Aussie Rob Abracadabra Lessons

Several months ago, my wife and I wrote off a AU$10,000 investment in the Aussie Rob Lifestyle Trader (ARLT) program, around AU$2000 in monthly line fees (10 months worth) and hundreds of hours of study and assiduous paper trading.  All I now have to show for this episode is a cheap laptop that came with the package.
 
We never got as far as investing real money in the market place, because the ‘paper trading’ try-out platform delivered such consistent, relentless and serious losses that we decided it was not prudent to put up real money and potentially lose that as well as our initial investment.

Admitting a mistake is always hard.  There is emotional pressure to blame someone else, alongside the very real possibility that perhaps it was oneself that was at fault.

These considerations made me hesitate reacting in any way to the outcome on this experiment until the dust had well and truly settled.  I needed time to reflect on the experience with detachment and look hard at all aspects of the whole experience.


Aussie Rob Lifestyle Trader, at the time I worked with it, was an organization that provided training and software for ‘technical’ trading the main US ‘futures’ markets.  It relied on mathematical algorithm based trend trading rather than ‘fundamental’ trading that relied on balance sheet, profit and loss, and enterprise trading and management performance data.

ARLT specialized in US traded ‘futures’ in three discrete markets.  They were ‘Forex’ currency exchange, primary produce ‘commodities’ and share ‘options’.  Futures are speculative or insurance markets dealing in and managing anticipated possible future rises and falls in prices, and they are all heavily leveraged to maximize control rather than direct ownership of underlying assets. 

The US markets were considered to be the most tradable because their volumes are so large, they guarantee fast discretionary movement.

The Forex and Commodities software was a ‘technical trading’ platform that used daily downloaded data that indicated the ‘balance of power’ between buyers and sellers in the now electronic market ‘trading pits’,  as an intentional ‘leading’ indicator, to determine later price movements
 
These two sides in the transaction were represented as snaking and regularly intersecting red (sellers) and green (buyers) graph lines.  Their crossing points (with particular positional qualifications at the entry point) and the periods between, successively became buy, hold and sell recommendations that would enable the ARLT customers to “cut their losses early and let their winners run”.

Options trading software was somewhat different, relied on a greater variety of data sources to determine trades, worked on a monthly trading rather than daily cycle and had more elaborate risk assessment and minimization trade placement procedures.  All the optionable shares (shares whose price movement prospects can be speculated on or insured against) in the US market would be represented by simultaneously combining historical price movement (a lagging indicator) and ARLT’s weekly version of the buyer/seller balance of power algorithmic performance graph (leading indicator), along with MSN/Yahoo financial reporting data.

Taken together, this was represented as an ‘edge’ in the market, i.e., a consistent advantage in relation to others with whom we would be trading on the opposite side of our trades.  Together with the training they supplied and the discipline in applying it on the part of the user, this would hopefully deliver a profitable positive cash flow for the ARLT customer.


ARLT put considerable effort into its training, to ensure the conversion of the potential ‘edge’ into an actual profit.  They quite properly pointed out that undisciplined trading was fatal to the prospects for success.  Much was made of developing a trading plan and then sticking to it.

What they were also at pains to point out was that nothing was guaranteed and that the fortunes of individuals depended on how well they applied the principles they were taught.  Implicit in this was that the user of the system was totally responsible for whatever happened to him or her in the market place.  Losses would be scrutinized as to what ‘you’ were doing ‘wrong’ either in the design of your trading plan or the effectiveness of its implementation by you, i.e., your consistency and/or trading ‘attitude’ and focus.

All this training activity, spanning from ‘basic’ to ‘advanced’, gave the overwhelming impression that the organization was covering all the variables and honing the ‘edge’ to be an ever more reliable instrument in the market place, for those who knew what to do and how to do it.

ARLT also put effort into providing group support through franchise leaders and locality based trading groups.  My franchisee seemed to be a very sincere and decent man who was totally committed to and utterly convinced by what he was doing.  But he also gave the impression of being a very uncritical acolyte who could be easily led into being a mouthpiece of the ‘Party Line’.  His presentations tended to be long on sentiment and short on substance.
 
My first franchise meeting was not promising.  A number of people were muttering that Forex currency futures and commodities were losing them money and that they would stick to option insurance contracts in the hope of more stable and predictable outcomes.

