|
PureBytes Links
Trading Reference Links
|
Yes, you are damn right to be suspicious.
The scheme is a reminder of older day ads, such as:
"Boy or girl? Fill in the attached form and we will let you know. You cannot
lose: if we are wrong you get your money back".
In all appearance, the scheme here is not so crude, but it is none the less
merciless, and a powerful, risk-free money making machine for it's DayForce
promoter.
1. The probability that a volatile stock - with a close to close sigma or
standard deviaiton in the order of 5% -does NOT go 0.5% above open at all is
very small (perhaps 15% - I had the figures once, I cannot remember). The odds
of their keeping their $100 fee - charged for each and every trade - is
therefore 85%, far better than the old fashioned boy-or-girl scheme above.
2. Although 85% of the trades will make it at one time or another 0.5% above
open, many of those highly volatile stocks will first spend a significant
amount of time in negative territory before doing so - perhaps trading
typically 3 to 10% below open before making their comeback.
We are talking of a $100'000 trade ($500 for 0.5%). If you feel that you can
stomach a 5% or $5'000 morning drawdown or more, in order to cash in on $500
later on, well, be their guest. They are getting paid to watch you take all the
risks.
3. If the stock does not make it back - well, you are down $5'000. Your choice
is then to attempt to recoup (facing perhaps another ten $100'000 trades).
4. It is true however that it is possible to improve the odds with a minimal
amount of technical analysis. And they will be able to truthfully claim that
they have very satisfied customers. Some of those will have entered a
succession of very successful trades, and swear that the system is unbeatable.
Bur for each of those customers that will have made it rich - say $50'000 over
just a few days, 10 others will each have eventually lost $5'000 and walked
away.
5. In short, they are offering nothing more than a high priced roulette or
casino service. They will be making money as long as they can draw in new
clients - suckers is more appropriate a word, I think.
If they have a statement that gambling may be dangerous to your health, I
missed it.
Are such schemes legal? If not, what's the SEC doing?
A.
Ullrich Fischer wrote:
> Has anyone tried these guys? It sounds too good to be true, so it probably
> is. I heard about it from a spam email and sure enough, there is a site
> there, but unless I hear from someone for whom this has paid off, I'm a tad
> suspicious. -uf
|