HomeTrader

For about the last 3-4 years, each weekend the Financial Review has carried a large full page advertisement from HomeTrader, touting their courses on how to make a motza by trading shares.

About 3 weeks ago these stopped appearing. Instead, a small advertisement has been run. This is an apology, stating that the figures quoted in the advertisements were not actually obtained by people trading shares. Instead they were trading “Contracts for Difference” – a newer kind of derivative.

Derivatives like contracts for difference (and options) are highly leveraged and really only suitable for people with a sophisticated understanding of financial markets. They carry a very large potential downside…

Just remember for anything that seems too good to be true… it probably is.

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EDIT 16-Jan-06: In the interests of fairness:

Following an exchange of emails with the operators of HomeTrader, I have modified the above post to remove a statement of personal opinion.

The operators of HomeTrader have requested that I remove this post completely.

The operators have also pointed out that their full-page advertisements are now being run again (which is true because I have seen them in the Financial Review). This presumably means they have done whatever they needed to do to make ASIC happy.

My adding this statement does not represent my giving of investment advice. I am not licensed by ASIC or anybody else to provide such advice. I neither endorse or criticise HomeTrader, or any other share market advisory or trading systems or advisers.

7 Comments

Don’t you love a good disclaimer?

Every Aus financial publication I get these days has mega adds for CFD’s. They are just a great idea, and very profitable for the companies as winning traders such as myself are few and far between. This is coming from an accountant who sees the tax returns of many people! (no names mentioned)

CFD’s have all the benefits and pitfalls of high leverage. It’s great if you know how to use it without lopping off a financial limb or two.

You can imagine the type of person who trades CFD’s as a result of seeing them advertised in a paper or magazine is precisely the type of person who is unlikely to be consistently profitable as well. If few Joe and Mary lunchpails are making money with CFD’s in the present environment then I predict it will get nasty when the tide goes out on the ASX.

Oh and I really hate ‘testimonials’, they should be banned imo.

Comment by Andrew | January 27th, 2006 1:20 am | Permalink

I recently attended a HomeTrader seminar and it was quite interesting – and this comment is coming from a share trader. Click on the link to find out my views on them.

CFD’s have their purpose and I guess the company needs to get word out that their serive is there if you want it.

As bloggers we have the right to say what we want – we have Freedom of Speech in our country after all. And if it is the truth well how can they sue you on something that is true?

Comment by George Polizogopoulos - Share Trader | February 18th, 2006 2:41 pm | Permalink

Suggest readers look at a few other postings on that site, esp. the comments by Craig.

And by the way, their is NO right to freedom of speech in Australia. Don’t get confused with the USA. The stuff does not apply in Oz.

Comment by Wally | February 18th, 2006 6:52 pm | Permalink

HomeTrader and all the other “give us 5 grand (or more) and we will show you how to make money trading” type of business are all scams. They prey on the greedy and the ignorant.

Comment by Daniel Sparanto | August 14th, 2006 8:40 am | Permalink

I want to a free intro seminary by Hometrader last night. I have no association with them (past or present). I am familiar with computerised trading systems.

Thoughts on the Product
It seems pretty good. A well designed computerised trading system generally has an edge over the market (as it systematically exploits trends). They key thing is discipline – to stick with the system thick and thin. I can think of a lot of worse ways of trading.

Thoughts on the Pitch
Its a pitch. They are selling something. To me, the price is OK (bear in mind I haven’t done the course). If people want to try before they buy they can pay for a $149 seminar first.

Is the Marketing Deceptive
Maybe. I have no doubt the Gun Trader results are actual people but there is a “lottery effect” operating. The top 3 returns of 157%, 97% and 86% dont mean much if there are 1,000 entrants and the average return is 10% and the median 8%. Basically what it says is that you’ve got a 0.3% of getting over 86%.

Comment by Ed Swayne | August 16th, 2006 8:58 am | Permalink

I searched the net and went to a bunch of seminars before deciding on Hometrader. So far(all year)they have been nothing but professional and helpful. While advertising big numbers (who doesn’t? because those returns ARE possible), the course itself is really focussed on risk management,and I thought overall is quite conservative in its approach. One of the first components of the course is a realistic assessment of what is required (and how much)to trade for a living and the sort of risks involved in high return trading. Mate, while I respect your right to say whatever you like, perhaps gather more info and open BOTH eyes.

Comment by Murray | September 7th, 2008 5:27 pm | Permalink

Well Murrary, I could have trashed your comment but I didn’t – I have let it through and will now reply.

I have no problem with Hometrader or anybody else advertising and educating. I have a big problem with testimonials and quoting of performance. Testimonials are only of value if published in full. A portion of a sentence is not worth the paper it’s printed on. Similarly, quoting performance is of value if it is long term. I note that the Hometrader ads don’t quote the performance of individuals beyond 3-6 months. Whatever happened to the fantastic returns that “Jewels K” was making? Is she still doing so well? We will never know.

Systems, as sold by this company and a number of others, tend to suffer from “dropout bias”. The average results are unknown because the result quoted are from those who stuck with the system. Those who dropped out are gone and results are not fed into the quoted performance. This tends to push the quoted results higher than they should naturally be.

I’ll ignore your implication that I have my eyes shut, Mate, because they are wide, wide open.

Comment by Wally | September 7th, 2008 5:45 pm | Permalink

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