Broker Review Lion Markets

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LionMarkets Review – Is it scam or safe?

Trading Accounts and Conditions

Minimum deposit Min./Max. bet size Payout % Trading platform
$100 $5 / $5000 Up to 83% SpotOption

LionMarkets is a binary options broker, offering trading in different financial assets on SpotOption web-based platform. Unlike most binary options brokers, it offers a single trading account type.

The Company. Security of Funds

Company Country Regulation
Advanced Innovative Securities Limited Vanuatu VFSC

LionMarkets launched its services in September 2020. Obviously, the broker is based in UK, but the company behind the brand, Advanced Innovative Securities ltd., is registered offshore, in Vanuatu

Binary options brokers have increasingly bad reputation lately, as many of them, especially non-licensed and offshore ones, turn out to be scams. That is why we advise traders to be careful when choosing a brokerage and avoid doing business with offshore companies. Vanuatu, for example, has become a very popular forex and binary options hub due to its low-cost registration procedure and favorable tax regime. The minimum capital requirement for opening a brokerage there is only $2,000. By comparison, CySEC requires at least EUR 730 000 in capital form new brokers, which acts as a deterrent for most scammers.

What is more, we found a discussion about LionMarkets in the Forex Peace Army forum, where all user reviews are negative. Most users claim that LionMarkets is a scam broker. Considering the above said, this binary options broker is not recommended.

Trading Conditions

Trading Options: Call/Put, 60 second, Long term, Pairs, One touch, Ladder, Builder, Limits

Assets: Currencies, Stocks, Indices, Commodities

Expiry Times: 60 sec, 120 sec, 180 sec, 300 sec, Long Term

Minimum Initial Deposit

The minimum initial deposit for clients of LionMarkets is $100, which is average. Yet, some binary options brokers require less. For example, one can open an account with FinaCom-regulated Grand Capital with just $10.

The minimum bet size with this broker is on the lower end of average, amounting to $5 (for 60 second options). With Grand Capital one can place a trade with just $1. Such low minimum bet sizes allow for better risk management.

Depending on the Trading Options and expiry times, payout percentage offered by LionMarkets reaches 83%, which is average for the market. In comparison, payout percentage offered by Grand Capital amounts up to 86%.

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Trading Platform

Like most binary options brokers, LionMarkets uses the web-based SpotOption platform. The platform is popular and easy to use.

A useful feature on LionMarkets’s platform is the Spot Follow, which allows traders to follow the best and most experienced traders on the platform. All traders need to do is to choose the trader that they believe will be the most successful and have all their trades duplicated into their account automatically.

Methods of Payment

There are several payment methods available to LionMarkets’ clients: wire transfer, credit/debit cards, and more than 20 e-wallet payment options (such as Skrill, Neteller, China Union Pay etc.).


LionMarkets is an offshore binary option broker whose trading conditions appear standard. We do not recommend doing business with it, because it is not properly regulated and its overall reputation is negative. To sum up the above, here are the advantages and drawbacks in relation to this broker:

Pros Cons
SpotOption platform available Registered offshore
Various instruments and options offfered Bad reputation
No bonuses
Broker Advantages

FXTM a regulated forex broker (regulated by CySEC, FCA and FSC), offering ECN trading on MT4 an MT5 platforms. Traders can start trading with as little as $10 and take advantage of tight fixed and variable spreads, flexible leverage and swap-free accounts.

XM is broker with great bonuses and promotions. Currently we are loving its $30 no deposit bonus and deposit bonus up to $5000. Add to this the fact that it’s EU-regulated and there’s nothing more you can ask for.

FXCM is one of the biggest forex brokers in the world, licensed and regulated on four continents. FXCM wins our admirations with its over 200,000 active live accounts and daily trading volumes of over $10 billion.

FxPro is a broker we are particularly keen on: it’s regulated in the UK, offers Metatrader 4 (MT4) and cTrader – where the spreads start at 0 pips, Level II Pricing and Full Market Depth. And the best part? With FxPro you get negative balance protection.

FBS is a broker with cool marketing and promotions. It runs an loyalty program, offers a $100 no-deposit bonus for all new clients outside EU willing to try out its services, and an FBS MasterCard is also available for faster deposits and withdrawals.

FxChoice is a IFSC regulated forex broker, serving clients from all over the world. It offers premium trading conditions, including high leverage, low spreads and no hedging, scalping and FIFO restrictions.

