Regulators Banned A $40 Million Dollar Fund From Using This – But You May Be Able To!
A friend just dropped a bomb shell on me and I would love to get your feedback.
It’s about a strategy that one of the largest brokerage firms in the world invested three years and millions of dollars to develop.
Then they used it to managed over 40 million dollars (until Regulators stepped in) and told them it gave them an unfair advantage over their clients and it was a conflict of interest.
They were banned from using it, which they weren’t happy about, because they were making a KILLING with it…
The strategy has been sitting on a shelf ever since (with the exception of the developer using it for his own money).
This banned strategy is based on the HUGE ugly FOREX truth hiding in plain sight – which is that retail traders, over time, consistently lose. Not everyone, of course. But the VAST MAJORITY of traders with smaller accounts (under 1 million) lose.
The stats on this are shocking.
According to a study conducted by AMF (French regulator) 89.3% of all FOREX traders lose 100% of their money over a 4 year period!
Wow – that’s big! So common sense tells us if we can do the opposite of what the retail traders are doing as a group, then we will make money as often as they lose money. That is the premise of this entire strategy.
But the only way this works is if you have access to the data on what the millions of retail traders are actually doing at any given moment. This data is being sold to a number of hedge funds for approximately $1 Million dollars a year!
The good news is that I am getting access to this data for much less, and by chance I was introduced to the person who controlled the strategy used on this 40 million dollar fund. Since the fund was shut down by the NFA, he is leveraging the data (which is aggregated from numerous brokers) and is killing it on his own trading account.
So basically this strategy looks at retail trader “sentiment” and does the exact opposite, and makes BIG money on autopilot.
Since the fund was shut down, my friend has been running this strategy on his own account for five years. His account is up over 300% in that time with a max drawdown of 25%.
Furthermore, his account was audited by a 3rd party firm, and they validated these stellar results – so it’s official long-term results using his own money.
And since the audit, he’s added another 40%! Check out the stats below going back to October 2010!
So my question for you is. . .
What questions or concerns come to mind for you? Objections? Ideas? Drawbacks? Risks?
What popped into your head when you read about the strategy above?
I am actively asking for your feedback, so please leave your thoughts below, and I will reply and keep you updated over the next few weeks.
I am putting together a follow up article complete with the stats from his live account as well. I hope to have it polished up and published for your reading pleasure in a few days.
If you want to be kept up to speed with any new developments you can register below for ongoing updates.
Happy trading my friends…
– Dustin
Register below for updates!
I have looked at market sentiment heat maps before but they are more confusing than helpful. I am hoping that this is more concise in its application principles for the regular retail trader to understand and act accordingly with to prosper.
This is actually 100% automated. The developers wanted a totally hands of unemotionally driven strategy that worked directly from trader sentiment.
I’m no expert on trading, but if he achieved a 300% ROI over a 5 year period, that’s a great ROI IF he achieved it WITHOUT compounding. But if he achieved it WITH compounding, then I’m NOT impressed!
The strategy achieved 340%. The 300% was just what is in the audited report which was done several months ago. In any case this may not be for you. If 70% a year is unacceptable for you using no more than a max of 8.1 leverage on any one trade I think you will have a hard time finding satisfaction in the markets. Sure there are systems that have done better but the consistency and low risk that this has been accomplishing is pretty impressive. I appreciate your feedback though. This is the exact type of constructive criticism/expectations I am trying to gather from traders.
Very nice
Hi Dustin,
Thanks for including me in your blog and i will be looking to see your commentson this opportunity when you are ready. Great stuff. BeeKee
If a big institution has been forced to disband the use of this system, how is it not banned for other users.
I believe the majority of retail traders feel that a lot of the brokers trade against the retail trader because they know the stats as you indicated. I was always informed that 90% loose money, 5% BE, 3 % make a little and only 2% make a good living. So it does make sense to trade this way.