The local trading group organizer was a charming woman, but I never could be sure whether she was an organizational agent or a generous hearted community leader giving something back to those around her.  ARLT was all for ‘giving back’ (including starting up local trader groups) not just because it was portraying itself as a good corporate citizen, but also because it was assiduously planting the assumption in the minds of everyone that success came with the turf and that we would all have to learn to be generous with it.

It was very re-assuring to know that being part of the ARLT ‘team’ would mean that one would be under some sort of pressure to 'give back' some of the effort put into our development and the profit we were going to make.  Such charity is a sweet adjunct to success because not only does it reflect well on the moral fiber of all concerned, but points to the near certainty that our profit is there, just waiting for us to key into through the Aussie Rob Way.

While the nature of the probability algorithms used by ARLT to develop its claimed ‘edge’ in the market place were never discussed, much was made about probability and odds and how very slight shifts in the odds could deliver slightly more wins than losses over time, in the same way that weighted dice do.  While future events cannot be predicted in specific detail, shifting the odds can deliver predictable aggregate future outcomes over time.

Traders have to be prepared to accept losing trades, sometimes a quite long run of them, without losing focus or nerve.  Sticking to the trading plan and having faith in the long term reliability of the trading ‘edge’ were critical to long term success.

We were all referred to Mark Douglas’s book, ‘Trading in the Zone’, where these concepts of working with probability were teased out by a very experienced market trader. He used the analogy of a casino in weighting the odds against their customers by margins small enough not to be noticeable on the gaming floor, because of the random nature of probabilistic outcomes.
 
What he doesn’t mention is the extent of Casino security surveillance to catch and eject parties who are capable of beating the odds, such as ‘card counters’ and cheats.  Casinos are in a unique position to determine and protect their probabilistic edge.  No one else gets close to this level of future security.

The casino ‘edge’ over its customers is programmed into the games and gaming machines.  It is unassailable and the same odds are offered industry wide.  All casino competition is at the margins.
 
Patrons can sometimes win very large sums, but they only get to keep their winnings if they never come back.  If they return, and they almost always do, they give them back and then the rest, eventually.  Casinos put in considerable effort and money into inveigling their customers back and getting them to gamble more, because they know they are going to consistently win more than they lose in the end.  The gamblers tend to only remember their wins.  Casino ‘losses’ to its customers are bait to keep them hooked.

Futures and options traders are in a much less certain position than Casinos because they are competing in an open market of buyers and sellers.  There are no preset odds advantages here.  An ‘edge’ in that market has to be a system, technique or skill that is in front of the competition, much in the same way as it is with professional gamblers.
   
ARLT claims its ‘leading’ indicator based program has a reliability advantage of ‘reading’ market intention rather than the ‘trailing’ ones, such as historical records, that only ‘see’ the market after the event.  However, whatever advantages their ‘proprietary’ product has, it exists in an intensively competitive environment whose response and counter-response times have reached digital speed.  Technical traders are all, to some extent, operating off algorithmic computer mathematical models using leading and/or trailing indicators.


If one uses a military analogy, the picture becomes clearer.  If one side has weaponry that is more advanced than its protagonist, there is an a priori assumption that the former will tend to, but not necessarily always win. Breach loading rifles will tend to beat muzzle loaders because the former can fire more quickly.

If one traces the development and take up of new technology on battlefields, technological advantage is short lived.  Once a new weapon proves itself, its take up by all armies is rapid, for nobody can afford not to have it.
 
Hiram Maxim’s machine gun was a devastating and decisive weapon when used against traditionally armed ‘native’ armies resisting imperial colonization, but once similarly armed and trained militaries brought them against each other, the effect was indecisive, militarily destabilizing and devastating for all sides.

And if one military force keeps getting a consistent technological edge because of the nature and dynamism of its economy, its enemies will eventually stop trying to compete on unequal terms and start to use the asymmetrical ambush tactics of insurgency to compensate for their weakness.

The same applies in markets.  Just as Maxim’s machine gun was rapidly copied and replicated, so is probability driven software in speculative trading environments.  What ‘edge’ equalization in a software competitive trading market will do, is make market wide anticipatory behavior occur much faster and cause the trading environment to become more unstable and less predictable, just as Maxim’s machine gun did.