HotForex is a EU Regulated broker, offering wide variety of trading accounts, including Auto, Social and Zero spread accounts. The minimum intial deposit for a Micro account is only $50 and is combined with 1000:1 leverage – one of the highest in the industry. Review Visit site

Live discussion

Join live discussion of on our forum profile provided by Lions of Forex, Feb 5, 2020

Lions of Forex is the most complete Foreign Exchange & Millionaire Mentorship educational suite available to individuals from around the world. It offers financial mentorship and education on trading in the global markets, as well as in-depth Millionaire Mindset training to expand our members minds.. The LOF platform offers daily SMS trade ideas, weekly live-webinars, 120+ hours of Forex training, unique resources for traders, a large international support community, and an incredible affiliate program that incentivizes members to help others achieve the same financial success!


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Consumer Reviews

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First of all for you to even trade Forex you have to be a person that controls his/her impulses “ambition, greed, and emotions” by placing it in 3rd priority by 2nd priority being adapting and learning AKA using intelligence to not make the same mistake twice; because like Albert Einstein said “doing the same thing twice expecting different results is the definition of insanity”. And that is how people blow their accounts and couldn’t stay in the game long enough for it to actually click.

That is the key, whatever you do your urgent priority should be to stay in the game! The most that I have made in a day has been $900 on a Sunday and several hundred the first half of the week and overall $3400 in that week. And to finish with a bang your first priority is actually having dignity to learn concepts, patterns, and what the mentors provide. And if y’all do that you’ll finish in 1st place! Mic drop!

best people on Earth: “pursuers of Excellence”
That’s how you execute Ambition without Limits

Is Your Forex Broker a Scam?

If you do an internet search on forex broker scams, the number of results is staggering. While the forex market is slowly becoming more regulated, there are many unscrupulous brokers who should not be in business.

When you’re looking to trade forex, it’s important to identify brokers who are reliable and viable, and to avoid the ones that are not. In order to sort out the strong brokers from the weak and the reputable ones from those with shady dealings, we must go through a series of steps before depositing a large amount of capital with a broker.

Trading is hard enough in itself, but when a broker implements practices that work against the trader, making a profit can be nearly impossible.

Key Takeaways

  • If your broker does not respond to you, it may be a red flag that he or she is not looking out for your best interests.
  • To make sure you’re not being duped by a shady broker, do your research, make sure there are no complaints, and read through all the fine print on documents.
  • Try opening a mini account with a small balance first, and make trades for a month before attempting a withdrawal.
  • If you see buy and sell trades for securities that don’t fit your objectives, your broker may be churning.
  • If you are stuck with a bad broker, review all your documents and discuss your course of action before taking more drastic measures.

Separating Forex Fact From Fiction

When researching a potential forex broker, traders must learn to separate fact from fiction. For instance, faced with all sorts of forums posts, articles, and disgruntled comments about a broker, we could assume that all traders fail and never make a profit. The traders that fail to make profits then post content online that blames the broker (or some other outside influence) for their own failed strategies.

One common complaint from traders is that a broker was intentionally trying to cause a loss in the form of statements such as, “As soon as I placed the trade, the direction of the market reversed” or “The broker stop hunted my positions,” and “I always had slippage on my orders, and never in my favor.” These types of experiences are common among traders and it is quite possible that the broker is not at fault.

Rookie Traders

It is also entirely possible that new forex traders fail to trade with a tested strategy or trading plan. Instead, they make trades based on psychology (e.g., if a trader feels the market has to move in one direction or the other) and there is essentially a 50% chance they will be correct.

When the rookie trader enters a position, they are often entering when their emotions are waning. Experienced traders are aware of these junior tendencies and step in, taking the trade the other way. This befuddles new traders and leaves them feeling that the market—or their brokers—are out to get them and take their individual profits. Most of the time, this is not the case. It is simply a failure by the trader to understand market dynamics.

Broker Failures

On occasion, losses are the broker’s fault. This can occur when a broker attempts to rack up trading commissions at the client’s expense. There have been reports of brokers arbitrarily moving quoted rates to trigger stop orders when other brokers’ rates have not moved to that price.

Luckily for traders, this type of situation is an outlier and not likely to occur. One must remember that trading is usually not a zero-sum game, and brokers primarily make commissions with increased trading volumes. Overall, it is in the best interest of brokers to have long-term clients who trade regularly and thus, sustain capital or make a profit.