An explanation of how the system (you are obviously going to offer at some time in the near future) physically works, not the background detail but the operational detail, would be helpful for potential clients to reveiw.
Maybe offer it to Beta Testers like myself to operate on a Demo Platform for a short period of time, so as to receive independent feedback from ordinary folks.
The reason a broker cant use it but individuals can is because a broker would have a conflict of interest in using it since the system trades against the very clients they are providing broker services for. As an individual you do not have this conflict of interest.
Why would a broker tell his traders his inside info,so they can do, what he was doing to them???It was banned in the US.There are still many non-US brokers who still can do this,so why would broker give away his secret weapon?This is similar to selling inside info of any bussiness (which is illegal, atleast in the US) before it goes public.Recently SNB had an inside info of the ECB to start QE one week before ,so SNB had to give up on holding 1.2000 level,otherwise SNB would have to buy all those new printed billions of euros to keep 1.2 level !
Selling inside info is always lucrative to some unloyal employees,some companies move calling centres to 3-rd world countries,like phone operators,and there is evidence of some of those employees selling lists of 1000’s of customers credit card details for $50 per list to fraudsters…
anyway,just my opinion…
The firm was a US firm and had built up the 40 million dollar fund in the US. US people can not open accounts outside of the US and they were forced to cease and desist so they would have been starting from scratch. Since they were not in the business of managing funds it ended their. I will get more specific info on this topic though. Thanks for the questions, this is the type of skeptical/critical thinking I am looking for. I want to make sure we have all our bases covered.
I know the $ decline is imminent – I’m looking for the best opportunity in the CD/$ – When “The tide” turns it will continue way past median (as it always does) ! Gary
Like to see in action thanks
bonjour Dustin
pas besoin de chercher base de données
je suis dans les 98% de perdant
il suffit donc que je fasse l’inverse de ce que je fait
aujourd’hui
je vais faire ea qui reproduit mes positions a l’inverse
pour voir mais j’ai des doutes!!
Hello Reeve, just doing the opposite will not work on its own. You have to see the overall sentiment then their are a number of filters that tell you when to get out and specific ratio’s that work best for entry ie ration of longs to short etc.
Dustin
Can you explain how the NFA have come to know about them using this?
I find it difficult to understand how any body for that matter have so much insight into anyone’s trading account and activities to determine that the method they are using are against the rules.
Any robot (EA) can be written to execute trades on an account almost in invisible style.
So how does the regulators know exactly about this and if it does exists why can it not be operated below the radar?
Why will it be banned for hedge funds and not for retail traders?
Gerhard
As I said this is one of the largest FX firms in the United States. All NFA registered firms are required to have disclosure documents which describe their trading methods to their clients. These documents must submitted to and approved approved by the NFA. This was several years back during a transitional phase when the NFA was just beginning to heavily regulate FX. Many managed accounts that once were, suddenly were no more. It was a very common theme however not so much for larger funds. Most of the larger funds simply moved off shore and rebuilt however this particular FX broker was very large. In fact one of the largest so the revenue created from their fund was secondary to them being a brokerage so they simply closed the managed down. As far as “why can a retail trader use it and a FCM cant” its because you are not registered with the NFA. When a firm registers with the NFA they are giving the NFA jurisdiction over their business and must follow the rules and regulations put in place by the NFA. As a retail trader you can trade any way you like.
Dustin, can you explain the difference between this system and Tom’s EA. Tom’s EA was automated also, it went belly up mid last year. By following your rules, my account was wiped. I’m sure there are many of your subscribers in the same situation. I would like my 39k back that Tom’s EA mismanaged. When trying to access Tom’s EA website, it is in lockdown. So why should I take your word on this automated system given my past experience with your product?
