'Guarantee' against losses?

Beginner Questions
1

Yup: I just KNOW that I have your attention!!!

I’m just looking for opinions on this:

What would you say if I told you that there was a broker that GUARANTEED IN WRITING (and had the ‘financial muscle’ to make such a guarantee) that if you opened a new account and followed their (free) signals for a three month period and traded those signals EXACTLY as they were given to you if the NETT RESULT of those trades was a loss at the end of the three month period an amount equal to the NETT LOSS would be refunded to you and either put into your trading account or transferred directly to you by bank or wire transfer or credit card?

What would you say to that?

2

Hold on and I’ll write them a check as soon as I finish writing the ones for guaranteed hair loss treatment…that TV preacher…my weight loss pills…and my closing on that 1% interest rate mortgage…??

(jus funn’in with yeah D)

3

You forgot the ‘waist shaper’, the ‘miracle foot repair cream’, and the ‘nose hair trimmer’!!!

Good one though.

But I’m real serious here would you believe.

Let’s say that the broker actually guarantees that for a three month period if you are showing a NETT LOSS on the trades that they have given you and you HAVE IN FACT TRADED THOSE TRADES EXACTLY AS THEY WERE GIVEN TO YOU by their signal service then they will refund the amount of the NETT LOSS to you at the end of the three month period. I think it’s great for someone who wants to ‘get in’ and while they are being ‘mentored’ they are trading ‘for real’ and IF by some remote chance or other they end up in a NETT LOSS situtation (let’s face it the broker or signal provider is going to ENSURE that there is no NETT LOSS at the end of the three month period) then they’ve lost nothing and have at least TRIED to trade LIVE and if they decide after that to ‘go it alone’ well then that’s their problem but it’s certainly better than just throwing $1K into an account and ‘hoping’ that ‘trading is for you’ only to find out afterwards that ‘it ain’t what you thought it was’!!!

4

Well honestly I say I would believe it, it would all depend on whether they are having you trade .01 cent pips and have a long trend they are following so you dont have many trades over that 3 month period.

And the kicker is how much does their subscription generate in gross dollars. figure of say xx,xxx amount and they have a few people lossing in three months like under xx bucks as long as it is still in reason % wise of their gross they can chalk it up to advertising fee in trying to gain new subscribers.

The people that lose wont go with them afterwards or might cause they are so honest, and the people that won might go with them cause if I do what they just showed me but up my pip amount i could make a killing

just a thought

5

I would say “scam.” Is this “broker” in the USA? I’m sure the NFA/CFTC would close them out in a matter of a few minutes since this clearly violates advertising regulations.

Rule #1… if you see “guarantee” run away.

You sound reasonable Dale, but how could you actually, even remotely seriously, believe something like this. :eek:

If I had a “guranteed” strategy… I wouldn’t be wasting my time trying to sell it to others… I would make the google guys look poor and then hire buffet as my assistant.

6

Oh man I can just see THIS thread ‘burning out of control’!!!

I love it.

Now first of all: nobody said that I ‘believe this’ nor did I say that this broker actually exists in the first place. I’m just saying ‘what if’??? And WHY ‘pray tell’ would it necessarily have to be a scam??? What IF it was really genuinely being done to help new traders NOT lose money and get off ‘on the right footing’??? What IF a signal provider or broker offered free ‘mentoring’ and forex education AND offered this ‘guarantee’ for the first three months??? Why could that not be ‘legitimate’??? Do you not think that it would be ‘revolutionary’??? And why would it be illegal??? It’s not false advertising. The broker (or whomever) is saying: ‘open an account with us, we will train and mentor you, we will give you the tools you need, and help you gain experience, and you can make a little money on the way and if we cannot make a trader out of you or you find that trading is not your thing then no harm done’. What’s wrong with that folks???

7

Sorry, I was being ‘summoned’ to go and have dinner so I did not finish what I was saying.

Put it this way: what is the difference between the scenario I described and the ‘money back guarantee’ on the aforementioned ‘home shopping’ products mentioned in jest??? The guarantee on the weight loss products, for example, will always say ‘when used in conjunction with a calorie controlled diet’ (I don’t know personally, I’ve just heard about it) so, what’s different, ‘your losses will be covered if you lose money trading our signals’??? Where’s the problem???