Behavioral Trading

The slippage issue can often be attributed to behavioral economics. It is common practice for inexperienced traders to panic. They fear missing a move, so they hit their buy key, or they fear losing more and they hit the sell key.

In volatile exchange rate environments, the broker cannot ensure an order will be executed at the desired price. This results in sharp movements and slippage. The same is true for stop or limit orders. Some brokers guarantee stop and limit order fills, while others do not.

Even in more transparent markets, slippage happens, markets move, and we don’t always get the price we want.

Communication Is Key

Real problems can begin to develop when communication between a trader and a broker begins to break down. If a trader does not receive responses from their broker or the broker provides vague answers to a trader’s questions, these are common red flags that a broker may not be looking out for the client’s best interest.

Issues of this nature should be resolved and explained to the trader, and the broker should also be helpful and display good customer relations. One of the most detrimental issues that may arise between a broker and a trader is the trader’s inability to withdraw money from an account.

Broker Research Protects You

Protecting yourself from unscrupulous brokers in the first place is ideal. The following steps should help:

  • Do an online search for reviews of the broker. A generic internet search can provide insights into whether negative comments could just be a disgruntled trader or something more serious. A good supplement to this type of search is BrokerCheck from the Financial Industry Regulatory Authority (FINRA), which indicates whether there are outstanding legal actions against the broker. And if appropriate, gain a clearer understanding of the U.S. regulations for forex brokers.
  • Make sure there are no complaints about not being able to withdraw funds. If there are, contact the user if possible and ask them about their experience.
  • Read through all the fine print of the documents when opening an account. Incentives to open an account can often be used against the trader when attempting to withdraw funds. For instance, if a trader deposits $10,000 and gets a $2,000 bonus, and then the trader loses money and attempts to withdraw some remaining funds, the broker may say they cannot withdraw the bonus funds. Reading the fine print will help make sure you understand all contingencies in these types of instances.
  • If you are satisfied with your research on a particular broker, open a mini account or an account with a small amount of capital. Trade it for a month or more, and then attempt to make a withdrawal. If everything has gone well, it should be relatively safe to deposit more funds. If you have problems, attempt to discuss them with the broker. If that fails, move on and post a detailed account of your experience online so others can learn from your experience.

It should be pointed out that a broker’s size cannot be used to determine the level of risk involved. While larger brokers grow by providing a certain standard of service, the 2008-2009 financial crisis taught us that a big or popular firm isn’t always safe.

The Temptation to Churn

Brokers or planners who are paid commissions for buying and selling securities can sometimes succumb to the temptation to effect transactions simply for the purpose of generating a commission. Those who do this excessively can be found guilty of churning—a term coined by the Securities and Exchange Commission (SEC) that denotes when a broker places trades for a purpose other than to benefit the client. Those who are found guilty of this can face fines, reprimands, suspension, dismissal, disbarment, or even criminal sanctions in some cases.

SEC Defines Churning

The SEC defines churning in the following manner:

Churning occurs when a broker engages in excessive buying and selling of securities in a customer’s account chiefly to generate commissions that benefit the broker. For churning to occur, the broker must exercise control over the investment decisions in the customer’s account, such as through a formal written discretionary agreement. Frequent in-and-out purchases and sales of securities that don’t appear necessary to fulfill the customer’s investment goals may be evidence of churning. Churning is illegal and unethical. It can violate SEC Rule 15c1-7 and other securities laws.

The key to remember here is that the trades that are placed are not increasing your account value. If you have given your broker trading authority over your account, then the possibility of churning can only exist if they are trading your account heavily, and your balance either remains the same or decreases in value over time.

Of course, it is possible that your broker may be genuinely attempting to grow your assets, but you need to find out exactly what they are doing and why. If you are calling the shots and the broker is following your instructions, then that cannot be classified as churning.

Evaluate Your Trades

One of the clearest signs of churning can be when you see buy and sell trades for securities that don’t fit your investment objectives. For example, if your objective is to generate a current stable income, then you should not be seeing buy and sell trades on your statements for small-cap equity or technology stocks or funds.

Churning with derivatives such as put and call options can be even harder to spot, as these instruments can be used to accomplish a variety of objectives. But buying and selling puts and calls should, in most cases, only be happening if you have a high-risk tolerance. Selling calls and puts can generate current income as long as it is done prudently.

