rate it doesn't really matter the outcome is the same what's what's the outcome know so let's say for example you got introduced onto a platform and the trading educator got paid 500 bucks flat rate why does the trading educator care how much you trade well he does because the broker is paying him and he's the brokers [ __ ] he works for the broker and the broker will not work with an educator who doesn't push the inversion narrative they won't even get a contract they'll have their contract cancelled so this is why when we look from the left-hand side to the right-hand side of the industry those red arrows you see are essentially arrows of where the narrative is coming from and the power is coming from because all the way to the from the left to the right every participant individually as you continue across is the [ __ ] of the one next to them does that make sense they won't even get the contract the contract will get cancelled and then your trading educator doesn't have a platform that they can introduce their students on to all their clients onto so then their loss they don't have a business make sense they're the [ __ ] so how does the Institute get around this we spent four years doing this convincing brokers because they have to have the contracts in place by law by regulation we force the brokers to write zero on the contract so it says on all our contracts the Institute will receive zero percent rebate income and commission and flat rate zero why do you think we do that to eliminate the conflict of interest because we know if it's there only bad things can happen why would the brokers do that do you think the brokers like that why would they not like it yes potentially less [ __ ] less [ __ ] more winners so think about it like this right if if you're the brokerage company with 10,000 clients okay what do we look at before with marketing 30 to 50 percent is spent to get more accounts in to open more accounts that I have done accounts are closing down okay what do I be agreements provide brokers they provide them with distribution and marketing where they don't have to pay marketing dollars upfront so a trading educator is going out on their own dime setting up events like seminars webinars stuff like this teaching nonsense introducing guys onto the platform they pay Commission they trade as frequently as possible in the biggest size possible broker takes the money in hasn't cost the broker anything and then a check goes back out every month 25 50 percent or a flat rate to begin with in the US but they won't work with anybody who doesn't push the inversion narrative so what what is it doing it creates infrastructure that lowers their marketing cost so if you write zero on a contract why would you not want to do that because you want the traders to beat the trading educators to be incentivized to get people onto the platform because it's it's lowering your marketing cost it provides distribution does that make sense so the status quo must be maintained so they don't like it but there is a discussion to be had with brokers as to why there's a big positive for it why why is there a big positive sorry no it's not the revenue streams retention is a very very big positive so if you introduce guys who only make money they're never going to close their accounts of course cheaper marketing what else what do you think's going to happen in the future I beat with IB contracts who burned them in 2010 Singapore who recently banned them and who recently banned CFCs Belgium u.s. banned CFDs it's our strong belief that IB contracts at some point will be banned everywhere so here's your first trade idea first trade idea from the Institute the morning you wake up and you see the headline IB agreements banned in UK Europe us everywhere what happens to the publicly listed brokerage stocks they're down 80% 40 50 % of their clients come from the distribution of individuals introducing people onto platforms so that's gone distribution and marketing is gone but if you sit there and tell them that maybe the trade doesn't exist because they can save themselves before it happens so the conversations we've always had is this is going to happen and you know it's going to happen so you need to set up infrastructure internally that hedges your business against that happening and the day it happens all you have to do is send out an email to all of your educators and tell them here's the new contract sign it all go away it says zero and it can all be sorted out in a day and you can make a public announcement and say our distribution stays the same and where else are they going to go because if they've been banned everywhere in the country that they're in they can't say to the brokers oh I don't like that I'm going to one of your competitors because they've been banned everywhere so the infrastructure can be set up very quickly very efficiently for the brokers to respond to that in the future retention is a big one instead of having to spend marketing dollars all the time to open trading accounts that are opening more trading accounts than are closing down it lowers marketing dollars because you give them a coupon business it's like a bond so if you put a hundred traders like Institute traders onto a brokerage platform and they're trading two or three times a week and they never blow up it's like the broker owning a bond they're getting paid a coupon constantly what if a high percentage of your guys make money well they don't like that either that's annoying so they're told to hedge and if they don't they've only got themselves to blame and we don't hear them complaining like and crying like [ __ ] on the phone so we're very straight up with them we will give you a coupon business and a business hedge but we want zero on that contract you should hedge everything we do because a very high percentage of our guys make money and we want one thing in return we want access to all the data so we can see in real time under