Hello Duane, I am sorry for the issue’s you experienced with Toms EA. Depending on what settings were used different people experienced different things. I personally had one account that made it through unscathed and another account I closed at the recommended 40% draw down. Not sure that I would say it went belly up. I have since made that back plus I was so far ahead already it didn’t really matter. Toms EA was a strategy based on martingale which can be very powerful but when the market runs it can be a real problem as well. Particularly for those that are not willing to close it down manually with a loss. Toms EA had made me around 100% a year for several years so I was way in the positive even with the loss I took.
Trading is all about the big picture and managing risk. That being said, this is nothing like Toms EA. But regardless of that. Trading is not about anyone’s word so you should never take anyone’s word for it. Its about the risk and analyzing that risk and deciding if its worth it to you. Its also important to choose a point that you intend to pull the plug. For me that is around 40% on larger accounts. I would also like the $69k I lost when I took a hit but losing is part of trading and after 3 years without a losing month I am ok with that small loss when compared to the gains I had made overall with Toms EA. (side advice – when you are making good money. Pay yourself so if things go bad you have a good chance of not taking a total loss.)
In any case, on to your questions regarding if this new strategy is similar to Toms EA. As you know Toms EA was a martingale strategy. This new strategy trades against the retail trader sentiment. So when retail traders are long it is going short and visa/versa. Of course there is more to it then that. There are specific ratios it looks for as well as a number of filters for entries and exits. Also, keep in mind that when the market is really trending down on the EURUSD for example. You probably think most people are selling. The truth is most retail traders are looking for the bottom rather than trading with it. So even in these conditions this strategy does really well. One of the most important things I have learned over the years is the retail trader almost always loses.
Another big difference is when we launched Toms EA we had not had any extended single direction moves like we have been seeing lately. We had a significant amount of history but in hindsight I would say not enough variety in market conditions. This new strategy has been traded since 2010 and it has performed in every market type we have seen including the recent EURCHF floor removal which ruined a lot of traders. So in short, no its nothing like Toms EA. This is a strategy designed for and traded on millions of dollars by developers working for one of the largest FX brokers in the world. I hope I have sufficiently answered your question and I hope that you get back in the saddle. Losses can sting but its like I tell my kids. When we get knocked down all we can do is get back up and move forward.
Dustin
My name for your new system would be
BrokerBreaker.
I would truly love to see a system that would give
us poor peons a fair shake with the brokers. They have run my stops ENOUGH. Why the automated system. Is it too complicated for the
average peon ?? Waiting expectantly for more
info. We surely need a system like this.
Thanks
Hello Elton, I love the name. As far as the automation goes its because it was developed using B-book order flow from brokers. So all this aggregate B-book order flow is analyse with a number of different filters. Its way to complex for an individual to monitor. To be honest I dont know 100% what the parameters are as it is proprietary. I have watched it for a while though and its interesting to watch. It does require some patience though because it trades against retail traders. So just like most retail traders it just limps along for a while not really making a lot or losing a lot. Then all the sudden it will make 20% in a month. Its just he opposite of the typical trader.
Assuming this is not a scam, the only way a strategy like this is going to work is if the number of people using is limited. If you have lots of retail traders (like us) trying to do the opposite of other retail traders, it’s going to stop working.
Also, how much money are we talking here for access to this strategy? On what platform?
The price is yet to be determined. It will work on MT4. Regarding your comment on having to many people accessing it. This was designed to be scalable and it was traded on over 40 million dollars and had no adverse affects. That being said we would have to have a significant amount of people trading it to impact the strategy.
Hi,
Are these trades being recorded on myfxbook for example? How has the performance been verified?
Yes they are, in fact they have paid nearly $10k to have a CPA come in and do an audit on them.
hi,
What is the cost for this?
You can find more information on Profit Stream here: http://www.forextradersdaily.com/wealthbuilder
https://www.forextradersdaily.com/wealthbuilder
Hi Ross, this link you provide is not able to make the payment for both option. Mind check on it and get back?
Garry,
Please try this link: http://forextradersdaily.com/profitstream/wealth-builder/ And if you have further questions you can contact support by email at [email protected]
Thanks,
Ross