How Regulators Evaluate Churning

An arbitration panel will consider several factors when they conduct hearings to determine whether a broker has been churning an account. They will examine the trades that were placed in light of the client’s level of education, experience, and sophistication as well as the nature of the client’s relationship with the broker. They will also weigh the number of solicited versus unsolicited trades and the dollar amount of commissions that have been generated as compared to the client’s gains or losses as a result of these trades.

There are times when it may seem like your broker may be churning your account, but this may not necessarily be the case. If you have questions about this and feel uneasy about what your advisor is doing with your money, then don’t hesitate to consult a securities attorney or file a complaint on the SEC’s website.

Already Stuck With a Bad Broker?

Unfortunately, options are very limited at this stage. However, there are a few things you can do. First, read through all documents to make sure your broker is actually in the wrong. If you have missed something or failed to read the documents you signed, you may have to assume the blame.

Next, discuss the course of action you will take if the broker does not adequately answer your questions or provide a withdrawal. Steps may include posting comments online or reporting the broker to FINRA or the appropriate regulatory body in your country.

The Bottom Line

While traders may blame brokers for their losses, there are times when brokers really are at fault. A trader needs to be thorough and conduct research on a broker before opening an account and if the research turns up positive for the broker, then a small deposit should be made, followed by a few trades and then a withdrawal. If this goes well, then a larger deposit can be made.

However, if you are already in a problematic situation, you should verify that the broker is conducting illegal activity (such as churning), attempt to have your questions answered, and if all else fails, and/or report the person to the SEC, FINRA, or another regulatory body that could enforce action against them.

How to Spot a Forex Scam

The spot forex market trades over $5 trillion a day, including currency options and futures contracts. With this enormous amount of money floating around in an unregulated spot market that trades instantly, over the counter, with no accountability, forex scams offer unscrupulous operators the lure of earning fortunes in limited amounts of time. While many once-popular scams have ceased—thanks to serious enforcement actions by the Commodity Futures Trading Commission (CFTC) and the 1982 formation of the self-regulatory National Futures Association (NFA)—some old scams linger, and new ones keep popping up.

Back in the Day: The Point-Spread Scam

An old point-spread forex scam was based on computer manipulation of bid-ask spreads. The point spread between the bid and ask basically reflects the commission of a back-and-forth transaction processed through a broker. These spreads typically differ between currency pairs. The scam occurs when those point spreads differ widely among brokers.

Key Takeaways

  • Many scams in the forex market are no longer as pervasive due to tighter regulations, but some problems still exist.
  • One shady practice is when forex brokers offer wide bid-ask spreads on certain currency pairs, making it more difficult to earn profits on trades.
  • Be careful of any offshore, unregulated broker.
  • Individuals and companies that market systems—like signal sellers or robot trading—sometimes sell products that are not tested and do not yield profitable results.
  • If the forex broker is commingling funds or limiting customer withdrawals, it could be an indicator that something fishy is going on.

For instance, some brokers do not offer the normal two-point to three-point spread in the EUR/USD but spreads of seven pips or more. (A pip is the smallest price move that a given exchange rate makes based on market convention. Since most major currency pairs are priced to four decimal places, the smallest change is that of the last decimal point.) Factor in four or more additional pips on every trade, and any potential gains resulting from a good trade can be eaten away by commissions, depending on how the forex broker structures their fees for trading.

This scam has quieted down over the last 10 years, but be careful of any offshore retail brokers that are not regulated by the CFTC, NFA, or their nation of origin. These tendencies still exist, and it’s quite easy for firms to pack up and disappear with the money when confronted with actions. Many saw a jail cell for these computer manipulations. But the majority of violators have historically been United States-based companies, not the offshore ones.

The Signal-Seller Scam

A popular modern-day scam is the signal seller. Signal sellers are retail firms, pooled asset managers, managed account companies, or individual traders that offer a system—for a daily, weekly, or monthly fee—that claims to identify favorable times to buy or sell a currency pair based on professional recommendations that will make anyone wealthy. They tout their long experience and trading abilities, plus testimonials from people who vouch for how great a trader and friend the person is, and the vast wealth that this person has earned for them. All the unsuspecting trader has to do is hand over X amount of dollars for the privilege of trade recommendations.

Many of signal-seller scammers simply collect money from a certain number of traders and disappear. Some will recommend a good trade now and then, to allow the signal money to perpetuate. This new scam is slowly becoming a wider problem. Although there are signal sellers who are honest and perform trade functions as intended, it pays to be skeptical.

