# Case: three promises that sound too good

> Judge three ads that promise easy money by what you can check, not by what they promise; find the hidden losses, the guarantee, the pressure and the request for access.

- Course: [Trading Basics: How It Works, How Not to Lose Everything](https://productovi.com/courses/trading.md)
- Module: What is trading, and should I even try?
- Lesson 4/32, ~40 min
- Source: https://productovi.com/courses/trading/too-good-to-be-true

## Nora's three offers

**Alex Tutor:** Back on your Pebble practice account, but no chart today. Nora has forwarded three offers she's tempted to pay for. We'll judge each by what we can check, not by what it promises.

**Nora:** First: a signal seller. His ad shows 20 trades, average +273.1 basis points each, not one loss. Forty-nine dollars a month. Looks solid, right?

**Alex Tutor:** A basis point is a hundredth of a percent, so +273.1 is about +2.7% per trade. Now the real question: 20 out of how many?

**Sofia:** So an ad is a shop window?

**Alex Tutor:** Exactly. Nobody puts burnt bread in the window. Ask for the full list: every trade, losses and costs included.

![Nora points at shiny pebbles in a shop window while a hand tucks the grey ones behind the counter; Marc holds a magnifier up to the full list.](https://productovi.com/courses/trading/diagrams/m1-l4-scene-shop-window.png)

**Nora:** Done. He sent all 60 and called the ad "the highlights". The column shown_in_ad marks the ones in the ad.

**Dataset (CSV):** [Signal seller: the full list of 60 trades](https://productovi.com/datasets/trading/too-good-to-be-true/signal_seller_trades.csv)

Sent by the seller on request. The ad showed only the rows marked yes. The list doesn't say whether results are before or after costs.

- `trade_id`: Trade number
- `shown_in_ad`: yes: the trade was in the ad; no: left out
- `result_bp`: Result in basis points of the trade amount (100 bp = 1%)

**Alex Tutor:** Before reading on, find the average of all 60 results, not just the 20 he chose.

> **Exercise:** What is the average result of **all 60** trades, in basis points? One decimal.

**Alex Tutor:** In the ad: +273.1. All of them: −50.0. The ad didn't fake a single trade. It just chose which ones you'd see.

**Nora:** But twenty wins in a row!

**Alex Tutor:** Easy to show when you have other trades to hide. The 40 hidden ones add up to −3,001 − 5,462 = −8,463 basis points.

**Sofia:** Do these numbers even include costs?

**Alex Tutor:** The list doesn't say, so ask. If they're before costs, the spread and fees make it worse still. Now count: how many of the 60 lost money?

> **Exercise:** How many of the 60 trades have a negative result? The ad showed none.

**Alex Tutor:** 34 losers, none in the ad. That's survivorship bias in a shop window: you only see what survived the cut.

![The ad showed 20 winning trades averaging +273.1 bp; the full list of 60 has 34 losses, none of them in the ad, and averages −50.0 bp.](https://productovi.com/courses/trading/diagrams/m1-l4-shop-window.png)

*Blue trades were in the ad; grey ones were left out.*

**Marc:** And even the full list is his own. He could have typed it. I'd want a record he can't edit, like a statement from the broker.

**Alex Tutor:** Right: an independent record. A screenshot or spreadsheet from the seller proves nothing.

**Alex Tutor:** So which kind of record would actually settle it?

> **Exercise:** Which of these is an independent record of the signal seller's results?

## A bot with a guarantee

**Nora:** Offer two: a trading bot. "Guaranteed 5% a week." 300 dollars to join, then a deposit of at least 1,000 with them.

**Alex Tutor:** Any guarantee of a trading return is a red flag. Markets promise nothing, so whoever promises is mistaken or lying. A guarantee doesn't remove risk; it hides it.

**Marc:** The math is wild too: 5% every week for a year turns 1,000 dollars into over 12,000. If that worked, nobody would sell it for 300.