If one person or organization knows the future, the world is their oyster, because everyone around them is still assuming and behaving as if no one does.  Casinos do not know the future in terms of particular events, but they do in aggregate terms over time.  The gamblers keep blithely giving them their money because they do not understand odds, or how odds based futures work.
 
Once even the mug punters start to suspect that someone is way in front of them, they become much more cautious and defensively change their behavior.  Fortunately for the gaming industries, this only happens when they start to think that someone is actually ‘fixing’ events or getting ‘inside’ information.  More, if people beyond the usual cliques of insiders are let in to the ‘secret’ of what the future holds, it isn’t a secret anymore and that caution becomes more proactive in terms of intelligent counter-strategy.  As result of this dynamic, the future changes and becomes uncertain again for everyone.

This is not to say that some people in a market cannot develop an ‘edge’ as professional gamblers/speculators, but I suspect the only ones who make a regular living out of it are the few who are enormously focused, well educated and read in their field, work at it full time, have an excellent system of intelligence gathering, are prepared to work on ulcer makingly thin probability margins and have developed their own repertoire of skills and insider contacts that they guard jealously, for fear that their precious, rather small and hard earned edge might be exposed, copied and eroded.

I rather suspect that anyone who thinks that there is an easy way into gambling profit is either kidding themselves, or sees that there is easier money in selling training and market software than being a ‘trader’.  If the money to be made from trading was that good, Aussie Lifestyle Trader would be spending most of its effort Aussie Lifestyle Trading.

While I was with ARLT, between November 2008 and September 2009, US markets were volatile anyway, which meant that any sort of trending became difficult to pick.  However, ARLT never made any representation that market volatility would make any difference to the validity of its claimed ‘edge’.

The Forex and Commodities market probability software was impossible to assess other than by results, which were dreadful.  It was a ‘black box’ system that would have to be uncritically taken on faith and the testament of people from within the ARLT organization, who claimed to have enjoyed success in its use.

For all I knew, it could have been based, as some critics have suggested, on readily available information one could easily have got for free and would never be vouchsafed by anyone knowledgeable in the market place as a reliable ‘edge’ that might deliver regular profit, even if worked in a disciplined and focused manner.

If the prediction system was that good, ARLT would be running a ‘mechanical’ (without modification) ‘in on the cross out on the cross’ paper trading demonstration site to show its customers how their system of intersecting red and green lines delivers its claimed ‘edge’.

While they did publish some trading results in their monthly newsletter to members, it was not in a format that could be easily compared with my own daily paper trading results. One would have thought that such a transparent and easy to follow demonstration site would be a central plank in their mentoring program  It would provide everybody with immediate feedback if they had 'got it wrong' or 'got it right' in applying the basic rules of the system.

The extra training, planning and risk management strategy sits on top of this system and if that isn’t delivering the basics, no amount of prudent and disciplined behavior will help.  Risk reduction strategies are always in direct proportion to loss of potential profit, in the same way that playing against smaller odds on a roulette table does. And such risk reduction in no way alters the effects of playing adverse odds.  It merely serves to reduce the losses they incur over time.

If the ‘in on the cross and out on the cross’ signals do not deliver a basic surplus, all the rest of the palaver is worthless nonsense that merely serves to conceal the basic defects of the product ARLT is selling and enable it to blame its clients for ‘their’ failure.

The options trading ‘system’ offered by ARLT was more accessible to critical review.

In his DVD training sessions, ‘Aussie Rob’ Wilson, who fronts the organization, makes much of the fact that 80% of all options end up worthless to the buyer.  He claims this is good news for anyone wanting to act as an options’ insurer.
 
An option insurer is a party prepared to sell insurance for a premium, against a share rising or falling in value above or below an agreed strike/exercise price, by selling or ‘writing’ a ‘call’ or ‘put’.

The ‘call’ gives the insured the right to buy particular shares at an agreed strike price, within the prescribed period of the option contract.  If the shares go higher than the strike price, the insured is entitled to exercise the option and make a profit.  Or, the insurer ‘writes' a ‘put’ that gives the insured the right to sell the shares to the writer at the agreed strike/exercise price.  If the market price of the shares fall below the strike price, within the insurance period, the insured is entitled to sell the shares to the insurer at that fixed agreed price and make a profit . 