8

Oh (I’m on a roll here) this something else that I feel ‘strongly’ about:

I’ve read on this forum (and others) where people say ‘why would I being doing this or that if I had a guaranteed system’ or ‘why would anybody charge for forex signals’ or ‘why do people write books about trading systems because if their systems are so good then why bother writing a book about them because they certainly don’t need the money’. Stuff like that. Now I have wondered a great deal about this lately. Let’s assume for one minute that I was ‘the best trader in the world’ or discovered some or the other ‘secret magic bullet’ that ‘guaranteed’ profitability EVERY SINGLE TIME I traded. Would I still ‘hang around here on babypips’??? Hell yes. Would I share my knowledge and experience on babypips??? Again a yes. Would I be any different to anyone on babypips if I was making a couple of hundred K per day out of my trading??? Definitely not. To use Wilder (of course) as an example: WHY write a book giving, in detail, systems that you succesfully use on a day to day basis??? Because you need the money??? I think not. Why ‘charge’ a fee for software or the like that you have spent many hours developing but because you already have ‘loads of money’ you should give it away for free??? Why??? Because it has a certain ‘instrinsic value’ that’s why and by NOT charging for it you’re effectively ‘degrading’ it. Also: it’s a funny thing: but if people don’t pay for something they automatically just assume that it’s ‘rubbish’.

Right, now I’ve got that off my chest. I feel better!!!

9

Hey my waist shaper worked quite well thank you…although the fact that the shape I got was completely the opposite of the shape that I wanted is a minor technicality and totally besides the point�

The thing I always ask myself is if they totally don�t deliver what is my recourse??�Do I have to spend 20K suing them to get back my ten grand that I lost???

#2. Is this a too good to be true so probably isn�t true scam, that results in no one to sue cause they are gone gone gone??? (or just to moved to somewhere in Kansas which is virtually the same)

Just my 2 sense�

J.

10

Yes, I bought a ‘C D Cleaner’ that was supposed to remove scratches and everything else but it was TOTAL rubbish (I get better results using dishwashing liquid and a soft towel). Of course the ‘guarantee’ (which you only read afterward of course) said that they would refund you the money IF you returned the thing UNOPENED!!! Brilliant!!! (Not to mention of course that the guarantee WAS INSIDE THE SEALED BOX)!!! Again: brilliant!!!

HOWEVER: I (we) digress!!!

Judging by the responses so far it’s obvious that I just have not been ‘fu*ked over’ enough!!! (Only kidding).

Anway, some more ‘rare insights’ into this ‘idea’ would be appreciated.

11

Well of course it’s too good to be true, hahaha. “Guarantee” isn’t a word used in the trading world. Here’s a good business plan… Let’s open a forex company and guarantee results…if we lose, we pay every client back…hahaha.

Like I said…if you have such a strategy, why even bother dealing with clients. Go trade your account on your yacht…enjoy your life.

12

Ah, BUT, let’s say that you DO have a strategy that’s right more often than it’s wrong BUT you don’t have the capital to turn a ‘gazillion dollar profit’ a day. Then what?

Of course then let us NOT discount the ‘greed’ factor i.e. if you’re already making a ‘gazillion dollar profit’ a day using a some or the other strategy then does that mean that you should be satisfied and not try to make more??? I mean (and to be honest this HAS always made me wonder): why does Warren Buffett continue to do what he does for a living??? I mean the obvious question to ask is ‘SURELY once you are worth a billion then what’s the point of trying to make another billion, or another billion after that’??? See what I mean.

And why are there SO many books on the market about trading??? It’d be a VERY long ‘stretch’ for me to believe that every single one of those authors could not ‘cut it’ as a trader so they decided to write a book on trading to get themselves out of the ‘sh*t’!!!

13

I see your point Dale. I too have a strategy that has performed well… BUT, you never know when this strategy might go south. You cannot “guarantee” people results.

If this is concerning your own strategy, then my suggestion is this. Keep your track record (your own account) and then you can show these to people with proper disclosures on them. But by simply advertising as a “guaranteed” strategy is simply misleading. There is no such thing.

Warren Buffet does not promote his stock as a “guaranteed” way to make money. He lets his track record do the talking. I’m sure Buffett continues to do what he does because he’s passionate about it. At this point, I don’t think he cares about money.

Dale, I see your point, but I hope you see mine as well. It’s a fine line you have to walk on.

14

Ok, how about this… what if the broker was using this “tactic” to create a pool of traders that could be big enough to attempt to move the price in whatever direction the broker wants… then capatalize on it…I think that’s the direction your other thread is going “Who’s buying & selling at the top and the bottom”?

Just a thought :slight_smile:

15

Alright, alright, alright, let me put you all out of your ‘misery’.

Before I start let me say this:

THIS IS ALL HYPOTHETICAL AND NAMES AND PLACES HAVE BEEN CHANGED TO PROTECT THE INNOCENT INVOLVED!!!

OK, first, enter our trader, let’s call him ‘Borat’ shall we.

Now Borat is an Introducing Broker (‘IB’) for a particular broker, let’s call the broker ‘Babybroker’.

Borat has managed to find a ‘financial backer’.

Now let’s say this:

Borat has been working for months on setting up certain trading systems on the Babybroker platform and is sure that the systems are all correctly set up and working and are, for the most part, profitable.

