We have been asked to list this comment by a site visitor who describes his experience in trying to get his money back after 'buying an expensive trading program.' He warns that "The Department of Fair Trading will not get involved in such cases because the item that was purchased is used to make a profit and thus cannot be classified as for personal non-business use."

Get-poor-quick software

For $7500 or more you can buy share portfolio software which is supposed to enable you to control thousands of dollars for "merely five minutes of your time and a few mouse clicks."

"It doesn’t come much easier," the sales pitch of one product continues. Maybe not, but more than one purchaser is wondering if they could lose $7500 any quicker.

First the amount of money you control depends largely on how much you put into the market in the first place. Second, if you use the information the package gives to create and track graphs, it takes more than five minutes to make a decision.

Most of these programs use technical analysis methods to measure market behaviour. They then generate buy and sell signals based on current and historical share pricing. It is supposed to indicate to you after you have entered opening and closing share price data from the Australian Stock Exchange, when to buy and sell particular securities. They are particularly attractive to short term traders.

Mark X (Not his real name) claims to have spent hours setting up and downloading data from the ASX into one system every day since September (There is the five minutes per day theory gone.) Based on the data he has entered, in this case the opening and closing of the Top 150 stocks, each day he downloads recommendations generated by the software of up to 20 stocks he should buy that day.

The program then suggests he contact his broker, show them the recommendations and acquire the shares. Marks says that in 10 months the system has not picked one share that he would have bought in that time for short-term trading purposes.

Looking at some of the recommendations, you probably wouldn’t have either. On May 21, it said buy Alpha Health at 33c. They were then trading at 33.5c; they are now at 29c. On June 11, buy Alkane at 20c. They are were trading at 20c; they are now at 16c. One June 28, buy Resolute at 72c. They were trading at 74c; they are now at 66c.

The list goes on. There are a few winners, but nothing compared to the losers. And that was in a rising market. You have to ask why would you pay thousands of dollars for recommendations that you are then supposed to take to a broker. Why not go straight to the broker?

Mark’s package sounds very similar to Market Wizards, now in receivership, which claimed its software could pick winning options plays. Unfortunately its occasional winning recommendations was far outweighed by its large number of loss-making recommendations. This also cost $7500, for software that, according to a seasoned trader, was based on fairly straightforward technical analysis, the tools for which are available at a fraction of the cost and often free. Perhaps the company’s demise tells the story.

At least one of these distributors is using an interesting sales technique to hook customers. It puts you in touch with people who swear by the product and claim to have made a lot of money from it. But since Mark X parted with his $7500 he has been unable to contact that other lucky customer.