He claims that by following his system, providing such share insurance is consistently profitable.

It took me ages to get my head round that and I would bet that a fair proportion of ARLT’s customers do not really understand this stuff before they start trading it.  It is complicated, no matter what Aussie Rob tries to tell you.

Further, what Aussie Rob does not say is that if ‘only’ 80% percent of one’s insurance trades come good, allowing for ARLT line fees and brokerage, one would likely make a loss.

Rob makes much of the ‘safety’ of options.  He does this in four ways:

First, he uses the analogy of insuring against a cyclone (hurricane), not in tropical northern or central Queensland, but cool temperate Tasmania.  Northern and central Queensland are cyclone prone.  Tasmania is not.  So go for Tasmanian cyclone insurance and you are a sure fire winner!

The problem is that in the real world, hardly anyone wants cyclone insurance in Tasmania.  They are much more likely to want it near where cyclones are likely to happen.  Insofar as rare freak event wind damage is a possibility in Tasmania, the premiums will be set at a very much lower level than further North, where cyclones are a severe and regular occurrence.
 
Furthermore, the sellers of real cyclone insurance get actuarial advice to statistically quantify, analyze and price risk.  While the insurance market is very competitive, all insurance suppliers are informed by more or less the same kind of risk information and the competition is therefore built around that, as well as the necessity to deliver profit to their shareholders.
 
Insurance companies do not enjoy quite the same ‘closed environment’ odds predictability as casinos and they operate in a more diverse marketing environment, but they are close runners up.  They have a built in vendor retailer advantage in stacking the odds against their clients.

Turf bookmakers weight handicap the horses and set the odds to ensure their margins.  Odds setting is a competitive business, but if an individual ‘bookie’ sets odds that are too generous with the punters, and doesn’t learn to reset them promptly if one particular horse is getting too ‘popular’, or lay off bets with other bookies if they get too big, he or she doesn’t stay in business for long.  They have to keep balancing their book/betting portfolio so that no matter which horse wins, there is enough losing money in ‘the book’ to cover payouts and the bookie’s margin.
 
They are running an odds retail business and the punters are not competitors in the market place, but customers who systematically lose more than they win, because they get pleasure from the thrill of a race with money on it.  Even the professional punters are not competitors.  They are competing with other punters for the prize pool left after the bookies have taken their margin (unless of course the bookie hasn’t balanced his or her book properly, or falls victim to a co-ordinated and sudden betting plunge).

Option insurance sellers do not determine their rate.  The market sets it on the basis of seller and buyer interest and/or theoretical modeling of share price volatility.  They do not have the kind of odds setting dominance over their customers of a casino, insurance company, or bookie.  They do not have that built in vendor margin.  It is a bet between equals who are punting against each other.
 
In the option insurance market, the consistent margin is mostly the broker’s or the market advisor’s rate.

Aussie Rob claims that the ideal option insurance trade is a steady and consistent share performer in whatever direction it is trending in.  However, the steadier it is, the finer the margins become.  Why would an insurance customer insure if the future of the underlying share for the option seems on the face of it a sure fire bet for the insurance vendor, unless the premium and/or the amount of change in the share price that will trigger an insurance payout at the expiration of the option is low?

I accept that the period in which I explored option trading was not normal.  A lot of the optionable shares had breached the strike price (the price above or below which, depending on whether it was a call or put, the insurer would be obligated to pay out) several times within the previous two to three month period.  So I just didn’t get to see the ideal.  I suspect that the few on offer that hadn’t were snapped up in the first days of the option cycle (a month), but then of course, one had to sweat it out for those extra weeks of risk exposure.

Aussie Rob recommended that one wait for as long as possible into the option cycle to reduce the time exposure, but the longer one left it, the poorer the quality of what was still on offer.

The second way Aussie Rob claims to make option insurance selling ‘safe’ is to use ‘spreads’.  These entail spreading the downside risk (like bookies ‘laying off’) by re-insuring with backstop insurers.  This reduces profit, but limits losses.  What it doesn’t do is improve the prospects for better than eighty percent successful trades.  It just ensures that those hopefully less than twenty percent flops aren’t disastrous.