one login through the back end of your brokerage account for brac end of your brokerage platform everything that every single Institute trader is doing in real time so we can monitor the risk and they like it if you want to see our IB contracts go to the accounts section of the website ITP ENCOM so we've got a new website up we're on an overlap situation at the moment so in sue trade comm is the old website ITP m-commerce than you want we've got the four four contracts that we have globally available on the site you can literally download them in a PDF it took several years to negotiate them all the one we have in the States we've gone a step further now and we're about to get another one in the rest of the world that does the same instead of them writing zero on the contract which has taken us three four years to negotiate prove the infrastructure works and let brokers like us let brokers see that it works give them a business hedge show them that the business is good and they're just being stupid if they think it's not the one we've got in the u.s. at the moment with tradestation 20% of the money that you pay well Institute traders pay to trade station gets rebated back into their account every month so just give it back to them up to the value of the education that you buy through the Institute so what does that mean that means you get your education for free you've just got to commit by putting the money up first to pay for it then when you become an institute trader over a two three-year period you're going to get the money back into your account that pays for the education so it ends up being free and we've negotiated the contract outside with a new broker that we're bringing in in the next one to two months and they'll they're going to rebate 20% in the rest of the world so what that is called is a soft dollar agreement called soft ink you're providing a service and the brokers paying for it you're providing a service to their clients and they're paying for it so we always eliminate the conflict of interest it's one of the most important principles that we get right in the Institute that we always implement so unlike the other educators we're not incentivized by volume and frequency we're totally the opposite we actually want you to make money because if you do it means all of our data is good so what are they these guys for trading educators that I've got volume and size incentive they're essentially the brokers in disguise they're incentivized by the full revenue streams well the three three as well three because they get the financing so not the OTC gain but the broker is paying them who gets the OTC gain so they're incentivized indirectly they just want you to trade as frequently as possible in the biggest size possible so they're always going to show you trading strategies that pay them not you charlatans they're known as guys who pretend to be traders but they're not they're fake traders they're internet marketing imposters here's the red flags of a charlatan educator who pushes the inversion narrative and is essentially working for the broker day trading always works well we know it doesn't always work because the trader is a slave to volatility and the trader doesn't tell the market what's possible the market tells the trader what's possible remember our Eurodollar example 106 buying sell for the next 250 trading days buy at 106 sell at 106 if there's no volatility you can't make money impossible so day trading doesn't always work in fact it works in the minority of cases it only works in history in the last 15 years 20 percent of times on average and that is a statistical analysis you can't argue with it we're looking at US equities in particular specifically and the major Forex pairs and 80% of the time it hasn't worked the odds are not in your favor so what does that mean you're being told the inversion narrative you're being the told you're being told the opposite of what's true but what does that do for the broker in the educator guaranteed volume everyday if you absolutely believe that day trading always works or works in the vast majority of times in history and going forward what are you going to do well you're a guaranteed idiot you're guaranteed to trade all the time fantastic perfect lines they get paid not you next one it's better to not have overnight risk and to exit your positions at the end of the day always why is that good for the broker and the educator because you've guaranteed to trade twice a day you enter a position and exit it also just means that the educator has no idea about risk because risk can be hedged out overnight risk can be hedged out for months with assets that are correlated next myth you can make a monthly income from trading well we know that not that's not that can't be true why because you need volatility what's what's the big one of the big educator slogans make $10,000 a month trading the International forex market get the life you deserve well what if the forex markets don't move you're not making $10,000 a month trading the International forex markets you're losing and they're actually right you are getting the life you deserve because you're an idiot but what does it mean if you believe that narrative it means you're a guarantee you fool it means you're gonna chase the monthly income you're gonna trade all the time chasing the income and what happens if loads of guys chase the income well you get an income it's the inversion narrative trading is easy you just need to follow a few lines on a chart technical analysis here's some signals follow the lines buy here sell here buy here sell here what does that do guaranteed trades it's the mice hitting the pedal trying to get a piece of cheese psychology is the most important thing in trading if that's your only narrative you've got nothing if you've got a strong mind you'll be good at risk management and make money if that's your only narrative you've got nothing you don't have a