It is unfortunate that the general public has been so mislead by Wall Street and have lost so much money following their advice that Joe Sixpack continues to seek the Holy Grail of trading. There isn’t any and you can be sure it is not in any of the hype of some company offering a system with huge profits.

It is possible there may be a few good trading methods, but they remain the secret of the system developer. Why should he tell everyone when he can make his own fortune without customer complaints.

If any investor feels inclined to buy and trading system or give his money to an account manager there are some questions that must be asked. It is called due diligence. Here are some of the minimums:

1. Is this a real time track record being shown or is it a hypothetical? If it is hypothetical trash it immediately.
2. Is there loss protection on every trade in the form of a stop? What percentage drawdown is allowed for the stop?
3. How much money is needed to trade every recommendation?
4. What was the largest single trade loss?
5. What was the largest continuous loss accumulation?
6. How many trades are made in a 12 month period? Number of winners and number of losers?
7. What is the dollar average for winners and loser?
8. How long has this system been in operation?
9. Do they recommend a specific broker to handle transactions?
10. Ask for a printout of last years monthly statements that can be verified.
11. Ask for references of people who have been trading the system for at least a year.

It is doubtful the investor will get all of the above and maybe they will refuse to provide important information saying it is private or proprietary. Also be sure that that the account may be terminated at any time for any reason with no penalty.

The customer should be able to speak with the broker at almost any time during trading hours if it is a managed account.

As a former exchange member and floor trader I say that Rule 2 is the most important of all. Small losses will not hurt. Big losses will ravage the trading account.

For any managed account or software system there will be losses. The investor must learn to live with these and realize that it is the big winners that offset small losses.

Before putting money into any program get the facts and make them prove it.

Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know. Copyright 2006 All rights reserved.

Copyright 2007 Albert W. Thomas All rights reserved. Author of "IF IT DOESN'T GO UP, DON'T BUY IT!"