In addition to this Borat absolutely loves this business and enjoys ‘mentoring’ and helping others new to this business. Borat, who is now a consistently profitable trader, but nevertheless still a businessman, can see a way to generate yet more income, whilst at the same time helping others to learn about this business and both he and the new trader can make a little bit of money along the way.

With me so far?

So Borat, because he now has a ‘financial backer’ who is ‘privy’ to his new found trading success, is able to offer new traders a guarantee against their losses subject to the following terms and conditiions:

The new trader must open an account at Babybrokers OBVIOUSLY stating that Borat is the IB.
The minimum opening deposit must be no less than $700 or 700 EUR or 700 GBP.
The new trader must purchase a certain book that contains certain trading systems from wherever they are able to obtain it (Borat has already arranged a discounted price with the original supplier out of the goodness of his heart and does not receive any commission from sales).

Once the new trader has taken care of the above Borat will supply the following:

Mentorship on the systems detailed in the book at no charge for a period of three months.
Trade signals when valid for a period of three months at no charge via email.
The software and indicators that have been developed based on the systems in the book at no charge for the Babybroker platform.
First line support on the Babybroker platform.
Additional documentation and related software at no charge.

The new trader must, in return, undertake to do the following:

Trade ONLY the signals given EXACTLY as given for a period of three months and such signals will detail the lot size, order to be placed, and instructions to take profit would be given from time to time.

Now why does Borat make this offer:

Well, it’s obvious that Borat will be collecting commission from Babybrokers, and that is obviously the motivation behind Borats offer.

However, Borat will also be trading exactly the same signals, and, furthermore, Borat would obviously only give out those signals that have the absolute highest probablitiy of success. So, it’s a ‘win win’ situation i.e. Borat makes commission from Babybrokers and profit on his trades, the new traders do not have to ‘go it alone’ in this sometimes ‘treacherous’ business, and the new traders also, obviously, make the same profits as Borat is making on his trades. If, on the other hand, Borat is a total idiot and the new traders end up losing money, then Borat’s ‘financial backer’ is prepared to cover any losses made by the new traders.

The intended result for the new traders: at the end of the three month period you now have a few new traders who not only have made some money but have an idea what it’s really like to trade live, and, if they are able to stick with the systems taught to them, will be able to make a living from trading without having to take the inevitable initial ‘wipeout’ which Borat and most of his ‘acquaintances’ have experienced at some time or another during their first attemtps at trading. It’s sort of like the ‘teach a man to fish’ thing.

The intended result for Borat: more capital to trade with!!!

I think Borat sounds like a hell of nice chap don’t you???

16

Dear Borat,

One “minor” detail. No firm that I know of will allow you to advertise such a “guarantee.” Against regulation. Sorry chap, it ain’t happening.

Everything else seems ok to me. If your financial backing is big enough, I wouldn’t even deal with the headaches a $700 account will give you. Especially if you have 50 small accounts. Not worth your time, $, or headaches.

17

Ok well I’ve just ‘bounced’ your comments off of Borat (sorry he’s not here right now to type this message himself) but he says to ask you if there is anywhere he can go and look on the Internet at the details of such regulations (oh, Borat forgot to mention that even if it is illegal to make such a ‘guarantee’ in the USA it may NOT be illegal to make such a ‘guarantee’ in Belize or Bulgaria).

Having said that Borat already does have two clients who started with a total of $400 between them and has already made over $20 in a week in commission (not to mention the fact that each of these clients are up about 15% in three days thank to his mentoring and the $20 commission is on very few trades he tells me). So Borat is thinking that if he had let’s say 100 clients (or more which Borat thinks is HIGHLY possible for the simple reason that this is a revolutionary idea that he has) then $20 could easily be $200 or even $2000 per week forever and ever!!!

I’ll be taking messages for Borat throughout the night so please come back to him on this one.

Oh, and he said to say a big ‘thank you’ for your input by the way!!!

18

Contact the firm you will be setting up this relationship through. As a MM/IB there are compliance issues you need to follow. They have a compliance department who will guide you in the right direction. In regards to Bulgaria or Belize…umm… good luck with that.

The $20 commission is probably based on 20 trades. No FX firm I know will pay you more.

Do you have a risk disclosure document?

19

Hey, you need to post one more post to get your count up to 50 so that I can PM you!!!

By the way: it also just occurred to me that it’s not the broker who would be offering the guarantee it would Borat’s company (which, would you believe, is right here in South Africa, and even if there were a law against this type of thing here in South Africa, one bill that is CONSTANTLY paid up is Borat’s lawyers)!!!

20

I made it to 50! Thanks to Dale’s relentless amount of questions… haha.

Doesn’t matter Dale… You as a MM/IB cannot make those guarantees! :eek: You would be an Introducing Broker to the firm. They simply won’t allow it.

Again, as I mentioned before. Let your REAL track record do the talking. Keep everything on the up and up and you will do well. If you have a strategy you believe in there is no reason to offer “guarantees.”