Seller of LSS made over $1 mill. selling the program and paid 50k to get out of trouble with the CFTC. Doesn't seem very fair to the buyers of the product that may have lost serious $. I think the CFTC should have made him repay all the buyers that were taken. Here's the PDF link to the CFTC ruling: http://www.cftc.gov/files/enf/02orders/enfangell-order.pdf
From looking at these vendor's reward to risk ratio (1 mil to 50K) it becomes obvious why they have no incentive to change their business practices.
In reading Gary Smith's book "How I Trade..." the author mentions that Angell's methods were important in becoming profitable BUT he would never take Angell's seminar or use his system mechanically. For whatever value one might find in the "LSS Method" I'd suggest looking to the writings of Douglas Taylor, of which they are derived. ~EC
You are correct that LSS, which stands for Long, Sell, Sell Short, is basically a knock-off of the famous Taylor Book Method. Anyone who has actually tried to read Taylor's description, as I have, will tell you that Taylor's writing was incomprehensible gibberish. I believe LBR rewrote it at some point and her description is pretty useful.
I read the link to the CFTC proceeding and it is pretty interesting. The essence of the case was that his promotional brochures for the $3,400 software claimed that he had used it in real-time trading to make substantial profits and that audited account statements backed it up. These claims were largely untrue it seems. In fact, the profitability claims had been generated from backtesting, and the so-called auditing had been done by the software developer, who got a cut of the sales proceeds. There must have been some undisclosed problems with the Commission's case for them to settle so cheaply. They did not order restitution, which I would have thought would have been automatic if the case was as egregious as they made it sound. Whatever.
The CFTC should require all vendors of systems to back a system with a REAL track record. That would save a lot of money to ordinary people seduced by claims of quick and big profits. Such a requirement would eliminate a lot of the phakes and phonies in this business and gives this business a better imago...
Yes I agree that Taylor's writing is difficult to understand and that LBR's writing clarifies it quite a bit. The main value that I have seen from this method is to be alert to recognize the pattern (however it unfolds). The essence of the pattern is that the market is moved up and down and the public is induced to buy at the high and sell at the low because it looks bullish or bearish respectively. Of course "we" are supposed to do the opposite and profit from this pattern. The thing that is key is that following the rote pattern Taylor gives isn't nearly as important as empirically observing the existing pattern and trading based upon that. For instance I could argue that instead of the ideal Buy / Sell / Short pattern that prevails in a bull market of 2 up days and one down day, we actually have one up day followed by 2 (or more in this current downtrend) down days. Or in other words if the day after the bullish up day starts to break to the downside after acting bullish early, "we" had better jump on it on the short side.
Actually, George Angell is just one of many vendors who have been fined and censured in recent years. Sorting through the archives of the CFTC site is interesting reading and pretty enlightening. So many of these vendors are basically fined because they claim to trade the systems for major profits themselves or "imply" that they do. I believe that many of these CFTC administrators plant watchdogs on these pay sites with their "internet surf" program.
There is no magic to a system actually having been traded successfully. "Buy on Monday, sell on Friday" might have worked quite well in the bubble market. I have no problem with a vendor selling a system that has not been traded in real time, provided that fact is clearly disclosed. What I don't understand is bringing a fraud case, like this Angell matter, and not ordering restitution for people who presumably were defrauded. Kind of like the class action attorneys who bring cases and settle for some meaningless "relief" for the supposedly injured plaintiffs yet reap millions of dollars in legal fees.
Any chump who thinks buying a book or a piece of software will make them rich trading futures, should have their trading account transferred to professional traders STRAIGHT AWAY, and not bother frittering it away. The CFTC probe is one of quite a few which are being run against people who sell systems on the basis of backtested results. So long as there is no OPTIMISATION of the backtest - that is, there are no PARAMETERS WHOSE OPTIMAL VALUES ARE FOUND BY SEARCH - I have no problem with system folks doing so. Obviously to CLAIM that it was run 'live' is a different story, but that is not what prompts most investigations. Most are prompted by some dimwit who either half follows a system (takes the signals but not the stops, takes SOME signals but not all, wqhatever). Similarly, the lawsuits against the Street stem from IDIOTS who put their entire life savings into unproven companies. I have foughtl long and hard (for five years) against analyst onflicts of interest and the tilted playing field in the brokers' favour. I have wailed about Fed repo money being used to goose the market up and enable distribution; the failure of supposed Chinese Walls; and the tying of analyst remuneration to investment banking. Until mid 2001 when it was clear the crap people bought was NOT COMING BACK, nobody cared. The fact that the Street is fiulled with prostitutes and charlatans is NOT news. It has not been news since Jesse Livermore's day. CAVEAT EMPTOR is always the watchword - otherwise you might as well turn Wall Street and the Merc into a day care centre. I read Angells book, and it was nothing new. At the time I had been trading for less than 2 years.