“Robot” Scamming in Today’s Market

A persistent scam, old and new, presents itself in some types of forex-developed trading systems. These scammers tout their system’s ability to generate automatic trades that, even while you sleep, earn vast wealth. Today, the new terminology is “robot” because the process is fully automated with computers. Either way, many of these systems have never been submitted for formal review or tested by an independent source.

Examination of a forex robot must include the testing of a trading system’s parameters and optimization codes. If the parameters and optimization codes are invalid, the system will generate random buy and sell signals. This will cause unsuspecting traders to do nothing more than gamble. Although tested systems exist on the market, potential forex traders should do some research before putting money into one of these approaches.

Other Factors to Consider

Traditionally, many trading systems have been quite costly, up to $5,000 or more. This can be viewed as a scam in itself. No trader should pay more than a few hundred dollars for a proper system today. Be especially careful of system sellers who offer programs at exorbitant prices justified by a guarantee of phenomenal results. Instead, look for legitimate sellers whose systems have been properly tested to potentially earn income.

Another persistent problem is the commingling of funds. Without a record of segregated accounts, individuals cannot track the exact performance of their investments. This makes it easier for retail firms to use an investor’s money to pay exorbitant salaries; buy houses, cars, and planes or just disappear with the funds. Section 4D of the Commodity Futures Modernization Act of 2000 addressed the issue of fund segregation; what occurs in other nations is a separate issue.

An important factor to always consider when choosing a broker or a trading system is to be skeptical of promises or promotional material that guarantees a high level of performance.

Other scams and warning signs exist when brokers won’t allow the withdrawal of monies from investor accounts, or when problems exist within the trading platform. For example, can you enter or exit a trade during volatile market action after an economic announcement? If you can’t withdraw money, warning signs should flash. If the trading platform doesn’t operate to your liquidity expectations, warning signs should flash again.

The Bottom Line

Conduct due diligence on the forex broker you’re considering by going to the Background Affiliation Status Information Center (BASIC), created by the NFA. Many changes have driven out the crooks and the old scams and legitimized the system for the many good firms. However, always be wary of new forex scams; the temptation and allure of huge profits will always bring new and more sophisticated scammers to this market.

Dirk du Toit’s Bird Watching in Lion Country

I still purchase some e-books these days, mostly a hangover from my early days in an attempt to find some new insights or terrific system or perhaps simply curiosity.

When thinking about reviewing the book Bird Watching in Lion Country I realized how difficult it is to write an objective, fair and substantiated book review. After a while I gave up on the “objective, fair and substantiated” bit and decided to just write down some random thoughts and hopefully they are of some assistance.

Bird Watching in Lion Country is a top selling forex course written by Dirk du Toit aka Dr. Forex, it covers all aspects to become a successful currency trader. Included is his popular 4×1 strategy to make money forex trading. Currently Dr. Forex is busy automating his 4×1 median trading strategy. The forex market is ‘lion country’. Bird watching in lion country can be a very rewarding, yet dangerous experience.

Trend/median trading is a succinct description of his system. Dirk du Toit is fundamentally against highly geared trading – standard 100:1 accounts are a big no no – and don’t even think about 400:1. He’s good on both trade and risk management. So you won’t lose your shirt – but neither are you likely to compound your pot in the other direction with undue speed either.

Basically on a 1 hour chart with around a months data draw in major support and resistance around 300-400 pips apart, and then a range in the centre of that (the median). His theory is that the price will revert to the median with time and uses this to time trades. He recommends low gearing, which allows large stops and only taking entries in the direction of the trend. It’s a 200 page book so there is obviously more to it than that, but it is a quite simple less stressful system.

Dirk doesn’t have a tip service. However, if you follow his program you will gravitate towards the same approach to the market that he has and intuitively understand how the shared “fundamental” insights may effect your positions or how you should think about new positions. Dirk does not call it “fundamentals”, but “market dynamics” – and it is all about getting in tune with how the market discounts, which is IMPORTANT (and stuff the rest) information and how that shows up in prices.

Taking the risk that I stand to be corrected by the Doc himself, I would say he is an (not very strict) intra week trader. But that doesn’t mean you can’t be a very successful intra day median trader. He believes in taking profits regularly off the table and there is no sin in taking a 30 – 40 pip profit, however a 100 pointer is also welcome and necessary from time to time, thank you. In his new book, “Bird Watching in Lion Country”, he very convincingly argues that strict intra day trading is a basically random effort and most won’t ever be successful with it. Realizing this his mentoring is geared towards helping one to see that a “manageable time frame”, which can differ from individual to individual, is much more suitable.

