Investing In Traders: Human factor evaluation. How to know if a trader will perform well. (Part 2)

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So the trader has provided you all of the stats and you are happy with it. And what do you do next?

The problem is the stats are about the past. Now, how do you make sure that this trader is actually good and that you can trust them and that they will deliver results for you? So you have to evaluate the human factor as well. there are a few questions that almost nobody asks, but I recommend you asking those questions.

The first question is: have you ever blown an account and how did it happen? If a trader says that he has never blown an account, you immediately discard him because it means it will happen in the future and it's very likely that it will happen with your account. If a trader is open about his blow-up experience, then it's a good sign. I don't know any successful trader on this planet who hasn't blown an account at least once.

For the second question, ask him: how does this market work exactly? So if they trade forex, ask how does the forex market work? Now, if he gives you a generic answer, the one that you can find online all over the place, that's a bad sign. Something to the lines of "big banks move the market", "most traders are losing money", "market reacts to support/resistance lines", etc. Discard him. Now, if he tells you something that you have never heard before, and of course, don't expect that he will give you all the secrets and that he will go on and explain you everything because it takes many hours to explain. But if you hear something that you have never heard before, it's a very high probability that he's a professional trader, actual professional trader.

Now, the difference between retail and professional is that retail strategies have expiration date. They don't work forever. They work just for a short time. And retail traders have no understanding of how that specific market works. They act according to wrong beliefs and eventually they will go on and lose their money. Professional traders, they know what they're doing and you have to look for actual professional traders.

And the third question is: what would you do in case you lose my capital? The correct answer is that they would do nothing. If they are brave enough to tell you that, then you can trust this person. Because that's reality. In the world of investments, let's say a capital manager has 5 million under management, which is much more than what he has in his own account. If something bad happens - if he blows up, well, he cannot do anything. And that's happening all the time in the world of investments. You just can't do anything about it. And that's the correct answer. Nothing. If he says he will refund you the money, Skip it. Discard him. That's not true. Even if he can, if it's a small amount, well, it will be emotional strain for him. He has now made a promise that will bring him stress and that will have impact on his performance. And also, if he tries to say that, no, this is not possible it will never happen that he will lose your capital. Something like "I risk only 1% per trade" (which is nonsense because anyone can blow up with any risk per trade no matter if they use stop loss or no). That's a lie as well. He cannot guarantee that, so discard him. He's not authentic with you. And if he says that, again, he makes a pledge -- a promise that he can't fulfill, and it will bring him stress. It will make him emotional. Somewhere down the line, maybe five months after, when he has a hard situation, it will show up. Just don't trust this type of people.

So these were the three questions that I would ask myself if I was choosing a trader to invest in. Thanks for reading and I wish you all the best.