Avoid Day Trading Scams, Fake Gurus & Pump And Dumps

Avoid Day Trading Scams: Spotting Fake Gurus and Pump and Dump Schemes

According to studies, 97% - 99.8% of retail day traders lose money - and those that don't earn less than minimum wage (or front run their followers via pump and dump schemes).

This article will tell you everything you need to know about why day trading is a scam (and what you should do instead).

The fact that day traders lose money isn't my opinion, rather it's based upon numerous research studies.

If you want to read the research studies about day trading, you can find them here.

Day traders are led to believe that they can use technical analysis, support and resistance and patterns - unfortunately this is false.

There are zero day trading research studies that show it's possible for retail day traders to be consistently profitable.

Humans look for patterns that are oftentimes not there. According to my former Cornell University professor, Tom Gilovich (one of the world's experts on patterns and cognitive biases):

Thomas-Gilovich-Day-Trading

In fact, the ONLY way I know to be profitable day trading is to front run and pump and dump your followers.

You can learn more about this below (unfortunately pumping and dumping your followers is not illegal):

Most of the Successful Retail Day Traders May Be Using Pump & Dump Schemes

There are many profitable retail day traders on YouTube.

They're almost always trading low-float stocks that they can manipulate.

Front-running is defined as purchasing a security and then selling it as buyers rush in.

Many of the most successful retail day traders are engaged in front-running and pump and dump schemes.

A Strategy That's Better than Day Trading

Day trading strategies oftentimes rely upon continuation of trends and trading breakouts.

But, to consistently make money in the stock market, Iโ€™ve found that being contrarian yields the highest profit potential - "Be fearful when others are greedy and greedy when others are fearful" - Warren Buffett.

For example, if the market falls ~5% in 2 - 3 days, and large companies like META / FB or Amazon fall 7% - 8% during that time, then your highest probability trade would be to sell puts and bet that META / FB and AMZN will not continue to fall.

Add in the fact that volatility would substantially increase while the market falls, and therefore the premium received for selling those puts would increase, and itโ€™s no surprise that selling puts during periods of high volatility is one of our core principles at BestStockStrategy.com.

You can learn more about the Top 3 Stock Market Trading Strategies here

Become a Successful & Profitable Trader with our Trade Alerts Special Offer

Summary - Day Trading Scams and Avoiding Pump and Dump Schemes

Iโ€™ve never met a successful retail day trader or retail penny stock trader who didn't defraud their followers.

Ross Cameron and Warrior Trading were sued by the FTC and paid a $3 million fine. Raging Bull was sued by the FTC too.

Be careful of traders who trade low float penny stocks with an audience.

To be successful selling options, you donโ€™t have to be special. You can be average; and as long as you donโ€™t get greedy or trade too many contracts, you can consistently make money (you also need to hedge and aggressively close out your losing trades).

What To Do Instead Of Day Trading

Retail day traders of stocks and equities do not have the odds in their favor.

Day trading is like paying money to bet on the outcome of a coin flip.

Selling option premium is the absolute best way to consistently make money.

Why My Strategy Is The Best

I make it very easy. I donโ€™t overwhelm you with unnecessary information. You'll learn everything in 2 - 3 weeks.

Frequently Asked Questions (FAQs) - Day Trading Scams

Is day trading worth it?

No, virtually 100% of retail day traders of stocks lose money. This is scientific fact.

Is day trading legit?

It's legit for the day trading fake gurus who front-run their followers - their biggest problem is avoiding Government lawsuits.

Day trading ruined my life?

Yes, that is common since I've never met a profitable retail day trader of equities who is consistently profitable.

Who is the richest day trader?

Virtually all retail day traders lose money. 

Do investment banks day trade?

Investment banks make money as market makers, or transactional traders, they profit from the bid - ask spread differential and by making markets. These are riskless trades. 

Retail traders are not market makers and therefore assume substantial risk when day trading.

Can you really make money by day trading?

Can you make money by day trading? Yes.

Will you? No.

Just like, can you make money by playing the lottery? Yes. 