The most important aspect I think where his approach differs from every other retail forex trainer that I have come across (except the real empathy and real concern inherent to his personal approach) is his MULTI ENTRY system. In other words, where most say, take the maximum you are prepared to trade with, wait for your signal, add your stop and limit and trade, he says, “just take a little bit of what you are prepared to risk and enter in a identified “zone”, and then add to that position, preferably at BETTER prices (not more expensive) and do so until you are fully “invested” and then wait for the profits, which you can pick off all at once or one by one.”

One can easily scan the chapter headings in the contents page and think these are topics you know well, or have already read about many times before. Except maybe for Part 4, so you skip over Parts 1 – 3 directly to Part 4 to get the secret formula. This would be a mistake – take your time and read the book from page 1 to 238 because it really explains the forex landscape (lion country) in a unique way.

No matter what kind of a trader you are and what indicators are dear to your heart, read the book with an open mind. If your trading is not going all that great, take a week or 2 off while you read the book – you may just come back with some new and fresh ideas. You may even continue scalping if that is what you really enjoy, but with a different mind-set.

With regard to specifics like entry and exit signals, and trade (and risk) management – Bird Watching in Lion Country turns a few “truths” upside down and offers a different perspective. Surely timing of entry has to be pin-point (or pip-point) . really? Surely you should cut losses short and let profits run. or should you? Surely you should never add to a losing trade. or should you? Get out as soon as you think you are wrong. or not?

But don’t skip Parts 1 – 3 just to get to Part 4!

Part 1 is very general, but specific and enticing enough to compel the reader to fork out the money to buy the balance of the book.

Part 2 is about the psychological attitude toward the market, the statistical approach and the edge. This part sets the real deep down fundamentals of how you can become a winning trader. Dirk makes the point somewhere, probably in this Part or maybe Part 1 that winners and losers are not divided years or months (most self-traders are simply too “short sighted” to think in terms of years) down the line, but on day # 1. You need an edge. The edge is not the result of the system, but the beginning. This part also contains some other necessary mumbo jumbo, trading psychology type stuff beginners and losers need to hear and will adhere to hopefully now that they read it in the proper context.

Part 3 is about how the FX Market works and underlying fundamentals. Dirk explains why the characteristics of the FX market that all the market makers put up on their websites are vitally important and why you should not dismiss it as “useless information”. He also explains practical aspects which will confront you and which can be used to your detriment or used to contribute to your success. The concept of overshooting, trading data releases, the 24 hour day. All of this must be included in your approach. He specifically shows how the “marketing wizards” like the sponsors of some well know forex portals have a grip on the general informational spam in the retail FX industry, which they use to get people to dump margin in their “segregated” bank account and then systematically turn it over to their “profit account”, thinking they are going to become market wizards .

“If an experienced person meets a fool with money, soon the experienced person will have the money and the fool the experience”

Part 4 is the system. I think that the “technical” part of the system is interesting and good. The fact that there is not a detailed method with accurate numbers is fine with me because at least you get the general idea and you can yourself deal with the details. The whole system is based on the fact that you have an edge because your trade in the way of the fundamental trend. The big issue is how do we determine clearly the fundamental trend, because if we are trading in the wrong way that could be pretty bad. And in my opinion the book presents that finding the long term fundamental trend is almost obvious. We have hints like differences in interest rates or other basic fundamental indicators but what we can do with a bunch of contradictory news that are coming every day, and what is the relative importance of each of them we don’t know. This part contains a section about looking at this idea to trade your own money strictly from a business perspective and also then contains his 4 X 1 trading strategy and median trading methodology. And relational analysis – relating price, time, events.

Experienced traders will after reading the book probably add something to their armoury or may revamp their trading completely. New and inexperienced traders will have a refreshing and sensible look on the market and they will have the basics to make it work. But a book is a book. Trading systems are not bought of the shelf, installed in your brain and the money dropped into your bank account .

I had also the feeling of contradictory statements for example (but it’s not the only one) between the fact that market is a dangerous lion but it has a statistical behaviour (is coin flipping threatening?). Otherwise the fact that the mentoring program is highly promoted is not such a problem because it is mentioned more only at the very beginning and the very end, so you can easily avoid the commercials. The fact that the system is not accurately defined is OK but the problem is more that the author states that you will get to know everything in detail and that is not true.

