The million dollar investment strategy is about a strategy that 10-fold a trading account from $100k to $1M within a short period of time. The start of it all is from another article in which we discussed about a recent saga in Singapore about a guy who accused a girl of losing 80k of his monies in forex.
In that article, the legality of the service was questioned, however, despite the girl providing being the service provider of trade signals to the guy, I concluded that the guy is all to blame for losing his money.
This is because he made the decision to listen to the trade signals from the girl, he made the decision to pass his money to her. And without knowing what he is getting himself into, he is inherently getting himself into an extremely high risk situation.
In this article, I shall try to understand the trading strategies of how her students are able to 10-fold their accounts within a month or within days. I shall discuss the risk of it as well.
In the saga, the girl provides trade signals to subscribers every now and then. This is not a unique service and there are many providing this service.
The idea is that an expert will analyse the market and provides a list of actions that the expert feels is reasonable to take. The expert will provide it to their subscribers and the subscribers simply copies the trade.
Using the information from the girl’s Facebook post and the stories from both sides, I tried to piece together what was done.
This piqued my curiosity because there were testimonial claims that students were able to 10-fold their account size within days and weeks. With one hitting the $1M mark within 4 weeks.
That’s absolutely amazing results. Especially at ITP, where ourselves managed to 10-fold our accounts only after a few years and all of us were employees.
The Million Dollar Investment Strategy
Looking at the stuff that they trade, their trade instructions, and their profits and losses, I believed that they are trading CFD.
CFD stands for Contract for Difference. In over-simplified terms, CFD is a contract in which the value of the contract changes as the price of the underlying product changes. CFD can represent stocks, bonds, currency aka forex, commodities and indices.
CFD is attractive to many traders because of margin. CFD is a leveraged product, it allows someone with a small account size to holding large positions. The margin available will allow you to hold positions multiple times the size of your account. Therefore, 10-folding your account size in a short period of time is entirely possible.
One last thing to note is that, CFD is NOT AN INVESTMENT. It is a TRADING STRATEGY. People get confused over them.
Trading on Margin
How does margin works? Imagine you are buying a house. Most people do not buy their house in full cash. They pay for the deposit, let’s say 10%, and they will borrow the rest. That is buying on margin.
Therefore, to buy a $500,000 house, one only has to pay $50,000 to own the house and throughout their loan period, slowly pay off the remaining $450,000 plus interest.
1 day after you buy your house, Chow Yun Fatt moved in next to you. Your house has increased in value due to Mark gor being your neighbour. Your house is now worth $600,000. You are actually sitting on a profit of $100,000, a 200% gain from your initial output of $50,000.
That is exactly how CFD works as well. CFD is a leveraged product, therefore, it allows you to control profit greatly from having a small account size by using leverage.
While it can amplify your winnings, it can also amplify your losses.
Do take note that while it allows you to win a lot, it can burst your account and send you in debt very quickly as well. In this world, when your borrow money, there is something called interest.
We have heard time and time again about horror stories and still people insists on taking on needless risk recklessly. It is really difficult to say no when you have $90,000 or even $900,000 staring at you within a week.
In this article, it speaks about John from Melbourne, who lost $500,000 trading in CFD because he doesn’t knows what it is doing. And heck, he is a successful Financial Advisor. He goes into trades hoping it will turn around.
In this example, Michael O’Carroll, a retired teacher who knows nothing about the financial market, lost £16,000 in 22 minutes, by engaging a service provider and trading according to the trade signals of the service provider.
Even billionaires goes bankrupt using CFD on leverage.
And if you think stop-losses measure or any form of circuit breaker function on advanced computer systems will save you from destruction, you are wrong. All computer systems has to react to the prices of the real market.
Here, I have shown 5 examples on the downside of CFD, which is a classical example of a high-risk and high-return strategy.
And in case any readers would think that money comes just like that, there is always a reason behind it.
Well, I hope I get the their base strategy correct. What I can conclude is that, I don’t doubt that this strategy can make one a lot of money, however, in order to do that, the trader must be extremely skilled. That level of skill is so rare that even a billionaire does not have it. And that the consequence can be dire for many.
To know how to safely increase your bank account by 10-fold, you can read our book, “How to Grow Your Elephant“, which will cover topics that you need to take care of before you start investing.
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To really know how to invest, take a look at our Skillsfuture-claimable stock investment course where we cover topics on which stocks to buy and how to profit from with little capital. And I guarantee you, we do not use leverage.