Is Trading a Scam? With Debora Rosciani from the Main Financial Radio in Italy

by Andrea Unger | Interviews

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The world of trading is often associated with distorted views that confuse people and prevent them from understanding what trading is really about.

In this interview with Debora Rosciani, journalist of Radio24 (Sole 24 Ore group), Andrea focuses on the widespread belief that trading in general is a scam.

Unfortunately, we know that scams are very common in the world of trading. However, it is true that there are also many honest and reliable service providers and trainers. The key is to be able to recognize them while avoiding scammers and bogus sellers.

In this interview, Andrea and Debora explain:

- why there are so many scams in trading

- how some of the most common trading scams work

- how to recognize and avoid them

Enjoy the video! 😎

Transcription

Debora

Is trading a scam? We talk about it with Andrea Unger, 4-time world trading champion.

Welcome back! We're meeting today on this digital stage to talk about trading. So, what is the scope of our chat with today's guest? The scope is to steer the listener away from the false myths about trading and towards the so-called systematic method. 

What do people who approach the world of trading for the first time ask themselves? In other words, what do they expect?

So many questions are asked. For example, does trading really mean doing risky and speculative operations? And also, is trading only for shrewd traders capable of tolerating even very high risks? And also, does trading mean sitting in front of a platform and doing dozens and dozens of trades per minute?

The truth is that these are false beliefs and distorted information that, by the way, often lead many people to rely on non-professional traders – or even real crooks - to perform trading transactions.

As in all professional fields, obviously everything depends on the level of expertise. Today, we're going to focus on the systematic trading method, a method that enables us to make preliminary and upstream evaluations.

The question is why do we need to do this work? Why do we need to use this method? Well, as we said previously, trading is generally perceived by the masses in two ways: a scam or a quick and easy way to make money, and neither of the two versions is true.

The tools to operate in a professional manner in this field, removing the wrong or distorted information that often influences it, are provided by Andrea Unger, the only person to have won 4 times the World Trading Championship in the Futures category. Andrea, welcome back!

Andrea

Thanks Debora, nice to see you again and hello everyone.

Debora

So, as we were just saying, we are going to examine each of the false myths of the trading world. Let's go straight into the first one, which is perhaps the most important, because it generally causes a lot of damage and many victims in the financial markets, whereas the financial market can really be a world full of opportunities.

Trading equals scam. In your opinion and according to your experience, why do people often think that trading is a scam? I mean, you must have met a lot of people who want to learn more about the trading world. So in your opinion, why do think that trading is a scam?

Andrea

Because sadly, it often is. In my opinion, we are surrounded by greed (which sounds bad) or illusion (which sounds better) of many people. The illusion of finding a solution to many financial problems, and the illusion that someone knows how to make easy money on the markets in this case.

Starting from this illusion, scammers leverage on the desire to be part of the game and exploit the superficiality with which many rely on the guru of the moment. And this isn't even a guru, because the most classic scam nowadays is the classic phone call at home where you' re asked a few questions like: have you ever operated on the Stock Exchange? Do you know the markets? Do you know Crude Oil? Things like that.

And then they propose the opening of an account with a broker. Sometimes they even say that the broker is licensed, but this is not so important. So there's an unidentified broker who says that there is no need to worry because a consultant will assist us and tell us everything we need to do the operations we want to do.

People generally trust this. Maybe they are told that they will earn a lot of money, so they start to trade following the advice of this consultant

Often, they also tend to show things in a biased way, in the sense that if there are some positions in gain and others in loss, they’ll put the accent on the positions in gain and say, "hey, look here, you..." and the illusion of having gained something is made.

If things go very well, they suggest to invest more money, in order to get down to serious business, as they say, in some way. 

If things go wrong, they say they already know how to recover it but it takes more money. So, they basically want more money. And that’s generally more and more.

In order to understand if these people are reliable or not, you can do a very simple test. I already know the outcome. Whatever the trading results, tell them that you want to withdraw part or all of your money for personal reasons, whatever they may be. Rest assured that you won’t get your money back, but only get 3,000 excuses.

Also... Connected to this last request, there's often a scam on the scam, where they say "Yes, I'll send you the money but you have to pay taxes, because you earned a profit. And we are a tax withholding agent in the UK, where you pay half the taxes you would pay in Italy. So, if you pay taxes here, we'll send you the net amount. You must pay taxes and you know it. And this and that..."

And people believe it, they want to believe it. Because they say, "they'll send the money back to me, as long as I pay my taxes". Obviously, taxes are not taken from the money deposited in the account. You have to make another money transfer to these people and afterwards they usually disappear, after you made this umpteenth bad decision.

So, what happens now? People actually rely on others who were strangers up to 5 minutes before. They are worse than the cat and the fox, because you’re led to trust someone who convinces you that you’ll make money when you enter this fairy-tale scenario where only he knows what to do and we poor people don’t know what to do.

