Should Trainers/vendors Be Regulated?

[TheDude 10]

As a whole, I'm not a big fan of regulation in the financial markets. In my professional experience, most regulators dont really understand financial markets.

 

However, recently I've become absolutely flabbergasted with some of the bull-stink that some of these trainers have been coming out with on these very boards!

 

My issue is this: If a fellow wants to learn how to drive a car, ride a horse, learn karate, become a doctor and so on, he will find that all trainers/instructors have some kind of professional qualification, or are a member of some professional recognised body.

 

If a fellow wants to invest his money and he seeks the advise of a professional, then that person too must be qualified to give financial advise.

 

However if a fellow wishes to become a self directed investor or trader, he can approach any tom, dick or sally who will hood wink them in to believing they know what they are on about. the result will be that the poor fellow is likely to pay an extortionate amount of money to the shill, and learn a bunch of rubbish that he could either have found free on the internet and/or (in most cases) is useless anyway.

 

Should these shill's be regulated, or just banned out right?

 

Thoughts please...

[BlueHorseshoe 10]

As a whole, I'm not a big fan of regulation in the financial markets. In my professional experience, most regulators dont really understand financial markets.

 

However, recently I've become absolutely flabbergasted with some of the bull-stink that some of these trainers have been coming out with on these very boards!

 

My issue is this: If a fellow wants to learn how to drive a car, ride a horse, learn karate, become a doctor and so on, he will find that all trainers/instructors have some kind of professional qualification, or are a member of some professional recognised body.

 

If a fellow wants to invest his money and he seeks the advise of a professional, then that person too must be qualified to give financial advise.

 

However if a fellow wishes to become a self directed investor or trader, he can approach any tom, dick or sally who will hood wink them in to believing they know what they are on about. the result will be that the poor fellow is likely to pay an extortionate amount of money to the shill, and learn a bunch of rubbish that he could either have found free on the internet and/or (in most cases) is useless anyway.

 

Should these shill's be regulated, or just banned out right?

 

Thoughts please...

 

One approach is just to drown them out with good quality free information. I think that this is what TL does well. If the vendors want to be heard above this then they have to provide a worthwhile contribution.

 

On the one hand, it is not your job or mine to prevent "newbies" from being "fleeced" by "shills". That's their lookout. On the other hand, it is our responsibility to ensure that TL continues to be a community where quality content is shared.

 

I think that it is important to remember the distinction between a vendor who posts things we disagree with, and a vendor who makes posts that are completely devoid of content.

 

BlueHorseshoe

[wrbtrader 10]

Hi,

 

Most of the free information available is by vendors or by none vendors getting some other type of compensation. The rest of the free information is by other traders that are also trainers/educators but doing such not for a fee and then a small percentage of them eventually become vendors.

 

This is one reason (not the only reason) why it will be extremely difficult to regulate the trainer/education industry because you'll need to regulate none vendors too without any bias. Simply, free information can also cause trading losses and most free information is posted anonymously by those without any verification. Yet, realistically, any forum owner that is compensated financially...should he/she be held responsible for those they allow to be as members and be responsible for the content being posted by those members ?

 

That's why TL has the following "Risk Warning" @ Risk Warning just like most vendor websites.

 

If there's going to be regulation...it'll primarily be via the forum owners and then secondary by the peers (members).

 

Therefore, the forum owners can easily have requirements that anyone (vendors and none vendors) that post training/education information, advice, recommendations, implies they are a profitable trader, taken specific trades in discussion and similar like...can only do so if they meet the qualification to be able to do such. Simply, regulation begins in the registration process of any forum or social network that makes itself available to traders.

 

For example, anyone that wants to be a member of Traderslaboratory must submit identification info, pay a small fee to be a member, show yearly trading account statements and anything else for those that post any type of training/education information, advice, recommendations or implies they are a profitable trader or implies they've taken a particular trade in discussion regardless if they are a vendor or none vendor posting free information. In other words, to regulate members implies the forum owner themselves will be regulated because they are the ones allowing these individuals to join.

 

Food for thought.

Edited June 24, 2012 by wrbtrader

[TheNegotiator 13]

My issue is this: If a fellow wants to learn how to drive a car, ride a horse, learn karate, become a doctor and so on, he will find that all trainers/instructors have some kind of professional qualification, or are a member of some professional recognised body.

 

In these specific examples, is it even true that to learn how to "drive a car, ride a horse, learn karate, become a doctor" the person who is "training" you must have a professional qualification in order to do so? Or is it the case that actually, any "tom, dick or sally" can show you (in most cases) what to do in order to become competent at the specific skill but then you must pass a certification yourself? I think in many cases, when we seek out a teacher, those who can demonstrate a level of skill by having a professional certification separate themselves from those who don't. Otherwise, how do you know whether a stranger is good or not, or even someone who claims to have a skill which you don't actually have is of a high level of skill?

 

Perhaps what should therefore be addressed as of primary importance is the level of certification required to trade at all. Trading through a broker you will need ziltch. If you are registered with an exchange however...

 

[alwaysastudent 10]

Currently the entire trading training sector is based on caveat emptor. Some teachers promote the fact that they have their Series 7 or Series 3, others open their live trades by way of trading labs. I know of one teaching institution where their instructors have to furnish proof of trading acumen by way of yearly trading account statements.

 

One issue with regulation is the need for a fix curriculum in the various aspects of trading. Finding a general consensus would be challenging with little benefit to the group embarking on the project.

[karoshiman 10]

 

...

 

My issue is this: If a fellow wants to learn how to drive a car, ride a horse, learn karate, become a doctor and so on, he will find that all trainers/instructors have some kind of professional qualification, or are a member of some professional recognised body.