So, I would say that the book had some very interesting parts but seems to have also some “holes”.

Some backtest results using the 4×1 strategy and the method described in Part 4 of his course.

  • $100,000 investment
  • Back tested over 22 months.
  • Based on position size of 1:1 leverage
  • Turned a net profit of $254,060
  • The average per month return is 11.7%
  • Success rate is 83%. (83 out of 100 trades close with a profit)

Dirk du Toit Trading Methodology

Dirk du Toit calls his analysis technique ‘relational analysis’ or ‘real time analysis’. It is about relating price (and price changes); time (the time it take the price to change and the time of considering any price); and events (any factors that may influence prices in the time frame I look at the market). In other words, what most people call fundamental analysis (i.e. the fundamentals behind price changes) is an important aspect of what Dirk incorporates in trade decision-making.

However, Dirk du Toit calls himself a technical trader because he uses technical parameters of recent and historical price changes and technical price levels to make trading decisions (in conjunction with the above). Most indicators only serve to confuse the issues. In a clean price chart there is too much in formation to use sensibly. Dirk adds that the moment you add all sorts of indicator lines. etc you just add to the confusion/overload of information. You should not add to information Dirk believes, but distill the USEFUL information and work with that fundamental type, information, or what he calls market dynamics which are VERY useful to filter out the overload contained in price charts suffering under the load of subjective technical indicators off all sorts.

The only way you are going to make extraordinary returns in FX is with high leverage. But high leverage can be a big problem. It starts pretty soon to affect the way you trade. For instance where you place stops to take losses. If you make a loss you have to make it up before you can think of moving ahead. Dirk’s view is simple: if you are short term orientated in your expectations you will be around for a short term. It makes much more sense to make sure you can trade on a small amount and make relative good returns in percentage terms to one day if you have the means trade properly than to be fooled by randomness and misread your luck for skill and then later just lose a large amount when your luck turn.

Stop losses are definitely one of those things that will depend on the risk tolerance of the individual. Dirk’s method is to try and hold trades through some severe dips, so that you give the market time to allow the long term trend to re-establish itself and return your trades to profit. Obviously, this will not happen all the time, and the market can remain in a retracement or correction for longer than you can remain solvent. It is up to the individual trader to ascertain their own cut off point.

Dirk only buys the EURUSD because that is the direction that the longer term trend is going in. You give yourself an edge by just playing the long term direction. Corrections and retracements against the long term trend are hard to time and even harder to predict how far they will go. You can save yourself a lot of worry and stress by keeping things as simple as possible while at the same time making your edge as strong as possible.

Dirk du Toit speaks of having two guidelines on when to cut his losses. If a trade is 150 pips in the red then Dirk will consider hedging the trade at that point. Sometimes he’ll do this, sometimes he won’t (generally because he likes to keep things simple and hedging can act an extra layer of complication). If things progress to 200 pips in the red then he will seriously start to look at the possibility that the dollar strength will continue. If the dollar bulls have the market on the run then he has no problem in exiting my position for a loss. This generally means that trades entered in Q4 are under scrutiny in Q2, and Q3 trades in Q1.

The second main guideline is when the bottom of the grid is being tested. If the bottom of the grid is breached by price and the breach continues then obviously the grid is no longer really valid and needs to be readjusted. In this case, all open trades need to examined and closed out if they no longer make sense given the new grid placement.

A market going the wrong direction is giving opportunities to average your cost of buying and that is the secret in the approach. Multiple cost averaged entries add to the total leverage and that means that by the time the market is ready and turn around you are in the market with a nice position and then you make good money. This is way beter than jumping in and out and round and about with high leveraged short stop hit you here knock you there tactics which is the exact way the majority of losers trade. And it gets them nowhere.

To illustrate this from a reverse perspective, how many times has a trade been closed (and therefore a REAL loss realised), only to find price reverse shortly thereafter to find that the loss could have been reduced or turned into a profit? Dirk’s point is that once a stop is activated, then a REAL loss is realised i.e. the money from that trade is gone, for ever, and nothing will get it back. The only thing that will offset this permanent loss is a greater gain than the loss, from a new trade that is statistically totally independant of the losing trade.