trading strategy all you need is risk management to be a good trader nonsense you need ideas if you've got amazing ideas you can be a terrible risk manager and still make money next narrative lifestyle messages get the life you've always deserved one day you'll own a car like me what are they trying to do there they're trying to just distract you away from the reality of the industry and the realities of trading with hopes and dreams and they're not living that life it's a fake life because they're not even real traders they're fake traders and if you remember right from the beginning we looked at boomers and Gen Xers and the problem with pensions everyone knowing that they can't retire this is the crux of the problem when desperation from the middle class fools meets conflict of interest so just two sides of the equation when desperation meets conflict of interest only bad things can happen it's all designed to distract your attention away from what's important and they're going to go to extreme lengths to convince you otherwise the inversion narrative is huge outside the United States much more so outside the US but what about inside the US we've already mentioned this in the example we about how the Commission is not paid as a percentage it's a flat rate but they're still the brokers [ __ ] they're only going to push the inversion narrative because they need a brokerage platform to put people on to legitimize themselves because if they have the branding of brokerage platforms behind them and they're working with them and they're their introductions have a place to go to it legitimizes their [ __ ] they need a home they always need a home and obviously you've seen we turn the tables on the broker and we've got 370 guys globally when you've got a lot of guys who do quite well under you provide a coupon business the broker likes you and you also get significant community leverage because if you have a hundred guys on a platform and they do well and it's a coupon business and you've provided a business hedge to the broker do they want to lose them of course not so what happens at the Institute when we want something from the broker they become our [ __ ] because they don't want to lose a hundred clients we've turned the tables so what does it look like in practice the inversion narrative1 IB Agreement I don't think we have to beat that drum again but one thing you should absolutely do if you go to get taught by someone in the financial market who professes they're an educator and they're good at teaching and they're they're a guru trader ask for their IB agreement if they're introducing you onto a platform the contract has to be in place it's illegal for the broker to not have the contract in place so if the educator won't give it to you where do you get well first of all what's the message if you won't give you what's the message from the educator if they say no I'm not giving you I'm not giving you a copy of my contract they've got something to hide or they don't have a contract which means it's illegal so either way it's bad where do you get it from well actually contact the broker and ask for the the email address to their compliance desk under regulation they absolutely have to provide it to you they have to they have to have full disclosure of the relationship with the educator so contact compliance and go behind the educators back that's how you find out if they're incentivized by volume and frequency regulatory history is a big one there is actually a real definition of what a professional so if someone claims that they are or have been a professional trader you can find out with a few clicks of a mouse why because if they've been a professional trader that the definition is they've performed a controlled function and the controlled function in all geographies is trading other people's money investors money so investors will be at a hedge fund pension funds but also investment banks the investors are the shareholders in the bank and the guys at the bank trade the shareholders may they control the balance sheet so they're a there they are a custodian of third party capital and they have to be regulated what do you have to do to get regulated you gotta take your exams and there's a public record everywhere in every geography there's mine FCA register so Goldman Sachs Lehman Brothers JPMorgan regulators of control regulated to perform controlled function of trading other people's money and world would consultants which is a small firm that we had four guys and we had to be regulated because we traded each other's money very straightforward another easy way of finding out is if you know someone who's got a Bloomberg subscription if you know someone who's got a Bloomberg subscription just ask them to type your name into the search field or the name of the educator and then click on I think it's eight career and it comes up with the full career of the person who was a subscriber to Bloomberg now it's difficult for retail because it cost twenty five thousand dollars a year but Bloomberg records the career of professional traders and professionals in the market not hard to find if you do a bit of digging that's online Creole joins JPMorgan equities trading team that's online as well so at Lehman before you can literally do a little bit bit of digging around and find out if someone has actually been a professional trader in their career it's not difficult but people just don't understand what the definition is between a professional trader and a retail trader this is Raj one of our mentors in the u.s. regulator in the u.s. is FINRA so Raj was the head of options trading at Bank of America head of options trading at Nomura quite a few places before but he's the youngest managing director at Bank of America at the age of 29 and run options at 29 years old so a bit of a player knows what he's talking about it takes five minutes to find that online five minutes here's the rest of our mentors so