 

If a fellow wants to invest his money and he seeks the advise of a professional, then that person too must be qualified to give financial advise.

 

...

 

 

 

I think one should distinguish regulation - which to me is imposed by the resp. state - and certification systems, which are often also self-imposed by industries.

 

For instance, in your aforementioned examples, there is (at least in Germany, where I'm from) regulation on driving a car or becoming a doctor, but there is to my knowledge no regulation on who is allowed to teach riding horses or karate. I don't know anything about riding horses, but in karate, the teacher will very probably have a black belt as this is industry standard. But I don't think that any laws require this to be the case (haven't researched it though).

 

The reason for this could be, that with driving a car or working as a doctor, other people's life's depend on your actions. Whereas in horse riding and karate you will very probably hurt yourself the most, if you are not properly educated.

 

It's similar with trading as an individual on your own account. You will not hurt anybody else but yourself, if you are not educated properly (by someone else or by yourself, i.e. by going through the pain). And with advisors giving advise to other people on their investments or trades, there are industry self-imposed certification systems, like with CTA's for example. As it's not the life of people that is dependent on proper trading, but only money, that could be a reason for the lack of interest by states to regulate.

 

However, coming back to your question, from a trader's perspective I would welcome some kind of certification system in order to maybe increase the level of education for newbies. But which part of the industry should drive such implementation? I mean, who is interested to educate a huge number of people with relatively small aggregate amount of money to become better in trading? I don't see anyone...

 

Another problem is that trading is a very individual endeavor. The right method for one person, might not work for another due to different personalities. That makes teaching so difficult or leads to many disappointments (also due to weak expectation management). The right teacher would be someone who is able to build together with his student the right method for him. That's a very complex and time-consuming task and requires a lot from both teacher and student. I haven't seen anyone who is providing such service (would probably be also a very expensive service...).

[i-tom 10]

To some extent the vendors are regulated. The CME has a list of education partners. The only honest vendors that I personally know of are on that list, especially if they are attempting to teach a person how to trade a CME product. If they are on that list they are legitimate. If not, you take your chances.

[SIUYA 11]

Random general thoughts.....

 

we dont regulate people from spending too much on on their houses, credit cards or lifestyles.....the banks are meant to do that

We do regulate education and educators in most countries - thats usually to ensure that the people they turn out meet certain standards which mean the general public can then trust that these people have a certain level of expertise or knowledge - it by no means tells us if they are good or not - merely educated.

 

I think that its too big a can of worms.

do we regulate the "you can do it", the Anthony Robbins of the world?

 

When it comes to finance, we regulate what "advice" can be given, and it would not be hard for a regulator to regulate trading educators for their general advice - however it will still not change a thing IMHO - and so why have extra regulation without any benefit.

 

The simple fact is many people will choose to be scammed, and there is nothing you can do about this flaw in human nature without excessive regulation.

http://www.bloomberg.com/news/2012-0...an-expert.html

 

Other things should be regulated first IMHO....eg; payday lenders

 

Maybe any vendors of "general" or "specific" advice or education in trading should not be allowed to claim certain things, or they should not be allowed to charge a certain amount unless they can verify certain claims......??

 

Trading is an individual pursuit - and what works for one person will not work for others....no matter if the education is the same for all students, high quality and certified. What about when you know a lot about trading stocks but want to branch into futures? You would not want the government saying you HAVE to do a course in order to trade a new instrument. Regulations increases costs.

 

If you dont do the homework before forking out good money to vendors - what makes you think you will do the work required to trade successfully.

 

Ultimately I dont think that there should be regulation mainly as - too hard to regulate and police, pointless and unnecessary cost.

[onesmith 10]

Everyone is already sufficiently regulated. Courts are always willing to listen to cogent demands. They have the authority to supercede Acts Of Congress. For instance, defining the exceptions that merit nullifying a Congressional grant of Immunity to a broad class of entities.

[Obsidian 10]

I think it is almost impossible to regulate trainers/vendors on the internet. besides nobody can protect you(new traders) if you trust a person (trainer/vendor) who you never saw him actually trading...

[gosu 10]

Vendors are already regulated. If you have any doubt about that, look for the ubiquitous disclaimer that EVERY vendor is careful to include with all of his material. What the OP is suggesting is more restrictive regulation, perhaps similar to requiring a series 7 license for a kid fresh out of college to give financial advice and sell financial products to retirees.

 

If the purpose is to make more jobs for regulatory agencies, that would be a fine idea. If the purpose is to protect people from their own stupidity, it wouldn't do much.

[SIUYA 11]

Vendors are already regulated. If you have any doubt about that, look for the ubiquitous disclaimer that EVERY vendor is careful to include with all of his material. What the OP is suggesting is more restrictive regulation, perhaps similar to requiring a series 7 license for a kid fresh out of college to give financial advice and sell financial products to retirees.

 

If the purpose is to make more jobs for regulatory agencies, that would be a fine idea. If the purpose is to protect people from their own stupidity, it wouldn't do much.

 

good point.

Interestingly enough all those disclaimers really do is protect the vendor/advisor/manager from being sued.....they generally offer no protection to the client who rarely ever reads it, and then often just ignores it anyway.

I think having a "know your client" survey is a good point....however these are also easily ignored.

Are there any existing educator/vendor codes of conduct, or associations that are used to self regulate? Maybe there is something in that....

[henryduncan12 10]

Trainers or vendors who are regulated or certified will be more trusted and new traders will believe on him. Regulation or certification makes a big difference between trainers. It is just like regulated and non regulated brokers.