Twitter Traders, YouTube Traders & Real Traders
Social media is full of trading gurus. Six questions to ask before paying for a tip, a course or a strategy, and why proof of work matters.
The number of social media influencers has shot up, accelerated in part by the COVID-induced lockdown. It is not hard to notice the new kind of gurus who sell gyan. They give advice on Telegram, WhatsApp, Twitter, YouTube and elsewhere, which is otherwise an online dissemination of strategies to profit from the market. Another approach is to offer free educational strategy content and then lure the subscriber base into paid courses, products and services. Those who have been in the market a while will know there is nothing new in these free strategies. It is all out there already: old wine in a new bottle.
There is no debating that social media, and the internet in general, has brought far more awareness about the stock market to society. Some of the people online are genuine too, and they flash their P&L as proof. But before you put your hard-earned money into a tip or educational content, it is important to ask the right questions.
Questions to ask before you pay
- Do you really trade the market with the strategy you are selling? If so, are you willing to share the P&L and the trade list from your broker?
- Do you have a discretionary strategy? If so, do I always have to depend on you, or spend significant time on my end to execute it?
- Do you propose a systemic strategy? If so, do you have a backtest report spanning a significant period? Is it easy enough to follow and execute between the daily chores of my life?
- What is the capital needed? What is the accuracy? What is the risk-reward ratio? What is the trade drawdown and the maximum drawdown in the strategy?
- What is the worst-case trade and the systemic risk with the strategy?
- Are you SEBI-registered? If not, are you operating as per SEBI guidelines?
Always remember that simplicity works and complexity sells in the market. To all the Twitter traders, YouTube traders and social media tipsters in general: ask yourself, are you a real trader? Real traders will always have proof of work.