Tristan Chris Cathy's over there Jason McDonald sorry I had to put your middle name in her Ben Berg green who's over there his gem who's arriving tonight he should have just landed actually he lands at 8:30 they were doing a conference at the weekend Hashem you can't get it online because Nasdaq Dubai they don't record publicly online but we have the certificates because we only hire guys who have actually been professional traders so you can go to any of those links and you'll find everyone's background now none of our guys have to be regulated now why because we don't perform controlled functions but the point I'm making here is this is if you are being told by somebody who professes to be a professional trader or has been a professional trader all you have to do is check and what happens if you draw a blank or you can't find it what happens if you ask them to prove it and they can't what's happened you've been told by a retail trader that they are a professional trader or they have been a professional trader so what does that mean you're being potentially taught by somebody who is exactly the same as you just because you have access to a brokerage platform or a trading account with with a couple of thousand dollars in it and you trade every day it doesn't mean you're a professional trader or have been a professional trader it's like me going out into my back garden everyday and kicking a football and saying I'm a professional footballer Barcelona are not signing me up next week and I should not be teaching football it's pretty straightforward so anyone can do their research and if you don't you're actually being really irresponsible all you have to do is check the regulatory history so check for the IP agreement check for the regulatory history the vast vast majority of trading educators in the market have absolutely zero professional trading experience they are retail traders pretending to be professional traders and it takes one check so now you know the definition if they have no status no history having a controlled function of managing other people's money it means they've never been a professional trader and they can't claim to have been one it's a binary outcome you can't get a little bit pregnant you're either a retail trader or a professional trader you either pregnant or you're not they're just pretending so they'll have the IP agreement they'll pretend that they're professional traders how do they pretend that they're professional traders but we live in an online world and they'll create completely manufactured backstories of their lives the most common one and I like this word it's a German word bundok in der the Wonder kid the kids could that came from nowhere and usually the lie is they turned an amount of money like ten thousand dollars into a big number like over a million the Wonder kid turned ten thousand dollars into a million now why is that why is that convenient because everyone could have fooled ten thousand dollars so open a trading account most people in the Western world can just put on their credit card so it's the perfect [ __ ] story to get people to pay for education and put ten grand in their trading account and it's simple but for people to understand oh you've turned ten grand into a million fantastic I want to do that to follow a few lines on the chart the other most common one is if older guys they'll say that they like to hedge funds or investment banks all that they they work at a hedge fund now or they run their own hedge funds there's complete nonsense if they did work at a bank it's probably in the support function and they'll have no controlled function so they'll be working in IT or operations or even working on the trading desk in getting the trader Coffee if then if they haven't been regulated to perform the function they've they've been at the bank and not performed a controlled function so it means they were in support the hedge fund one is very disingenuous because retail traders have been picking up newspapers and watching TV for the last decade reading all about these whiz guys in the market called hedge fund managers and apparently according to Charlotte and trading educators all you have to do to be a hedge fund manager is open a retail brokerage account and put five grand in it so you have to do and you can call yourself a hedge fund manager wrong a hedge fund is a very very specific investment vehicle with very specific parameters and moving pots very specific infrastructure and you need five things to be defined as a hedge fund you need an offshore registered fund 80% of them are registered in Cayman Islands you need an onshore management company so that's usually in New York London Geneva Singapore Hong Kong Sydney the offshore fund you have two charges you have the management fee so the offshore fund is charged by the management company a fee to run the assets play you and then you have a performance fee so it's usually 1 or 2% management fee 20% performance you have a third-party administrator so what they're doing every day is making sure that the management company is implementing the agreed mandate from the offshore fund for the for the strategy that investors have invested in you need a prime brokerage agreement with a top 10 investment bank no investment bank will look at you unless you've got 30 million dollars commitment up front total waste of their time investment bank small clients they want big clients who are going to trade and you need a seriously strong track record minimum three years probably five years obvious question why don't we set up ahead run well it's the wrong way round we are not the hedge fund taking investors money to make investors rich we are the investor so the front door of the Institute there's education but we're also training our own money and we have 40 trading accounts within the Institute and if we find good people we seed them on power of attorney with real money and they get to trade our