My beef with the Internet e-mini futures day trading rooms

I have a beef with many of these rooms. There may be a few that would meet my standards of integrity, but I am not going to name them here. That's not the point of this article, anyway.

What's sad and also telling, I am afraid, is that my standards are not so high. I would call them reasonable, but not high. Such standards should be a commonplace, but they are not.

Let me name three basic problems, three main bones of contention I have with the online e-mini futures day trading rooms, to be specific, and to show you that I am really not expecting that much from these trading rooms. Still, even my basic expectations are routinely not met.

1. The track record.

The trading results have to be tracked and documented. Many trading platforms allow for that. NinjaTrader that many trading room operators use, is one of such platforms. You can also simply take screenshots of all your trades listed by your platform on a given day if your trading platform does not allow to track them over a longer period of time. Still, I believe it is good to show a trading record for each day separately.

Even though that seems like an easy thing to do, many of the trading room operators refuse to provide a proper track record (as recorded by the trading platforms) and instead produce their own list of trades with results that cannot be confirmed in any way. This is definitely not a right way to go about it and may suggest that a creative accounting is taking place or the room is left for it just in case. In short, this cannot be trusted.

2. The lack of transparency.

That includes what the purpose of the room is, what to expect from it and how it is operated (in particular, whether the room operator is taking live trades or simulated).

There is nothing wrong with simulated trades. They do not invalidate the trading room's approach just as the actual trades do not guarantee that every member of it will make money even if the room operator manages to do so. There are other circumstances that determine how well you will actually do following the room's calls and it's important to keep them in mind. They should also be spelled out for every potential room participant prior to their signing up for it.

It is not uncommon for the newbies and wanna be trades to think that paying for the trading room entitles them to the same entries and exits as those of the room operator. Silly as that may sound, you might sometimes find voices to this effect and similar expectations on trading forums, especially those that cater to the beginners (the right verb is really "bamboozle"). That is often not realistic, even in the simulation mode.

Unfortunately, these things are often neglected, but instead a trial may be offered. Any such a trial is very welcome, free or otherwise, but only in addition to the relevant information properly disclosed in the written form. Otherwise, such a trial often ends up being nothing more than a marketing event with the prospective members being worked on by the room operators whose real skills are often in marketing and not in trading.

The purpose of many of such rooms is often stated as educational and yet many of them insinuate that you can make money following the room calls, which is supposed to justify the monthly fees of $300 or more. Clearly, you cannot expect anyone of sound mind to pay that much for a mere educational room, and yet the rooms that charge that much are not necessarily very forthcoming with the proper track record. In other words, what we have here is often a situation where the room owners hide the lack of proper accounting behind the excuse of operating an educational room, and yet charge for it as if the room were intended to make you money.

You can't have it both ways! Make up your mind, for God's sakes. If you run an educational room, you don't have to claim any profits and you don't have to be concerned about the track record, but if you insists on claiming them or even insinuating such a possibility, this has to be done in a proper manner, with a proper track record provided, ideally professionally audited too.

3. Dubious marketing practices.

This is related to the previous point in that shunning the right disclosure by the room owners enables them to portray the room as something it is not, but you will find this out only after a closer scrutiny, wasting the time you would not be wasting if you were dealing with an honest, transparent business.

Instead of useful, relevant information you are sometimes served information that is totally irrelevant, distractive, and even manipulative, such as, for instance, messages with more or less overt religious undertones. There is room for religion in our lives, but mixing religion with business that has nothing to do with it for the purpose of helping the latter shows poor taste and the lack of respect for religion, or, at the very least, an instrumental, oppportunistic way of treating it. You would expect the religious folks to know better how to treat religion, right?

And that, let me state it once more in closing, is indeed the main problem with many (most, perhaps) e-mini futures day trading rooms on the Internet these days (or online trading rooms, in general). Namely, the lack of transparency, if not, at times, blatant dishonesty or manipulation about the room purpose and operation.

I personally believe that e-mini futures day trading rooms should only be educational. That would mean less expensive than most of them actually are. That would also mean more honest because if you are not concerned about the track record as the measure of your room's quality then you can afford to be more honest. But there is also another reason for that. I am convinced that the average trader when properly trained can do better on his or her own than by following the calls of some self-proclaimed guru who may or may not be honest about his trading skills.

Get trained or train yourself and forget about the trading rooms with track records created by marketers!

Posted on July 6th, 2014.