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Trading Psychology

3 Scam Warnings for Smart Traders

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Written by Timothy Sykes
Updated 11/18/2021 10 min read

3 Scam Warnings for Smart Traders: Key Takeaways

  • Learn to avoid 3 common scams including one of the worst — the influencer crypto scam.
  • The SEC rejected a new bitcoin ETF. Here’s why it matters to you…
  • Is crypto legit? My take on bitcoin, crypto, and the blockchain.

Staying safe in the market starts with your education — get into my top-notch program NOW

Scammers Live Off Your Money

The only way scammers keep going is that people fall for their BS. It’s my duty to warn as many people as possible about their tactics.

Sadly, it’s like playing whack-a-mole — take one down and three more pop up. A lot of people don’t want to believe it, but scammers want to take your hard-earned money.

Here are three types of scams to watch out for. Pay close attention to scam #3 as it’s a BIG problem right now…

Scam Warning #1: None of My Top Students or I Trade for Anyone Else

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Heed this warning well. One of the biggest trading scams out there comes from people saying they’ll trade for you.

They use my name or the names of top students. When confronted with their BS, the scammers say, “Oh, this is a backup account. I reach out to my followers here. I can’t risk having too many messages on my main account.”

Here’s an example of a scammer impersonating Mark Croock

twitter spam
Twitter scammer impersonating top trader Mark Croock (Source: Twitter.com)

Don’t fall for it. Stay safe from the con artists by arming yourself with knowledge. I don’t manage other people’s money or trade for them. None of my top students trade for anyone else. We’re traders who teach strategies. Your goal should be to become a self-sufficient trader.

Scam Warning #2: Beware of Imposters With Fake Usernames

Scammers don’t just use the names of legit traders and teachers. They use completely fake screen names. For example, a recently arrested promoter used the name of a famous movie villain.

There are also bot accounts created by promoters. They’re usually names with a long string of numbers at the end.

Scam Warning #3: Beware of Crypto Scams

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Many of today’s scams revolve around crypto. There’s an entire crypto scam industry. Scams include influencer crypto scams, crypto mining scams, and crypto giveaway scams.

Some scammers say they’ll trade crypto for you. Or they offer to manage your stock account but you have to give them crypto to fund it. Or they want you to pay crypto upfront for their services.

I’ve been trading for 20+ years. I have never seen an industry with this many scams. I’m not calling out specific individuals. But understand that bitcoin is the currency that unites the world’s criminals.

Remember the Silk Road marketplace? It had illegal arms deals, drugs, human trafficking, and even staged assassinations. Just because it was taken down doesn’t mean criminals stopped using crypto. They just moved to encrypted messaging apps.

There’s SO much nasty behavior and SO many scams that it’s easy to wonder…

Is Crypto Legit?

I’m not bashing bitcoin or crypto. But it’s my duty to educate as many people as possible. I believe you should learn about speculative assets and investments. And I have several top students who trade crypto — like Matt Monaco and Kyle Williams.

My all-time most profitable student is a trader who applied my patterns to crypto. I hope crypto and the blockchain live up to their potential. But right now it’s…

One of the Biggest Scams in Trading Today

I know people don’t want to hear this. I’m not saying don’t trade crypto. Learn about it. Trade it if you must. But don’t fall for the BS…

Expect the worst out of everybody in finance — including in crypto. Again, crypto and blockchain might have solid functions in the future. And there’s no denying how far it’s come…

Crypto Is the Best Performing Asset of the Past Decade

Numbers don’t lie. Bitcoin was the best-performing asset of the past decade. It beat the Nasdaq 100 by a factor of 10.

But bitcoin and crypto have a ton of promoters. Don’t just listen to them. They’re like penny stock promoters. They say “Hold, everything’s fine. Have no doubts.” 

Not everything is fine. It’s good to have doubts and sell into strength. I want you to be cynical. The recent ruling by the SEC is a clear sign of things to come…

SEC Rejects Bitcoin ETF

There are two bitcoin ETFs already. Both the ProShares Bitcoin Strategy ETF (NYSE: BITO) and the Valkyrie Bitcoin Strategy ETF (NASDAQ: BTF) are futures-based.

On November 2, the SEC officially noticed the NYSE’s application to list Grayscale Bitcoin Trust (OTCQX: GBTC) as an ETF.

But last Friday the SEC rejected an application by the CBOE to list a proposed VanEck Bitcoin ETF. Here’s why…

SEC Cites Potential for Fraud and Manipulation

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The proposed ETF would track bitcoin directly. But the SEC says there’s a lack of regulation and too much potential for fraud and manipulation. Why? While futures-based ETFs are regulated, crypto and crypto exchanges are not.

It’s not even clear which regulatory agencies should have control over crypto.

What Newbies Don’t Know About Crypto Scams Can Hurt Them

A lot of people are really excited about crypto. Again, I’m not bashing it. But what you don’t know in this industry can hurt you.

I’ve been warning traders about Twitter pumps and the dark side of penny stocks for years.

My battle with the Wolf of Weed Street happened in 2014. It’s been over a decade since I received a cease and desist letter from Shaq’s lawyer after calling out the blatant NXTH promotion.

The crazy thing is, compared to penny stocks crypto is a free-for-all…

The Difference Between Penny Stocks and Crypto

The Bottom Line on E-Trade Day Trading
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Penny stocks fall clearly under the SEC’s regulatory umbrella. Yes, there are unethical promoters and penny stock manipulation. But at least there’s no question which regulator oversees penny stocks.

Meanwhile, the SEC classifies cryptocurrencies as securities. But the Commodities Futures Trading Commission thinks of them as commodities. Crypto exchanges are viewed more like banks and regulated by the Bank Secrecy Act.

That’s why SEC Chairman Gary Gensler called crypto the ‘Wild West.’ He wants to see better protection for investors…

More Regulation But First More Crypto Scams

I’m sure over time there will be more regulation. If you’re bullish on crypto that’s a good thing. Before that happens, we’re likely to see more crypto scams unraveling. It wouldn’t surprise me to see some of these altcoins drop 30%, 50%, even 70% in a few days.

Even as I write, Bitcoin looks like $65,000 might be a double top. It dropped below $60,000 again. It’s trading around $58,000.

People say, “Oh, the governments are just trying to stay in control.” If you want to make it about freedom vs. government, fine. Be my guest.

My concern is that financially naive people think crypto is safe. It’s not. 

If you love bitcoin and crypto you might be up a lot. I’m happy for you. Just remember it’s good to…

Take Profits Off the Table

Take some off the table — just in case. Sell into strength. I say that with penny stocks, bitcoin, or anything that’s up a lot. It’s smart to take 5%–20% of your holdings and lock it in.

This whole thing with the SEC rejecting the ETF should help you understand. This isn’t just me saying, “Be overly safe and conservative.” This is a warning. Ignore it at your own risk.

But it’s also an opportunity to learn more and I have great news…

New Guide Coming Soon: How to Spot Scams and Protect Against Big Losses

Tim Sykes pointing at you.
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I don’t know the exact title yet, but I have a brand-new three-hour guide coming soon. It’s already filmed and almost ready. My goal is to educate you about how to spot scams.

Will you watch it? Let’s see who wants to know the truth about scams — including crypto scams — bad enough.

Will you watch the new guide and learn to stay safe in an industry full of scammers? Comment below, I love to hear from all my readers!

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Author card Timothy Sykes picture

Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

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* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (888) 878-3621 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”