money now it's not a requirement you can just exist in the infrastructure and be good and join the community and help everybody out that's fine but that that's the way we look at things we want to invest in traders we don't want to take outside money and if you look at these guys the weathered faces of the mentors over here and mine we've all been in the industry for years we've done our time when you wake up at 5 o'clock in the morning for 10 15 20 years to make other people money and to make shareholders and investors richer and you make a lot of money yourself on the way when you paid a certain amount of money you don't need to get up anymore you can make a lot of money by doing not not not a great deal so all our guys are retired and we just trade our own money and as you've seen hedge funds are a very specific investment vehicle how much does it cost to set up a hedge fund structure over a million dollars if you don't need it you don't do it it's stupid it's vanity / sanity so we saw manufactured backstories IB Agreement regulatory history manufactured backstories what about manufactured trades and deception you'll see this a lot in the online world you'll see lots of educators active on social media posting screenshots of charts and this is a sensitive essentially hindsight trading so for example posting a picture of a chart on social media with an arrow that points here and an arrow that points there saying I bought it here I sold it here congratulations well anyone can do that anyone can pull up a chart and say I should have bought it at five and I should have sold it at eight it's just [ __ ] so that's hindsight trading what about predicted trading predicted trading is very disingenuous because people who don't understand the industry can fall for it very easily so what about posting a chart before an event with support and resistance and saying prepare for the big move and then afterwards you actually get a screenshot of a real trading account with a showing a profit of say three thousand two hundred forty eight dollars with a narrative next to it that says just made three thousand two hundred forty eight dollars it's only 10:00 a.m. that's me done for the day I'm off to the beach this quite literally is the oldest trick in the book and it's been going on since the nineteen twenties they've got two trading accounts they go long in one and short in the other and they post the screenshot of the one that makes money and it's the oldest trick in the book because it actually comes from brokers because in the old days brokers were advisory brokers they would advise their clients what to go long and what to go short in the market and if you've got a hundred clients and you're an advisory broker and this is going all the way back to the 20s do you tell all your clients your 100 clients if you have an idea to go long do you tell all of them to go long of course not you want to grow your business to 200 people so you tell 50 to go long 50 to go short 50 of them make money 50 of them lose money and then the guys that lose money you've helped them on the next one and you grow your accounts from 100 to 110 130 200 it's the oldest trick in the book all that's happened is it's big it's just become modernized by the educator who is the broker in disguise that's all it is and this is why basically any professional trader with any respect for their career will never post their trades because they will lose all of their gravitas all of their respect in the professional trading community because every professional trader knows that they're probably bullshitting because they know all the dirty tricks so there's a side of the industry that's totally opposite to everything that you experience as a retail trader but it also breeds a dependency culture as well which is exactly the opposite of the way traders are taught in the real world like professional traders so people signing up for example are too hot stock lists here's the top 5 stocks today here's the stocks in play here's the potential news get long get short get long get short what's happening there that's the educator pushing the inversion narrative because they're working for the broker indirectly and what you doing you're depending on those lists or those ideas every day to try and generate a P&L for yourself try and generate a profit of yourself it's the total opposite of the way you need to be taught you need to be coming up with your own ideas and generating your own ideas manufacture trades in deception again deception this is how the online world works with people who have a false narrative they know everything they say is [ __ ] but they have to give the impression that other people believe it so you get sucked in so there's two things you need to watch out for sock puppets and meat puppets what's a sock puppet well put a sock on your hand and speak you open four hundred social media accounts different email addresses different names what do you do you pretend to be people commenting on all of your posts and you're logging in to eighty of them for her day and making the comments there's a huge amount huge huge amount online of complete nonsense and people get sucked in by it what's a meat puppet a meat puppet is a sock puppet but it's a human they're hiring someone in Bangladesh China India wherever Russia to log into the accounts and do it for them and they'll upvote all their comments to get them to the top so it looks like there's a narrative occurring that believes their [ __ ] so then people get sucked in they build fake websites so they'll comment on other business people and then comment on themselves that's a sock puppet fake website fake reviews and they'll give reviews on themselves obviously that are favorable and then reviews on their competitors that are not favorable it's Ilych this is how they all do it or they can literally engage in actual criminal activity which is creating equity curves of trades that they claim they've