The problem with gurus

1. A very well known personality who has referred to himself as a professional trader, but who in reality is a currency strategist for a retail FX FCM.

2. A woman who calls herself an expert trader and who has in the past also referred to herself as a professional trader, but who in fact demures when asked to prove that she is profitable. Instead, she refers to her self-promoted media presence.

3. A professional trader, signal seller and analyst who plagiarizes entire paragraphs from another author's work on an obscure FX trading forum and, when caught, does not change his post to ackowledge his source.

These are not uncommon examples of the many personalities passing themselves off as honest people trying to help traders improve...for a price. I'll name them here. This isn't slander. It's a statement of fact. They charge money for products and services, but they are not forthright with their customers.

Boris Schlossberg, although probably a nice and very bright guy, is a bit vague about just how good of a trader he is. He has alternately called himself a "currency strategist" and a "professional trader" in the past few years. So which is it, Mr. Schlossberg? Grace Cheng is just plain unhelpful when one tries to question her about her actual trading performace. This was her answer to an email inquiry about whether she had a proven track record: "I am a full-time investor, and my trading expertise has been highlighted by the media (newspapers, TV etc)." The other is only known as "Kumar," owner of the subscription website FXSwingTraders. He, of course, is the plagiarizer. In response to a question from a novice trader, this is Kumar himself writing from the 4Xlounge:

The Heikin-Ashi technique is extremely useful for making candlestick charts more readable--trends can be located more easily, and buying opportunities can be spotted at a glance. The charts are constructed in the same manner as a normal candlestick chart, with the exception of the modified bar formulas. When properly used, this technique can help you spot trends and trend changes from which you can profit! There are five primary signals that identify trends and buying opportunities:

• Hollow candles with no lower "shadows" indicate a strong uptrend: let your profits ride!
• Hollow candles signify an uptrend: you might want to add to your long position, and exit short positions.
• One candle with a small body surrounded by upper and lower shadows indicates a trend change: risk-loving traders might buy or sell here, while others will wait for confirmation before going short or long.
• Filled candles indicate a downtrend: you might want to add to your short position, and exit long positions.
• Filled candles with no higher shadows identify a strong downtrend: stay short until there's a change in trend.

These are the only candles I like to use to determine a trend of the currency, and I like to look at the 4 hour charts.

And this is an excerpt from Justin Kuepper's article entitled Heiken Ashi: A Better Candlestick:

There are five primary signals that identify trends and buying opportunities:

• Hollow candles with no lower "shadows" indicate a strong uptrend: let your profits ride!
• Hollow candles signify an uptrend: you might want to add to your long position, and exit short positions.
• One candle with a small body surrounded by upper and lower shadows indicates a trend change: risk-loving traders might buy or sell here, while others will wait for confirmation before going short or long.
• Filled candles indicate a downtrend: you might want to add to your short position, and exit long positions.
• Filled candles with no higher shadows identify a strong downtrend: stay short until there's a change in trend.

These signals show that locating trends or opportunities becomes a lot easier with this system. The trends are not interrupted by false signals as often, and are thus more easily spotted. Furthermore, opportunities to buy during times of consolidation are also apparent.

Conclusion
The Heikin-Ashi technique is extremely useful for making candlestick charts more readable--trends can be located more easily, and buying opportunities can be spotted at a glance. The charts are constructed in the same manner as a normal candlestick chart, with the exception of the modified bar formulas. When properly used, this technique can help you spot trends and trend changes from which you can profit!

See any similarities? At least Kumar went to the trouble of moving Justin's conclusion to the top of the post. But does this make it any less obvious? How could someone be so brazen (or reckless)?

Of course, the person who asked Kumar to expound on Heiken Ashi was very grateful. It was, as he put it, exactly what he needed. Except that what he really needed was to read Kuepper's article and then follow up with a research plan for the indicator. Kumar, in his conceit and ambition, lost an opportunity to be genuinely helpful to his aspiring student.

Attempts to inform the forum of the source of the article were deleted by the owner of 4Xlounge, who has a business relationship with Mr. Kumar. The only original thought Kumar added was that he likes to look at the 4 hour charts. (Whoa there Kumar! Pull it back now! Pull it back!) Mr. Kumar and the 4Xlounge owner apparently feel it is not important to correct their error. The original article and author are still not referenced on the thread...hmmm.

I won't go into Schlossberg or Cheng, although I could write a few more pages about my exchanges and experiences with them and their work. Their cases are a bit more convoluted than Kumar's glaring and undistinguished example. The point is, we have a problem with integrity in the spot FX trading community. These three people are certainly not the worst offenders, but they are examples of just how easy it is to pass oneself off as a trader, and thus add cachet to one's business.

The problem with gurus is not that they are usually beneath the task, nor that they are usually dishonest. The problem is that they provide another reason for us to abrogate our responsibility to ourselves -- it's about due diligence, really. This is important whether we win or lose. Still, we are also obligated to hold ourselves and them accountable for ethical conduct, as we would hold any other professional accountable for their work.

It doesn't matter what kind of traders we are, or how experienced we are, or what part of the world we are from. We should all demand integrity from ourselves and from each other.

TLT