I wrote this article to share my experience of joining a paid trading group on Discord, so that you can use it as a reference or as part of your consideration for joining a paid trading group, an investment course, or something similar. This is by no means criticizing any guru or discouraging anyone from joining such groups and courses. The trades (and losses) that I made are 100% my own decisions and I take full responsibility for them.
I have been watching financial videos on YouTube for a couple of years now and in recent months, I found a financial YouTuber who is really good at reading the charts aka Technical Analysis (TA). He seemed to be able to predict the correct trends consistently for the past few months. He has this discord channel where he shares his daily market analysis and trades in real-time and it costs around USD40 per month.
My returns for the last 2 months were decent but it was draining for me to stare at the price movement every night (the US market starts at 9.30 p.m. / 10.30 p.m. at where I lived). I thought I could leverage his analysis and expertise to help me get reasonable returns every month. In short, I wish to stand on the shoulders of a giant and follow his trades so that I do not need to do so much work myself.
I finally took the plunge to sign up for the monthly membership when I saw that his win rate for the month of October 2022 was 10 out of 11.
The 2 biggest losses came from the inaccurate prediction of Apple’s price movement. I was holding 9 Apple PUT contracts due to an early assignment of my Apple BULL PUT Spread. He predicted that if the market was receptive to the FOMC Minutes released on 23 Nov (the eve of Thanksgiving), there would be a monstrous rally.
I sold off my PUT contracts to prevent a bigger loss as the market was rallying after Fed Minutes were released. The loss from the sale of my Apple PUT was around USD 3k (I shared this trade in another post). I also followed the guru’s trades and bought 40 Apple CALL contracts at an average price of $1.90. He bought 300 CALL contracts at an average price of $2.06.
Apple’s share price then started to fall on 25 Nov amid the Foxconn factory unrest and kept falling the following week. If I had kept my PUT contracts, I would have made a profit of USD 6k. The guru then exited his 300 Apple CALL trade (on 29 Nov 22) at a price of $0.86. I followed and incurred a loss of USD 4.1k on that trade.
This is a summary of trades that I made in the past 4 weeks after I joined the Discord membership.
As you can see, it was not all losses and there were some gains in the beginning. His predictions on Tesla’s gains and trades were mainly spot on. He also had other trades in other counters such as AMD and SPY (which I did not follow) and those were profitable as well. The Apple trades were the biggest losses I have seen from his trades thus far.
What I Like About The Group
I liked the idea of a trading community where people share ideas and updates on the latest economic news and data. Somehow, I think a paid group has less noise and distractions compared to a free one, where anyone can come in to spread FUD (Fear Uncertainty Doubt) and create disharmony.
Also, I think it is good to have someone who is skilled (in analyzing the market) and has a proven record to be the mentor of the group, so people can learn from him, such as how he analyses the market using Technical Analysis (TA). Or simply take the easy way out to just copy his trades.
There are some “gurus” who made a very good sales pitch but do not have a proven track record or are consistently losing money. So, before you sign up for any courses, be sure to check the track record of your guru/ mentor.
What To Take Note
Besides checking the track record of the guru, it is important to understand that it is difficult to copy all of his trades, especially for those living in different time zones. Even in the same time zone, it may be challenging to keep waiting for alerts to know when he is exiting a trade.
I remembered for a particular QQQ trade, he exited just hours after placing the trade. If I were to follow him after he announced, I would have made a loss while he still had a small gain. So, it is crucial that you take the guru’s trades as a reference and then decide if you are willing to take the risk of the trade going in the opposite direction. I think most people are only mentally prepared for the trade to go well.
Speaking of risk tolerance, I wish to remind you that all of us have different financial statuses and situations. A 100k loss may wipe up all of your savings but may just be a 1% loss for someone with a $10M portfolio. So, before you FOMO (Fear Of Missing Out) and try to copy your guru in opening up 300 CALL contracts, always think if you are able to accept if your capital drops by 20% or more. And what is the max loss that you can accept with what you are about to invest. That will help you in making the hard decision to exit the trade when things are falling apart.
Also, the guru makes money regardless of his trading record. The current Discord group that I have joined has more than 2,000 paid members and there are tiered memberships between USD 40 to USD 50. So, he is likely to be earning more than USD 80k every month, even without doing any trades at all. There is nothing wrong with that as he is doing honest work. However, with a huge cash flow coming from the course membership or his salary, he is able to put on bigger positions or riskier trades as compared to you who have a smaller account.
Lastly, it is also worth noting that no matter what happens, the guru is not responsible or accountable for your losses. If you are not willing to give a certain percentage of your profit to the guru, then you shouldn’t expect him to be responsible for your loss, just because you traded or invested based on his recommendation. Understanding this can help reduce your agony when things do not go according to plan.
There are many investment/ financial gurus out there who will tell you that it is possible to make an insane amount of money regardless of the market conditions. They can claim that they have a proven system to help you achieve maximum profits with minimum work. That is what most people hope to do: achieve more with less. However, do bear in mind that even the best investors and traders make mistakes and cannot get it right all the time. Furthermore, if the returns that they make with their proven system is so insane, then I guess they would be better off planning how to spend the money rather than teaching others how to achieve that kind of success. There is a minority group that is generous enough to share.
From the experience that I have shared, you may realize that the biggest loss is not in the membership or subscription fees but in putting your money in future investments/ trades that you think will make you money. So, be very cautious when you joined the courses/ community and tried to follow the advice there. When in doubt, it is alright to miss out than to stumble into a sticky situation where you can’t get out and eventually lose more than you can take. The market is extremely volatile, fear and greed interchange frequently in short spans. If you look back at the past few months, you would have realized that those who FOMO when high gain days often regretted when the market crashed a few days/ weeks later. Not many are able to consistently profit in this year. And those who do, often keep it to themselves.
Finally, whoever you trust your money with, whichever advice you follow, always be prepared for the best and worst outcomes. If you win, congrats! If you lose, know that it is your decision. If you are unable to take losses, it is better that you do not invest at all because all investments have risks. You may want to consider parking your money in fixed deposits or saving bonds. Inflation may eat your money but it is better than losing them all. On the other hand, when the market recovers and creates an all-time high, don’t envy the people who invested during the bear market and made big profits. It is again your decision now to play safe.
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