done going back in time which shows them making money over time and all they've done is gone into a spreadsheet or the backend of a website and typed in by at five dollars sell at five dollars sixty five and it just updates their equity curve and it's not audited by third party it's not audited by accountancy companies they don't have an administrators it's self-administered and it's actually criminal activity because what you're actually doing is you're miss selling financial performance lifestyle and social media posts this is that this is the stuff that that's designed to distract you so drastically over emphasizing the conflation between trading and lifestyle so of course if you know what you're doing it doesn't matter where you press press the button it's less than 1% of what you'll do as a trader it's the other 99% that's important you can't be sitting by a pool coming up with 10 trading diets at 10 really good trading ideas per week you actually do need to work you can press the button when you're lying by the Swingle but you have to do the other 99 percent of the work and you can always tell an educator that's had no trading experience because they'll constantly push the lifestyle narrative it's creating the hopes and dreams and how do they do it most typical ways renting houses on Airbnb and doing MTV Cribs style tours of their houses but they literally rent the house for a day and they don't own it it's rented for a day or they'll rent a super car for a day and in the house and in the car they'll film all day and collect three months of content and drip it out over three months so they build archives of content to drip out the inversion narrative possibly my favorite is withdrawing cash and parading it saying that you made it in trading that's where you get it from prop moving money store there's a million dollars on sale for 450 bucks in new style aged look 100 that's where they get it from and of course when you wrap all of this up together the IB Agreement the no regulatory history but telling you they're a professional trader when they're actually a retail trader the manufactured backstory the manufactured trades and deception practices that they engage in and the lifestyle and social media posts of course the cherry on the top of the cake is the reason why they do it is because they want to inspire you so you can one day be like them so you open a trading account 20 days later you're gone congratulations but there's other areas of trading infrastructure where IB agreements are very important trust me when I say this IB agreements are everywhere in trading they're not just with educators they are everywhere they just work in slightly different ways so they're in managed programs automated or algorithmic manage programs social trading and with online forums and information vendors let's start with manage programs so there's a difference between a sophisticated investor and a retail investor retail investors are usually under five hundred thousand dollars qualified sophisticated investors are over $500,000 qualified usually with industry experience so there's a gap in the market between retail traders and funds where sophisticated investors invest in hedge funds because hedge funds will only take a minimum of a million two million and you first have to be qualified as a sophisticated investor retail traders can't invest in them so what the retail traders invest in oh this infrastructure that is supposed to look like hedge funds called managed programs so you have these guys who are managing retail accounts where you give them money to trade they've all got of IB agreements with the brokers every single one of them so there's a conflict of interest and what tends to happen 90 percent lose money why because when they're managed account goes up in value they churn like crazy they trade they trade they trade - they trade and then the Commission goes in their back pocket from the brokerage company as a rebate and when they're down they just churn less so it's a turning mechanism what about if we automate that so we take away the human and we say all you have to do is put money in this trading account and every time this particular account trades you do exactly the same trade so it's automated so there's no human managing it the human is managing their own money and you're just copying their trades what about if we automate that now the way the way that's set up is you have what's called a master account at the brokerage company and then you have hundreds of retail traders who want to outsource their trading to somebody who's supposed to be good what's happening there well the guy with the master account has an IB agreement with the brokerage company so every time the master account of trades or that guy trades you automatically trade it's the same thing it's just two separate accounts instead of one so what's happened there well the broker has just out sourced pickpocketing to a machine what about social trading you've seen them all these platforms where you go online and you see all these guys in weird places around the world with nicknames forex master 179 was up a hundred percent last week based in Kazakhstan the new master trader we're promoting on the platform what's he done he's turned a hundred dollars into $200 and you're about to give them five ten fifteen twenty five hundred grand they're never gonna be able to manage that money they've got lucky because they never advertise how much money they're actually managing well very rarely but something that's very very very rarely advertised and no one really knows the real truth about it unless you're inside the industry 80% of their profiles are fake the people don't even exist they've created fake profiles and the social trading platform is the brokerage platform they own it or if they don't own it they have an IP agreement with the brokerage platform so what are you doing well you're just doing the previous example the