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Back to School: Learn to Trade Futures and Options Without Getting Scammed

Posted by SmartCheck Staff /
Backpack and Apple

If you search online to learn how to trade futures or options, you’ll find dozens of seminars, web courses, and training software. But while there are many useful resources available, there are also plenty of instructors promising expertise and results they can’t deliver — and in some cases, perpetuating fraud. How do you navigate the overwhelming number of options, sort the good from the bad, and steer clear of scams? Here are some tips for learning new trading skills or more about the markets safely and successfully.

Getting Started
Before you pay for classes or training software, it’s useful to tap into free resources to learn how markets and trading really work. A strong foundation will help you evaluate your options for further education and zero in on the areas where you most need help. You can learn a great deal on your own.

To help avoid misinformation and scams, it’s a good idea to start with public institutions, nonprofit organizations, and regulated trading organizations, such as exchanges. Although not exhaustive, below is a list of potential resources to help you get started.

- CME Group’s Futures Fundamentals site includes articles and videos on how futures markets work and how to trade, and the CME Institute includes free online courses and tools for practicing trades.

- The Institute for Financial Markets offers a collection of resources, including a free interactive online tutorial and a printed guide to derivatives markets, available for purchase.

- Intercontinental Exchange offers in-person and online courses covering a range of derivatives market topics.

- CBOE’s Options Institute offers courses in options trading strategy.

- The Options Industry Council hosts free webinars and in-person seminars geared to different knowledge levels, along with educational videos, podcasts, and articles.

- Your local library may offer free educational sessions on trading and investing, as well as books on trading strategies.

Once you’re ready to enroll in seminars or classes, sticking with established, trustworthy institutions can help you avoid scams and incorrect or misleading information. Many colleges and universities offer continuing education courses in trading strategy, taught by experienced instructors. Check course listings at accredited colleges in your area or colleges with online learning programs. Additionally, some larger brokers may also offer helpful training programs.

Watch for These Red Flags
If you’re considering in-person seminars and online courses, watch out for these common signs of fraud:

  1. Promise of big returns — Risk is inherent in any trading strategy, and there is no such thing as a foolproof method with guaranteed results. Typically, the opportunity for higher returns goes hand in hand with higher risk. Just as legitimate financial advisors don’t shy away from discussing the risks of investment opportunities, trustworthy instructors are upfront about the uncertainty that comes with following their advice — or any trading strategy advice.
  2. Easy answers and secret tricks — Derivatives markets are complex, with many factors in play day-to-day and minute-to-minute. Trustworthy instructors and authors will help you understand these complexities, not promise you simple shortcuts to success.
  3. Claims of past success — Scammers may advertise the exceptional results they and their students have seen following their strategies. While hard evidence of positive results may indicate a quality course, note that it’s easy to fake success measures or frame stats in misleading ways. Don’t take claims of success at face value if you haven’t verified them. Also keep in mind that individual students who offer testimonials may be outliers who don’t represent success for students overall. And remember, past success doesn’t guarantee future success.
  4. Urgency — Fraudsters may pressure you to sign up for seminars or classes right away. Be skeptical of claims that there are only a few open seats left or that the window is closing to lock in a discounted price. There will always be opportunities to hone your skills, and there’s no need to rush into anything if you’re unsure.
  5. The “free” offer — One common sales technique is to offer an introductory seminar for free and then charge for more advanced training or other “required” features or services. This could seem like a logical way to try before you buy, but you could also be subjecting yourself to high-pressure sales tactics and ongoing phone calls to get you to try another seminar. Also, watch for companies that promise free seminars that turn out to be sales pitches for paid classes or investment opportunities.
  6. Upfront commitments — Conversely, fraudsters may ask you to sign up for an extensive course load — and extensive fees — right off the bat. Be wary of companies that ask for a high level of commitment before you’ve had a chance to assess the quality of their courses.

Whether or not you spot any red flags, it pays to do some background research on a company and instructor before signing up. Learn about the history of the organization, including how long it’s been in operation, and check online professional profiles for instructors. If you’re considering a course taught by brokers or other professionals, check to see if they are registered and have trouble-free disciplinary histories.

It may be helpful to check online for reviews from past students and articles about the company, but take this information with a grain of salt. Positive ratings and reviews don’t guarantee quality and can be faked. At the same time, dissatisfied students may post negative reviews even when the instructor wasn’t at fault.

Finally, it’s a good idea to contact a company or instructor before enrolling, so you can confirm what the course will cover, learn more about the instructor’s background, ensure you understand all costs upfront, and ask any additional questions. A quick conversation can tell you a lot about what to expect.

About CFTC SmartCheck
This article was prepared by the Commodity Futures Trading Commission (CFTC) for the CFTC SmartCheckSM program. CFTC SmartCheck informs investors about tools that may help them research financial professionals, uncover past disciplinary history, and stay ahead of fraud with news and alerts. If you have a question about CFTC SmartCheck, email us at consumers@cftc.gov.

The article is provided for general informational purposes only and does not provide legal or investment advice to any individual or entity. Please consult with your own legal or investment advisor before taking any action based on this information.

Reference in this article to any products, services, resources, websites, or any entities, enterprises, or organizations is for informational purposes only and does not constitute endorsement, recommendation, or favoring by the U.S. government.

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