And it's very sad, because I've seen people who are also educated.... Don't think that only the uneducated or those who didn’t receive a high-level education fall into these traps. No way, there are also top-level graduates who fall into these traps. 

So, it's neither ignorance nor stupidity, it's just getting carried away by the pretty words of these crooks. They also call me sometimes and I enjoy it. I pretend I don't know anything, then I ask questions and then, eventually.... When my question becomes too difficult, they answer, “Well, this is a paid service, so you'll have to ask...."

Now there is a new scam about training, where they say they want to offer training to scare these crooks away and then they offer you ... And after two questions, you understand that they know less about the Stock Exchange than Pinocchio, and that’s it.

So this is what generally happens. We are flooded by offers from these people who propose to make us rich, and we are so flooded that, in the end, anyone who offers any type of financial training is labeled a “scammer”.

I don't blame those who do it and use this label. Because actually, we are so overwhelmed by all of this that it’s pretty normal not to trust anyone anymore. And you end up not understanding who actually has expertise and who is scammer....

Then there are also those who act as being the smartest guys in the world and seem to be able to discover the scammer before there is even a scam. I'm obviously talking about social media… but that's another case.

So, is trading a scam? No, it is not necessarily a scam, but unfortunately most of what is available is a scam.

At this point, the question is, sorry I'm anticipating your question, "But how do I recognize a scam?" Usually, the easiest way is to understand what expectations are related to the offer we're being made.

If the expectations are unrealistic, it’s clear that they are trying to swindle us in some way. If they promise 10% monthly earnings, you might not think it’s a lot, but I assure you that if someone offers you 10%, you should run for your life! I'm not saying it's impossible. I mean that no one can offer you that much, because if you do the math, you'll realize that it would be better for them to lock themselves in a room and do that instead of wasting their time phoning us.

But apart from that, 10% per month is high, too high. You can't rely on a promise like that. And even if they refer to real historical events, earnings with Bitcoin for example, and there is someone who actually became a billionaire with Bitcoin. Well, he DID become a billionaire, it's not like he's going to become one. What I want to say is that he were successful in the past, but there can be some additional problems for the future, so looking back at past events that were probably based on luck or chance than a concrete strategic plan is obviously bait to attract the next victim.

Debora

Andrea, let's summarize what you've already told us. First of all, the issue of promised performance. As a colleague of mine from Sole 24 Ore says, if what they tell you it’s too good to be true, it probably isn’t true. And this, in the meantime, is the first point to keep in mind when we receive an offer with stratospheric potential yields that we consider very interesting.

Maybe even have a look around and try to understand what investment tools are available and what kind of returns they offer, because if the one offered is totally out of line with the overall market and the average investments, this might be a helpful clue. 

You were talking earlier about the various types of existing scams. It happens to me to hear about scams from the audience of Radio 24. People who were scammed and have been victims of these so-called financial brokers, who generally, of course, as you said, call from London, which is the most famous financial marketplace in the world, and act as lawyers soliciting more money in order to manage disputes with crooked financial brokers. And, in the end, they generally belong to the same network...

Andrea

It happened to a person who was contacted by one of these people and unfortunately, of course.... They were the cousins of the earlier scammers, if not the scammers themselves in disguise. 

Also, one more thing: often these scammers also send PDF documents that have all kinds of logos on them. FCA, CME, Stock Exchange, etc. All the logos in the world on the same document that's supposed to be a statement or something, and they have no reason to be on that document. Because one thing is if I send out my brochure introducing myself. In that case, I'll obviously put all the logos of all the entities that I've worked with. But on a stockbroker’s statement, it doesn't make sense. You just need your own logo, your own address, and your own reference.

 

It doesn't make sense to put any other stuff. And, of course, they put all these stamps to make it look like it's very legitimate, because somebody told the Italians that if they're not regulated by Consob, beware that if they're not with FCA, beware that... They add all these stamps in a way to actually look like they're in line with all the directives, and obviously, that's part of the whole scam, too.

Debora

Andrea, I'll throw in one last case that is very complex and, if you like, even more devious: the Ponzi scheme. Maybe in order to make themselves even more credible in the eyes of the unfortunate victims, they can even initially repay part of the investment if you ask them, precisely because they divert part of the money received by new traders who have recently joined the group. So, they’re saying "See, I’m good". Then when the repayment requests pile up, that's when the repayments stop and the people disappear.

Andrea

Not only that. By making me earn money, I become their promoter. Because I believe I’m making money, and so I tell my friends and relatives. They trust me, and I say, "I’ve made money, look here, they gave me the money," and then maybe one of them attracts 10 in the network, and then they disappear with the money of those 10 and also of the first one that maybe, in the meantime, as you say, asks for something more and they disappear.

Yes, this is obviously a classic scheme, the well-known Ponzi scheme of the past. There was no need for Internet, but it is the same scheme. They make a person happy...

Debora

Timeless. A timeless model apparently. However, briefly, we have warned others to be careful especially with callers.

Well, another incredible thing is how people send money transfers with extreme superficiality and ease, even for large amounts, giving money to people who they only met over the phone.