Thirdly, Aussie Rob provides a number of prudent due diligence research check boxes for optionable shares that prevent naïve high risk clangers, like selling an option on a company that has an annual general meeting during the term of that option, or getting involved in non standard options.  This information is readily available on Yahoo or MSN and helps prevent needless risk.  It doesn’t increase prospects for that consistent better than eighty percent success rate, so much as it reduces the risk of own goals.

Fourthly, in the final training for options trading, we were coached to adopt another very tight risk reduction strategy, by limiting trades in shares with high Average True Range (ATR), which is an indicator that measures a security's volatility.  This would only allow for trades unlikely to breach peaks and troughs of share price ‘resistance’ and ‘support’ (and the agreed insured ‘strike price’ that would determine the fate of the trade) over the one month life or less of the options we were trading.  The only problem was that if one applied the suggested limitation rigorously, there were virtually no suitable options in the huge Aussie Rob list of available trades that would qualify.
 
Again, while the market was extremely volatile at the time and this would naturally make any trend speculation hazardous, no one was saying down at ARLT, “Let us wait until the market settles down a bit before asking clients to risk their hard earned cash.”  It is tough having to say to clients that one does not advise trading at the moment even though we are charging you $200 per month for an ‘edge’ that isn’t presently delivering anything except perhaps losses.

The impression that I now have of the Aussie Rob options ‘system’ is one of dressing up mostly commonly available information and risk minimization strategies that do a much better job at preventing large, rapid and unnecessary losses, than delivering profit.  For that, one has to do better than the industry average for option buyers, of 80% being worthlessly 'out of the money' at the end of the contract.
 
Yahoo and MSN finance do a great job in summarizing company data and commentary, and providing statistical price movement modeling, but it is available to everyone and this hardly provides an edge over anyone else, per se, unless there is some special training for interpreting and using the data, which there wasn’t beyond what has been described.  And ARLT’s buyer/seller balance trend lines seemed no more helpful than they were for the currency and commodity markets. 

I found myself relying on Yahoo and MSN ‘fundamentals’ information and analysis, as well as their volatility statistical models, even though I only had the vaguest idea as to the meaning of some of the terms being used, or the nature or value of the modeling.


The extent of an organization’s agitational propaganda and the extent of its efforts to control and manage information, are markers for its aim to control the thinking of its prospective and active clients.  And while that is not necessarily an indicator of dishonest conduct or fraud, it does indicate a need for much more effort on the part of its clients to do due diligence.
 
If Googling up Aussie Rob produces a lot of very positive material and very little negative feedback, it is as much a warning as an encouragement, because it might mean that his web designers and solicitors are very good at ‘crowding’ search engine inquiry and ‘editing out’ adverse comment.  They even have the search words ‘Aussie Rob Scam’ ‘covered’ with their own material and I suspect spy bots.  Within a week of this particular keyword search, I had a communication from Aussie Rob, ‘fessing up’ to all the ‘mistakes’ he had ever made.

In my researches I could only find non current Australian critiques of Aussie Rob that came indirectly through American based web sites.  When I followed up the American references back to the Australian site, I was told by its administrator that they had been “forced by Rob Wilson's Gold Coast pit bull lawyer’s threats,”  to get rid of the hostile material.  One has go to US sites to get what very little adverse comment there is to be found, presumably because they cannot be so easily got at by the Aussie legal system.
 
When I tried to follow up on the claimed nefarious activities of Aussie Rob, nothing but Aussie Rob generated material turned up.


If anyone uses the language of propaganda persuasion to excite audiences into believing that their future will be completely changed if they just follow the simple and easy to follow prescriptions of a professional 'excitementeer', that is precisely the time they (the audience) should be backing away into a bunker of due diligence.

If what the 'excitementeer' was saying was entirely true, a lot more people would be richer than they are today.  And if what he or she is saying isn’t entirely true, it may be the case that a good, but less glamorous broker might provide both less expensive and more profitable advice and service.  And there is no better antidote to 'excitementology' than a few well chosen books to deliver disinterested and sobering advice.

If anyone relies solely on information coming from within the organization that is trying to get and keep their business, they have suspended normal judgment.  It and its acolytes have their own interests which are mainly to get their hands on the client’s money.  Further, if prospective client audience members who are showing obvious interest in what is being said by the 'excitementeer' are approached by equally excited ‘audience’ members, making very exciting claims about their paper trade profits, using Aussie Rob’s wonderful graph system, these people may not be what they seem.  It could well be a trial sales close.