broker is fire has set up an algorithm that fires off signals through certain accounts and you've set up a sub account under a master account that's all you've done and then you're automatically copying the trades of that person that doesn't exist and all these guys get away with it because they're regulated in places like Cyprus and Malta which are in the EU but they can actually passport for their regulation into London so they end up with FCA regulation when they really shouldn't and that the regulators have actually started coming down really hard on them in the last few years and there's been multiple investigations into the social trading platform sites and they've actually found that eighty percent of them are fake profiles so all the owners of these platforms for the last two years have actually been looking for an exit at favorable prices and yours truly was offered one of them for 10 million pounds so we decided to send in a couple of people to do some due diligence and confirmed two weeks later eighty percent of the profiles of fake well done you've just been duped again I beat hot IB contracts or broke online forums do you think online forums were built for your benefit so you can go on and chat to some guys you don't even know about stocks Forex commodities they're not built for your benefit a lot of the profiles are again fake and the forum owners the companies that own them are actually incentivized by IP agreements try clicking on the broker ads on the right-hand side of the screen see what happens new window opens URL check the URL what it says it's an affiliate program and they have an IP agreements with the broker that's advertising on their platform we've downloaded many of the company's accounts to forensically go through them to see where they make their money and how they make their money because we see the URL links as affiliate links and we know they're getting paid by the broker in commission so you go on to Companies House download the last year's accounts their accounts before what are they how do they make their money mostly through marketing and advertising and what is marketing and advertising revenue its brokers paying rebates on IP agreements you need to understand how the industry works so what's going to happen when you go on an online forum well the online forums are in direct competition with trading educators so what's their narrative all education is crap well of course most of it it's because most trading educators have IP agreements where they get a percentage rebate but they're all real players in the in the vast minority and we're one of them but what are they going to push on their platform they're going to diss all educators and they're going to diss brokers that are not advertising with them and they're going to push you with the inversion narrative and they're going to promote forums that promote the inversion narrative and send you and push you towards the brokers they'll even set up fake profiles themselves and they'll call themselves for example veterans as having been on the forum for ten years and added lots of content to the forum that other accounts that are fake respect so they're basically sock puppets and they'll push you towards the brokers so you think you're talking to a guy that's got a reputation that's good it's a guy working at the forum you need to be very very suspicious of how all these guys work it's this huge conflicts of interest everywhere so consider what you've been shown today just think about everything how everything works how the parameters of the industry are literally set up for retail to fail the infrastructure was built for retail to fail not for them to benefit how hedge funds pension funds and investment banks are the largest payers of exchange fees an exchange --es need them to survive to maintain the status quo how investment banks in particular absolutely required um money to exist and they enable the infrastructure by providing the credit the financing to retail brokers how investment banks need their largest commission payers hedge funds and pension funds to survive so they continuously get paid how retail brokers and their I be incentivized educators are literally contracted and incentivized by the infrastructure for retail to fail so everyone gets paid how retail brokers and charlatan educators constantly push the inversion narrative how is the retail trader with a small account you don't really have a choice you have to trade on the platforms that's how you get access and how regulators will never actually prevent a problem they will only ever react to casualties of past problems in the markets and then I said now we've stated all this and we've got to this point I will you to ask yourself a very very important question is it even possible for retail traders to make money you've got to access the platform's so let's have a show of hands who believes retail traders can't make money one ok who believes retail traders can make money ok you're right but like right at the beginning when we said the most important thing is to look at how the industry works what did I say at the beginning look at how the people who do well in the industry work and if you're a retail trader you can make money if you find those people and emulate them it's pretty straightforward it's like walking into any industry find the players who win and do what they do form 10-k it's an annual report in the States for a public company it gives you all the forensics of the company who should we look up in the trading industry who's extremely successful to see what their odds are of making money yes why don't we look at Goldman Sachs that's where all the most successful traders in the world seem to come from so let's find out how they make their money go online type in Goldman Sachs 10k and type in the year you'll find it in the first two links it's out every year it's an annual report between pages 95 and 105 you will always find this