Financial advisors are not allowed to materially take money from a client, and as I understand that you absolutely don't get any cash when people use your systems.

Andrea

I teach how to build systems and then everybody does what they want. However, I have been contacted several times during my career by people who wanted to entrust me with their money. Even close acquaintances who told me... "I'll give you this..." And I say "No, you can't. And indeed, if someone else proposes it to you, know that it is forbidden. It's not allowed and it's absolutely illegal."

Then in some ways it's also absurd. I remember an email, after having won the first of the championships I won, that said: "If I send you a million, are you able after one year to turn it into 4 million, and after 2 years to turn it into 16 million?"

I said, "No, I'm not capable of doing that, and if someone say they are, I'd report them to the first police station because they're ripping you off for that million." Unfortunately, illegal money management is widespread, and it's always okay as long as it's okay. 

Because obviously the "customer", let's call him so, as long as he is happy with what’s going on he’s maybe also promoting it, and it isn’t always a scam like the ones we mentioned before, but the very fact that I’m managing someone else's money illegally is a scam.

There's something I'd like to say - and this is inevitable – to those who are offered fixed earnings and so on: in trading there are periods when you lose. You lose, and you can lose a lot. Periods that pass if you are well organized, but there are periods that can be very long.

So, when those periods come, the unlucky person who entrusted his money to an unlicensed broker starts to go crazy, and that’s when problems arise, and a complaint is filed, and then a chain reaction begins causing the whole house of cards behind it to fall.

Debora

By the way very often these operators...

Andrea

It's illegal and it should not be done. Period.

Debora

Among other things, these operators often use women, young women in the belief that certain messages will be more appealing, so there is also this whole scenario on the side that makes it even more unpleasant.

Andrea

We also have a female face inside the Academy that often goes public, and she's also definitely a pretty girl. I wouldn't want someone to say... "Ah look, they do that too..."

Debora

Yes, yes.

Andrea

Anyway, it's true, they make it more appealing because the female universe is judged perhaps as more naïve and less merciless than financial sharks, and therefore they lure more victims in this way. This is true.

Debora

Yes, indeed. So, pay attention. By the way, I’d also like to leave a message that perhaps I’ve already given in a previous episode, Andrea, so during our past conversations. If you doubt the integrity of the broker calling you at that moment, ask his/her name and maybe report it to Consob. Consob is the authority that supervises the financial markets, and it generally shuts down 5-7 sites per week involving operators that abusively do business on the market. So, there are also controllers who continue to close the activities of these brokers who later, under other names, return on the market.

Now, among other things, I’ d like to ask you a question, Andrea: do you think these professionals are former traders who have had financial woes and, maybe in some sort of compensation, later reappear on the market in this way? Or are they really people who learn three or four particularly catchy terms, and that's enough to catch all these people in their net?

Andrea

To be honest, I never thought of it that way. Well, maybe, but I don't think that they are ex-traders or cheated traders who are disguised as scammers in this case. I think they are scam professionals and plan what must be done. Similarly, the bank robber is not necessarily the former employee who was harassed by his boss. He is a bank robber who has made bank robbery his profession. So, I think they're professional scammers. At the end of the day, whoever they are, it doesn't matter, because they take the money away. 

Anyway, they have minimal skills in the field of trading, very minimal... they learn a script by heart of some event and they pursue the popular topics of the moment, those that can intrigue, those that can have more appeal on people.

In my case, it was Crude Oil because it was a big topic at the time. Lately, it's cryptocurrencies. You know, whatever sounds best to the victim's ears.

Debora

Alright, so we hope to have given you all the necessary advice to ward off potential fraudulent actions by these people.

Before we say goodbye, here's a last service announcement. For all the people who'd like to delve deeper into the concepts we have explored during our conversation, you can order Andrea Unger's book, "The Unger Method," which is available on the Unger Academy website. You'll receive the book at your doorstep. It's free, and you only cover the shipping costs: so happy reading, everybody!

 

 

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We'll help you map out a plan to fix the problems in your trading and get you to the next level. Answer a few questions on our application and then choose a time that works for you.

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Andrea Unger

Andrea Unger

Andrea Unger here and I help retail traders to improve their trading, scientifically. I went from being a cog in the machine in a multinational company to the only 4-Time World Trading Champion in a little more than 10 years.

I've been a professional trader since 2001 and in 2008 I became World Champion using just 4 automated trading systems. 

In 2015 I founded Unger Academy, where I teach my method of developing effecting trading strategies: a scientific, replicable and universal method, based on numbers and statistics, not hunches, which led me and my students to become Champions again and again.

Now I'm here to help you learn how to develop your own strategies, autonomously. This channel will help you improve your trading, know the markets better, and apply the scientific method to financial markets.

Becoming a trader is harder than you think, but if you have passion, will, and sufficient capital, you'll learn how to code and develop effective strategies, manage risk, and diversify a portfolio of trading systems to greatly improve your chances of becoming successful.