When my wife and I started to acquire enough assets and knowledge to go to the next stage as Real Estate investors, we did so with some help from excitementeers.  We didn’t buy any of the service packages they offered, but for the price of some very cheap seats at a ‘seeding’ seminar, we got enough really good ideas to apply in the next stage of our investment careers.

Excitementeers can motivate people to go to the next stage and do things they may not have otherwise considered or had the confidence to try.  All innovation and wealth building involves getting out of the comfort zone and sometimes it needs a helping hand from people who have done it before and have the motivational skills to get us actually DOING it.

In the case of our own move up, we had already done an apprenticeship that was probably longer and more arduous than it need have been.  We were ready for the prompt and were able to capitalize on any suggestion with sufficient background knowledge to give us the confidence and competence to take a risk.

My view is that in order to ensure one gets leverage from mentors who are ambitious and in a hurry, one needs to have built enough basic knowledge and experience ‘infrastructure’ to be able to engage them securely and with confidence.

All entrepreneurs are risk takers, many of whom at some point have lived on the edge of what was possible or sometimes sensible or even honest.  That means that there are failures and murky bits along the way with many of them.  Skating close to the wind comes with the turf.  It is the nature of the beast, which is why non entrepreneurs who aspire to their ranks need to become sufficiently like them as they are careful in dealing with them, to avoid being eaten rather than taught.

My father, who had been an ‘honest’ public service conditioned soldier, came to Australia and joined my Jewish uncle in a business partnership.  He was a furrier whose family had been in the trade for generations.  Father had to learn the hard way that while my uncle was a brilliant businessman, without whose help he would never have survived for long, he could not altogether trust him to supply necessaries to their joint venture without overcharging.  In his turn, when I was still a student and went into my first Real Estate venture, in buying a home and renovating it, he just couldn’t resist getting a fifty percent cut on the deal, even though I was his son, had found the property and come up with a decent deposit.  I needed his help with the finance and trusted him implicitly.

In business, one cannot completely trust anybody.  Period.

Aussie Rob is an entrepreneur with in all likelihood a bit of a ‘history’.  That is no reason to deny him his pitch.  However, check out what else is on offer and the range of opinion on what he and others like him are doing.  Day trading/technical trading can be a very hot issue amongst financial services operators, as well as outside observers of the industry.  See  http://www.fool.com/investing/general/2010/05/11/day-traders-dumber-than-ever.as... (there is a px on the end of this address and for some reason the system won't handle it) and the following commentary if you want to see just how contentious it is.

Even if this article’s assertion that only one percent of day traders make any money are only partially true, it gives cause for sober reflection, as is the accusation thrown back at the Fool authors; that they have an axe of their own to grind.  And the answer one comes up with is as much a reflection of us as investors, as anything else.  I am temperamentally a fundamentals man who has some skills in research and analysis to discern potential opportunity mining sites.  Technical trading has too much fresh air under it for my liking, even though I know that may only be a fear of flying.


Aussie Rob has taught me a lesson about myself.  If one is going into a new venture, preferably do something that is commensurate with pre-existing values and skills that one can continue to apply in the new situation.  But if one really is determined to strike out into the unknown, take a lot more time over it and become as familiar as possible with the territory before committing more than one’s time and intellectual space to it.

Never go into something cold, no matter how attractive it is made to look.  Never commit on the spur of a moment that is in someone else's control.  Know the downside of what you are doing as intimately as the up (your version, not someone else's).  Be extremely suspicious of anyone who says making serious money is a part time business, or that it is easy and that anyone can do it.  Most people can’t.  Very experienced operators can make it look easy and casual, but it isn’t and they aren’t.

Sensitive risk judgment, enough nerve to back it in, creative thinking, a clear sense of the boundaries and crossovers between one’s own interests and  those of others, a preparedness to act even if it means being tough and an excellent grasp of dynamic variables in fluid situations; all these things are important to being a successful entrepreneur.  This is as much a matter of character and fundamental values as training and education.

Aspiring entrepreneurs who don’t have or haven’t assembled what it takes, quickly become prey to carnivores that have.  There are a lot of wide eyed ‘Bambies’ in Aussie Rob’s audiences.  I was one of them, even though in other forums, I might not have been so wanting in judgment.


