Nov 14, 2014

How I Blew $2,000 on a Forex Workshop

Creating Millionaires... Through Forex Trading... Hopefully?

Recently, I was reading a Bloomberg article The Lure of Forex: Conflict, Debt and Loss in a $400 Billion Market .

It's an interesting article that explores the Forex education workshops in America and how these firms market their workshop to get students to pay a few thousand dollars to learn about Forex trading.



It seems like 70% of these retail traders ended up losing lots of money.

The article go on to highlight why retail Forex traders lose money and what are the forces acting against them. This makes me how many of the Singapore Forex retail traders actually made money of an extended period of time.

I personally have attended one Forex Trading workshop 5 years ago. It cost me $2,000 and a bad taste in my mouth.

During the preview session, the Founder of the company raved about the returns that you can make from forex trading and how 15 mins a day, is all you need to generate passive income for a lifetime.

I was pretty skeptical by that time after attending an options trading workshop and a property investment workshop, which both didn't work out as planned. Granted I thought that the options trading workshop is pretty good because I learn all about all the Calls and Puts, which allowed me to ace all my derivatives questions during the exams of my other finance related professional certification.

The Founder went on to claim that they have this "sure-win" formula that has been back tested for 30 years and it has been used by successful fund managers.

"You want to know the secret formula on how the big boys make money? Come and attend the 2 days course and we will teach you the formula!"

Feeling a bit rich at that time, I decided to sign up for the course, just to see how "powerful" this formula is. After all, they promise Money Back if I am not satisfied.

During the first day of the course, we learn about pips.

And they spent the whole day teaching on the history of pips! Why forex is the best market to trade, why small investors can make money on forex and not other asset class (According to the trainers, Forex is the largest capital market in the world and they can't be manipulated unless stock and property. Just look at the recent currency manipulation cases by the Big Banks and we know that to be untrue). It is one whole day of brain washing and low value knowledge which I can easily gain from Wikipedia.

The next day is slightly more interesting. The trainers talk about technical analysis, support and resistant, the usual stuff that we can also find all around the internet.

Than comes the moment of truth, where they reveal the "Formula"!

"You enter the market using this indicator and you take profit on 3 pips and cut lost on 5 pips on USD/JPY pair." proclaimed the trainer.

The other student asked the usual questions like ,"Can we apply this formula to other currency pairs." "How much money will I make?" etc etc.

I decided to ask a slightly harder question:

"Can I tweak this formula a bit to suit my risk appetite?"

"Yes! Sure you can. You can cut loss on 6 pips or adjust your profit taking if you want to take more risk"

"You mentioned that your formula has been back tested over 30 years and it makes money 75% of the time?"

"Yes!"

"If your formula works, than by allowing us to tweak the formula, won't that invalidate the value of this course by saying that you have a 'secret formula' that makes money most of the time? Does it mean that your formula is not full proof if you let students without any forex experience to tweak it anyway they want?"

"Erm. You know, people have different risk appetite and they might find a formula that works for them better..."

"Than, what's the point of telling people that you have the 'best' back-tested formula?"

"Erm. It's complicated. Can I speak to you later?"

The students were later asked to participate in a virtual trading competition whereby the winner of each month will get to win some prizes.

By the way, I never get to speak to the trainer at the end of the course. He seemed to have left the room quickly after the photo taking session.

I didn't think too highly of the formula since it probably won't really work and by than, I already formulated another investment style using George Soros Macroeconomics strategy. I wanted to pit my own strategy against the course strategy.

For the next 3 months, I topped the course alumni trading competition and is able to make a profit several hundred more pips than the runner up.

Amazed by my result which they thought was attributed to their formula, the company wanted to interview me and share with the other students the secret of my success, and how I made use of the company taught "formula" to make so much money.

I told them ,"I doubt you will want to interview me, because what I am going to say, is not what you will want to tell the rest of the graduates."

"Why not?" They were puzzled.

"Because I did not use your formula and I want my money back!"

They did not contact me from then onwards. 

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