Bottom line – once a trade hits a stop, a permanent loss is realised. Let me say that again – when a losing position is closed, the loss is finalised. Until then, there’s always potential to break even or turn a profit. Dirk says that if he’s wrong on the macro-direction, he’d rather make this loss on a small position than a large one. Of course the position could be an increasing loser, but he has held positions for two years before coming out on top, at no cost to him. Same goes for holding real estate until a market recovers.

Given all of the above, losing trades are obviously going to be much larger than the daily small profits of a winning trades. That is one of the main reasons of looking to have occasional 100+ pip profitable trades resulting from Q1 or Q2 entries. These large trades will be the main counterbalance to the occasional large losing trades. The daily small profitable trades that you grind out then become the trades that allow your trade balance to slowly rise over time.

Is the book a trading system? Does it reveal a trading strategy? If you refer by strategy to -: ‘buy when x crosses y and the RSI is above 55″, then no.’ It is a way to look at the markets, look at prices, get an understanding of what price action over the long term is doing. Then put a framework around that, which gives you a way to trade.

It appears to me that the very best books–those that get recommended by a wide range of traders–never include set strategies. They teach you to think like a trader and not just copy one who may or may not have been successful at some point in time.

I find this analogous to cook books versus recipe books. A recipe book will simply show you how to copy someone else’s work. But given all the variables, the result may or may not be satisfying. A cook book teaches you how use food to make your own creations and even write your own recipes, then, with confidence, modify them as your taste and needs change.

In my mind, the book ‘Bird Watching in Lion Country’ stands out as an eye-opener in a sea of dreadfully mediocre (or worse), cookbook-style forex trading books out there. You may or may not end up using some or all of his particular methodology. it’s not mechanical and requires a fair amount of discretion/judgment. Most important, it calls for a paradigm shift that many traders would probably be unwilling or unable to make. Even if you decide not to use his methodology in its entirety, I think the knowledge gained will be invaluable.

I know many readers here are scared to act, because there are so many scamsters out there. For their sake I can mention:

I have been to South Africa (Pretoria) and have visited Dirk at his house where he works from, and he is for real. He lives in a pretty smart, nicely furnished, house with a beautiful view in an affluent suburb of Pretoria, with newish (but not latest) model BMW and Merc in the garage, and he trades full time since 1998. So I believe, considering that he does not get $10 brokerage on each trade 5 times a day, (cause his clients mostly trade 10K lots, and not even once a day), do not charge $5,000 for training etc. he obviously has something going for him – and I don’t think it is a big inheritance.

Flashback Points to Note and Recall About the book Bird Watching in Lion Country:

  • Set goals for your trading, treat it as a business.
  • Use low leverage (below 3:1). Use 1:1 at market turning points.
  • Trade one pair at a time, one direction at a time, multiple mini-lot entry points.
  • Establish support and resistance levels on your selected time frame, trade within this ‘grid’.
  • Trade with the fundamental trend, buy the retracement from an established trend.
  • Sit out the losing positions until they return to ‘trend’.
  • Take profits quickly, multiple mini-exits.
  • Ignore short time frames and associated market randomness.
  • Most technical indicators do not work in currency market.
  • Retail forex brokers are not your friends – they depend on you losing in the long term.
  • Set MENTAL stop loss and take profit (setting it in the platform allows the broker to see it).
  • Guard against the unexpected. Always think about how much you could lose on a trade regardless of how confident you are about.

About the Author Dirk du Toit

Dirk du Toit is based in Pretoria, South Africa where he heads DayForex Capital Management, which specialises in the forex investment market. DayForex focuses on the trading of forex investments on behalf of clients and mentoring of self-directed forex traders.

After qualifying with an M.A. degree from the University of Pretoria, Dirk joined the financial services industry as an advisor in 1991. In 1998, as a primary source of income, he started trading on his own account in the global financial markets. His areas of focus were bonds traded on margin, equities and, since the advent of retail forex, currencies.

Since the beginning of 2001 Dirk has focused mainly on sharing his trading acumen with prospective self-directed traders interested in the forex market, while preparing the groundwork for DayForex Capital Management – these days a discretionary forex services provider fully authorised by the South African financial authorities.

Dirk du Toit is the Chairman of the Forex Investment Association in South Africa and an Associate of the Financial Planning Institute. He also holds the International Capital Markets Qualification from the Securities Institute in London.

Dirk has written two e-books on foreign exchange: “An Introduction to the Foreign Exchange Market”, and “Bird Watching in Lion Country – Retail Forex Explained” – a ‘must have’ book for anyone trading or intending to trade in the forex market.

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