15/1/2014: Please read the latest comment at the end of this article. I would advise Extreme caution in dealing with CM Traders
30/1/2014: WARNING. Read all comments before even remotely thinking about joining this company. Do not believe anything CM Traders tell you. You will do your dough.
12/04/2014: Alert ! CommOptions , commoptions.com recently discovered. Looks like CM Traders all over again. Fair chance it’s the same people. Website menu the same, same broker, same packages even! Be Warned, stay clear! (15/07/2014: it also seems that Sarcha Goulding who owns CM Traders also runs CommOptions, West Binary, West Digital and has been implicated in other scams like Intral
1/6/2014: Beware of ITZ Australia / ITZ International /International Traders Zurich who appear to have exactly the same MO as CM Traders
I’ve been meaning for a while to write something about the spate of binary option schemes out there. I recently went through the sales pitch from CM Traders, so this seems like a good place to start looking at binaries.
cmtraders.com.au , Woodybank Pty Ltd trading as CM Traders
CM Traders. They sell a package for investing in forex, commodity and index markets via binary trading. For those that don’t know, binary trading is a relatively new way to trade the markets, where you ‘bet’, effectively, on whether the price will finish higher or lower after the chosen time interval. So it doesn’t matter if you are successful or unsuccessful by one pip or a thousand pips, the bet pays a fixed amount. That fixed return is generally about 90% of your investment.
CM Traders spruik enticing returns of over 50 times your investment capital after just one year, and that is trading conservatively! ( and at their worst rate of return they reckon). That is based on winning 55% of the 2000 trades you get on the CM 2000 package and trying to win just 0.35% of your trading bank each time you have a successful trade. $1000 becomes $57,000!!
Trading is done by the Auto FX trading robot that handles all the trading for you, taking the trades decided on by their team of 30 traders ( no wait..now it’s 40 trading analysts with 1200 years of trading experience between them) and puts those trades into the market for you trading on your account with Binary.com.
All for the measly sum of $12,500, for a year. Of course you can start lower ($7,900) or go right up to the high flyer packages of over $50,000.
Ok, so what did I think about it all? I was given a trial, where I get to choose any ten of the twenty or so commodities, indexes and forex pairs that they trade. Ten trades in a day. After one day I received a follow up call telling me I was smashing it, having won eight out of my ten trades…when would I like to sign up! I replied saying that I would like to see considerably more than just ten trades before making an investment decision of over ten thousand dollars ! Imagine basing that decision on tossing a coin ten times. You’d be mad to do it. Ahh, but they say that they win so often because their team of analysts are so good. So could I have a longer trial , like at least 100 trades? Oh no…that would cost them too much money. Err..how exactly? Ah, well, it’s because they have to send out the trades to about 500 people within a very precise time frame. Ok, but that didn’t answer my question…where is the expence in that, and aren’t you jeopardising the clients trades by giving any trials at all then??
Later on, I was told that there was no point in having a longer trial as all the licences would be gone by then ( they were just trying to save one of the last packages for me ). I’m betting that there’s a fair chance they will still be offering licences next year….
They sent me some ‘client statements’, supposedly from one big player who has about $150,000 in his account. Out of the 153 trades listed there, there were 81 winners, or 52.9%. They told me that their worst case scenario was 55% winners and that they should really base their earning results on the 60 to 70% winners they usually get. So how do you increase your bank 50 fold when the returns from each bet are around 90% but you only win 55% of the time? Answer is, you don’t. Unless you employ some loss chasing mechanism and hope that you recoup your losses on the next winner, before you go through your whole bank. In the statements they sent me, at one stage the guy had four losses in a row and his next bet was over $6,000 trying to win just $300. It won, but if it had lost ( 48% chance) he would have been down $12,000 and I guess having to put about the same on the next bet trying to win it all back. The profit for the whole period was $10,500, so just the one bet at nearly a 50/50 chance was the difference between a profit and a loss. Of course, this guy was betting aggressively they tell me, because he has so much money and I could set my stop loss at any number of bets I like, or even don’t bother with recoupment at all. Well, the way things work is that, if you can’t win at level stakes, no recoupment strategy will make that system win.
One strange thing about those statements was that there were a couple of entries that were half cut, as if the statement had somehow been edited….just saying….
They offer a 110% guarantee, if you have more losing trades than winning trades and if you don’t make a profit. One proviso though is that you are able to show that you funded each trade recommemnded, and another is that you stay within a ‘conserative’ framework. I think that they are two weak spots in the guarantee, open to interpretation.
I got to speak to someone who claimed to be a client, and a happy one at that, but couldn’t verify anything.
So how does it all add up? They say they have only 1500 positions available ( with only the last few remaining..be quick!). Ok, so say they all start off with only $1000 banks, and after a year they are all at least up to $55,000. Let’s say 500 of them are on any one trade at any time, so they might be betting, combined, about $96,000 on that trade. The broker, Binary.com, I am told makes the market and takes on the bets. So they would have to be paying out on average, about $45,000 each trade, ten time a day, by three for the other thousand clients, that’s $1.35m every day. I wonder if any broker could handle that kind of consistent winning?
What else? So why was the sales person still working there? ( this person reckoned they had three licences and had been in three years)., At the returns they were quoting, I don’t think I’d be there on the phone every day….unless the good samaritan in me just wanted to help other people so much! They are also very good with an answer for every question, well thought out to sound convincing, or branch off onto talking about how succesful some client is. There’s also a pitch that all the licences are being snapped up because everyone must be buying themselves a treat for christmas (!) They said there’s plenty of good feedback on the web. I could only find a couple of blogs..both single post blogs, saying pretty much the same thing..sceptical at first but so glad they gave it a go..and just wanted to put out a public thanks. The only other mentions were articles posted about CM Traders on some article posting sites, by..I wonder who..
So, in my opinion only, I think it all sounds a bit too fanciful. I would definitely never base an investment decision of over $10,000 on the result of ten coin tosses. I wouldn’t rely on loss chasing (sorry..recoupment plan) to ensure my continued success. It all sounds far too good to be true.
I’ll also be checking in next year, to see how many licences they have left to sell….
If anyone has had experience buying into the program, we’d love to hear about your experiences..please leave a comment or email..