Will you? No.

Why do most day traders fail?

Day trading is at best, a 50 / 50 statistical probability (it's actually less when commissions and slippage are factored in).

When losing, you need to win MORE than you lose in order to get back to even.

As a result, from a statistical probability standpoint, day traders have a negative expected edge.

About the Author David Jaffee

I (David Jaffee) help people become consistently profitable traders while minimizing risk. Learn more about our live trade alerts and courses. I graduated from an Ivy League University and worked at some of Wall Street's most successful investment banks. Subscribe to my YouTube channel for valuable videos - BestStockStrategy YouTube Channelโ€‹. My personal website is DavidJaffee.com.

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Leave a Comment:

36 comments
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Loriann Gangler says July 13, 2019

I read through your blog post here. I was hoping you could help me with something. I was wondering, Do you know if insder trading is the same thing as a trading scheme? I want to get into trading but I’m worried I might get into trouble without realizing I’m doing anything wrong. Eagerly awaiting your reply.

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Ananthi Mathur says February 4, 2019

Hi, You have really explained well about intraday trading strategy its best to use it intraday as the newsflow means no fundamental shifts to the market and relative stability in the underlying assumptions. Smart traders may wish to use the 15 minute / 1 hour candles to create these strategies. Lesser may mean transactions costs will eat into profits and higher may mean too much interference with underlying markets.

Reply
    David Jaffee says February 4, 2019

    Thanks for the comment

    Reply
Marlon says January 21, 2019

I know very little about options trading vs trading stocks. Should I study up on the “basics” of trading options and then take your course or would that defeat the purpose of learning your strategy? What knowledge level of options trading do you think one would need to get started with learning your strategy? I want to get started but don’t want to go in blind if there is a minimum level of knowledge needed to grasp the information.

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    David Jaffee says January 21, 2019

    The course is meant for ALL experience levels. You can take it with zero prior experience and learn a profitable strategy so that you can trade successfully.

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    David Jaffee says January 21, 2019

    Sounds good.

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tanhqs says January 16, 2019

Best day trade stocks ?

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    David Jaffee says January 17, 2019

    I’m not sure, I do not day trade. I have a specific watch list.

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Forex Steam says January 16, 2019

Very informative, many thanks for keeping everyone up-to-date in relation to your investing advancement.

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    David Jaffee says January 17, 2019

    Thank you

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Gary Le says November 19, 2018

Hi again, I have a question, I just noticed you wrote that you made $755,000 in 2017. If you say you’re only making about 50% per year, does that mean started with a capital of $1,510,000 to make $755,000? Please advice. Thank you, Gary.

Reply
    David Jaffee says November 19, 2018

    In 2017, I made ~72%. On Jan 1, 2017, the account had about $1 million in it.

    Reply
Roy says August 20, 2018

Hi David,

In order to sell naked put options donโ€™t you have to have a large amount of funds in your trading account before a trading platform will approve you? I agree with your premise but I currently only have 4-5K ready for trading. Can I apply your method to grow this account or do I need to follow a different strategy till I am able to consistently keep maybe 50-100K in my trading account to be eligible to sell naked puts?

Reply
    David Jaffee says August 20, 2018

    You don’t have to have a large account.

    But it helps.

    I have students with $2,000 and some with $1,000,000+.

    With a $4,000-$5,000 account, I could teach you how to earn 30%-50% relatively easily.

    You’d make 1-2 trades a month.

    You’d trade only 2-3 stocks.

    It’d actually be relatively easy.

    The problem is, it requires A LOT of discipline because you’d get bored.

    What a lot of people do with is they try to hit home runs.

    They aren’t satisfied with ~40% returns so they try to turn $5,000 into $5 million and then they end up losing everything.

    You can turn $4,000 into $5,000 and then $5,000 into $7,000 while learning a skill so that once you have more money, you can easily grow and multiply that money ๐Ÿ™‚

    Reply
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    Thanks. This is more of a placeholder. I’ll tighten up the posts more in the future.

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