I now appreciate just how unpredictable markets can be and that one needs to understand them well enough to know when they have become too dangerous to speculate in.  I now think I know something of what options are and how they work.
   
Other than knowing that commodity and currency contracts have a settlement date when the money or the goods traded have to be actually bought or sold (and that the speculator has to be well out of it at least a couple of weeks beforehand) I know almost nothing about commodity and forex markets because all I learned about them was when to buy and sell using the Aussie Rob graph line intersecting crosses.
 
While I am not presently involved in the stock market, I do follow the Motley Fool website.  I ran into them while paper trading options and find them interesting.

I now have some idea how to do some electronic market orders on a broker trading platform.

I now appreciate that $200 per month, which is what Aussie Rob charges, will buy between half and one hour of a good stock broker’s time.  Five minutes of that would be enough to find out how much of what Aussie Rob offers can be had for free, or very much more cheaply and/or better and offered by people who have less personal interest in a particular outcome or preference.


Is ARLT’s $10,000 up front really too expensive for what is on offer?  Is it just charging what peoples’ hopes and aspirations will bear?

Notwithstanding anything I have said so far, I think that can only be properly answered by putting some serious time into casing the securities industry.  That is what we did in the Real Estate Market.  We went to the open inspections, followed the price results, read some books, got the ‘feel’ of various areas and developed a ‘smell’ for good value and promising prospects.  We started by doing simple value adding and on-selling our home, kept tabs on what the fashions and trends were and went from there.  And when we went to the next stage, we didn’t need very much of a push or support to go there.  A three hour seminar was enough.

There are many paths through any market, but there are very few short cuts for any but the most experienced, skilled, intrepid, very possibly devious and those who have yet to learn important lessons of life.  The shorter it is, the more hazardous it is likely to be.  Large gearing exposures are attractive on the upside, but only for people who understand and have the resources to manage the risk on the downside.  There are lots of Real Estate and share speculators who get burned every time there is a downturn, because they just do not manage debt risk appropriately.
 
Anyone who has ever had a margin call (covering the loss of value on shares or any other tradable financial instrument)  bought on borrowed broker funds, on a falling stock in a declining market knows how fast the losses can accumulate.

Patience is an overwhelming virtue in markets.  Learning their ways, at least initially, is far more important than trying to make money out of them.  McDonalds makes its aspiring franchisees work a whole year in one of its stores for nothing, because they consider that experience to be a priceless asset and a way of weeding out people who do not have the qualities they are looking for in a franchisee.

Proven product and systems knowledge, a very focused ‘attitude’, business skill, experience and consistent hard work are what make the money at McDonalds, just as they do everywhere else.  Getting there requires training, effort and time, just like it does, everywhere else.

Aussie Rob’s training and paper trading platform provided some of this, but only after one had committed to him and his organization.  This was putting the cart before the horse.  All electronic brokers have a paper trading function and run classes to operate their system.  And there is a wealth of web based technical trading data and educational material that is publicly available for free or at low cost. And there are literally cubic kilometers of printed information.

The Australian Stock Exchange runs a wide range of free online courses for beginners!

One would never put a year’s labor or substantial capital on the line up front with McDonalds until one was already very certain that this was a good investment with a very fair chance of success.  I put in ten months worth of effort at ARLT before I finally admitted it wasn’t what I expected or thought I had paid for.  One just shouldn’t be doing due diligence after the fact.

Would I pay Aussie Rob’s bill of fare if I had first done my due diligence?  Somehow I doubt it, but I leave that as an open question until the day I can truly say that I have done it.

By all means go to the Aussie Rob promo ‘seminars’ and find out as much as possible what that organization is prepared to tell you about what it does.  Then spend a couple of months checking it out.  Aside from anything else, you might turn up all sorts of interesting stuff that you had never considered or even knew existed.  Doing your homework often does that.

Getting it right first time is important in the sense that it takes time to pick oneself up and dust oneself down after a setback.  I will likely have lost nearly a year before I put my foot back into the financial markets arena.  A lot of people would just stay away after initially being burned.

And if you can’t do the due diligence properly, stick with the stodgy and the safe.  They may not be glamorous, but you are much less likely to lose money.