chart and it tells you the amount of money that Goldman Sachs makes or loses per day how many days they make and loose so what have we got here intervals of 25 million dollars ok on the right-hand side our days where they make money the left-hand side days when they lose money and how much they make and how much they lose so in the year 2015 Goldman Sachs made money on 212 days in the trading year and lost 38 days and this is trading operations pure training nothing to do with M&A Commission's or anything like this so pretty skewed to the right hand side and you can see that on a typical day when they make money they make between twenty-five to fifty million dollars so there's also a tale out there as well look at the tail on the right hand side where there's up to a hundred million dollars with 34 days out of the trading year they're making a hundred million dollars amazing right why do you think they're making a hundred million dollars because they call the markets correct the big situations when markets move they get it right and then when the markets don't move they trade in different ways and they just make money every day so they go home with flat positions every day know they're running multi-billion dollar portfolios they just let the portfolio work and they let the money come in and they don't stand in the way of it huge overnight risk you can speak to Chris Kaffee about it later at the pub we used to run crazy numbers a couple of billion dollars on the pan-european trading desk we'd have between 200 and 400 million of that risk and we'd run portfolios and that was even back in the early 2000s we weren't day trading just big portfolios that make money so 2015 was that a fluke was that a one-off you can actually go back all the way to 99 but let's go back a few years see what happens 2014 thank you very much what about 2013 what about 2012 that was a decent year what about 2011 you can go all the way back to the late 90s since they became a public company and started putting out these numbers publicly it's the same every single year why what percentage of retail traders lose money what are they doing everything on the right-hand side of the chart we looked at earlier what percentage of days to goldman sachs make money 90 what are they doing everything on the left-hand side of the chart that we looked at earlier it's not that difficult to work out if you know what you're looking for so shouldn't we be doing exactly what these guys do in our own trading accounts and become the most annoying clients of retail brokers in the world guys who make money everything that you've got to do in your retail trading account needs to be the same way that these guys do it on the left hand side so you have access to the platforms it's necessary to use them but you do everything in the opposite way to the way they want you to do things and you learn how to do it properly and there's no shortcuts you've just got to do it so right back to the beginning be warned or campaign continuously for the last five years is to first educate you on how the industry works so you don't make the stupid mistakes that everyone else makes that's what you've got today the next stage is to educate you on how to actually make money so how you actually emulate professional traders who are real professional traders who have got the experience been there done it and have made a lot of money unconfuse to continue to make money you've just got to go straight to the source so you've got to be woke and I hope this is working you up because the reality is is if you don't go down this you will go down the other path and you will blow up and we don't mind we'll be around next year the year after year later you'll just come back but it'll cost you a lot of money to learn the lesson if you haven't learned it already I guarantee you there's people in this room that have learnt it already most retail traders in the u.s. lose twenty thirty thousand dollars before they decide trading is not for them but they never get work they never find out the real reason and the real reason is the stuff you've seen today you've got to go straight to the source so just don't waste years of your life it's no skin off our nose if you do we'll still be here so here's our general website we've got a new website I TPM com you can sign up for free seminars around the world forward slash seminars if you want to go straight to the online education go to IET p.m. comm forward slash education we've got two programs all the informations there online we've got mentoring programs direct with our training mentors and all the guys are hired on very strict requirements they have to have been professional traders for years and made significant money and they have to prove it trading accounts IB agreements I TPM comm trading accounts and if you got any further questions go to the FAQ section check all those questions if you have any further further questions after you've seen the fa Q's of the answers send us a message through the website through contact form and we have two acronyms at the Institute which I'll leave you with GTFO h and d fi you get the [ __ ] out of here and don't [ __ ] it up I'll see you at the pub [Applause]

Channel: InstituteofTrading

Views: 3,489,246

Rating: 4.8260694 out of 5

Keywords: Anton Kreil, Institute of Trading and Portfolio Management, ITPM, Goldman Sachs, Seminar, Million Dollar Traders, Christopher Cathey, Jason McDonald, Raj Malhotra, Hichem Djouhri, Ben Berggreen, Tristan Edwards, Gregoire Dupont, Stock Market, FOREX, Hedge Funds, Investment Banks, Finance (industry), Training, Coaching, Business, Development

Id: L7G0OfJUON8

Length: 122min 39sec (7359 seconds)

Published: Mon May 15 2017

Reddit Comments

[u/OriginalPostSearcher]

X-Post referenced from /r/wallstreetbets by /u/dridus5
How to distinguish between real and fake traders

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[u/mikebcity]

Anton is the real deal man.