![5% every week, compounded for 52 weeks, would turn 1,000 dollars into over 12,000.](https://productovi.com/courses/trading/diagrams/m1-l4-guarantee-math.png)

> **Exercise:** A trading bot comes with a written guarantee of 5% a week. That guarantee lowers the risk of using the bot.

**Alex Tutor:** Also follow the money: who holds that deposit, and is it a licensed firm where you live? If you can't check, don't send.

**Alex Tutor:** Now check Marc's "over 12,000" yourself. Compounding makes small weekly numbers huge.

> **Exercise:** The bot promises 5% a week. If 1,000 dollars grew 5% every week for 52 weeks, each week on the new total, what would it reach, in dollars? Round to the nearest dollar.

## Copy my trades

**Nora:** Offer three is the friendliest. A man messaged me: I send my login and password, he copies his trades into my account and keeps 30% of the profit.

**Alex Tutor:** Never give anyone access to your account. With your login, a stranger can trade and sometimes withdraw. No honest helper needs your password.

**Marc:** And he takes 30% when he wins but pays nothing when he loses. Big bets with your money cost him nothing.

![When a trade wins he takes 30% and Nora keeps 70%; when it loses, Nora carries the whole loss and he pays nothing.](https://productovi.com/courses/trading/diagrams/m1-l4-profit-split.png)

**Alex Tutor:** Put numbers on Marc's point: one winning trade and one losing trade of the same size.

> **Exercise:** The "account manager" makes two trades on Nora's account: one gains 1,000 dollars, the other loses 1,000. He keeps 30% of each profit and pays nothing on losses. What is Nora's net result, in dollars? Use a minus sign for a loss.

**Nora:** He also said I must decide by Friday.

**Alex Tutor:** That's pressure. "Only 12 places left", "ends tonight": urgency leaves no time to check. A good deal on Friday is still good on Monday.

**Alex Tutor:** So what should Nora do with "decide by Friday"?

> **Exercise:** An offer says: "Only 12 places left, decide by Friday." What is the best response?

> **Exercise:** Match each red flag with what it really means.

## Your checklist

**Alex Tutor:** The checklist. One: the full list, losses and costs included. Two: a record the seller can't edit. Three: no guarantees. Four: no rush. Five: never your login, never money to a person.

**Alex Tutor:** Extra care with three words: leverage, crypto and signals. Leverage multiplies losses too. Crypto swings wildly and attracts fake price pumps. Signal sellers get paid whether you win or lose.

**Sofia:** And if an offer passes all five?

**Alex Tutor:** Then it's honest, not profitable. Most people who trade still lose money. Passing means "not an obvious scam", nothing more.

![Five checks: the full list with losses and costs, a record the seller can’t edit, no guarantees, no rush, never your login. Passing means not an obvious scam, not a profit.](https://productovi.com/courses/trading/diagrams/m1-l4-offer-checks.png)

> **Exercise:** A forum post says: "My copy service: 80% of my clients made money last year. Message me today, the offer closes at midnight." In 2–4 sentences: which checks does it fail or leave open, and what would you ask?

**Alex Tutor:** Time for the module's case. Nora wants one short verdict before she pays anyone.

**Nora:** Be straight with me. I'd rather hear it now than after I've paid.

**Sofia:** One verdict for each offer?

**Alex Tutor:** Yes: what you'd ask for, which red flags you see, what you'd do. Judge the offers; don't suggest anything to buy instead.

> **Exercise:** Write Nora a short verdict on the three offers.

> **Educational, not advice**
>
> This lesson is educational, not advice. Most people who trade lose money, and you can lose all of it. Ask a licensed professional where you live about taxes and rules.

- Previous lesson: [Why most beginners lose](https://productovi.com/courses/trading/why-most-beginners-lose.md)
- Next lesson: [Exchange, broker, instruments: a map](https://productovi.com/courses/trading/exchange-broker-instruments.md)

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