How to Spot a Trading Scam: Kevin's Complete Red Flag Checklist

Someone out there is using Kevin’s photo to promote a fake trading room. Not a stock photo – Kevin’s actual photo, with a different name attached. A subscriber sent it to him after signing up, thinking they were getting access to a service the three-time World Cup Trading Championship winner endorsed. They weren’t. The trading room was a scam, and Kevin’s face was being used without his knowledge or consent to make it look legitimate.

This is the opening story of one of the most practically useful BST episodes ever recorded. Over the following hour, Kevin – who has been trading algorithmically for over 20 years, has written multiple books on systematic strategy development, and has built a large following helping traders avoid the mistakes he made early in his career – walks through a comprehensive checklist of red flags that signal a trading product, room, or service is fraudulent or misleading.

The trading industry has a fraud problem. Not everyone running a course or a trading room is a scammer, but the space attracts bad actors at a higher rate than most industries because the promise of easy money is uniquely compelling and the barriers to publishing authoritative-sounding content are low. Knowing how to distinguish legitimate from fraudulent saves money, time, and psychological damage.

Watch the full episode below, then read on for the complete breakdown.

Table of Contents

Red Flag 1: Fake Testimonials and Stock Photos

Fake testimonials are perhaps the most common deception in trading marketing. Kevin shows examples of websites with five polished testimonials from “independent professionals” and “institutional traders” – all backed by stock photos that can be found on any free or paid photo library.

The verification is simple: right-click any photo in Google Chrome and select “Search Google for Image.” If the photo appears on dozens of other websites in completely unrelated contexts, it’s a stock image and the testimonial is fabricated. Kevin did this for every person on one example website and found they were all stock photos.

Additional tells on fake testimonials: unusual patterns in the wording (multiple testimonials starting with identical phrases), descriptions that are implausibly precise (“after 18 months and 3 weeks I made $47,281”), or testimonials from traders claiming to be in markets they couldn’t plausibly be in. In the US, using fake testimonials with implied real-person identities is illegal under FTC rules.

Red Flag 2: Trade Results That Defy Execution Reality

When scammers show trade charts, they often make errors that reveal the results were fabricated. Kevin highlights two specific examples:

Fills at exact bar highs and lows: A scammer’s trading chart showed multiple short entries filled at the exact high of bars, and a long entry at the exact low of a bar. In practice, this is impossible in real-time trading. Market orders don’t get filled at absolute extremes; limit orders at those levels would require the price to move through them. Any competent trader looking at this chart would recognise immediately that these fills could not have happened in live trading.
SIM account indicators: In TradeStation, live accounts have contract codes like “ESM21” (E-mini S&P, June 2021). A chart showing “ES.D” without a date code cannot be used for live trading – it’s a simulation format. TradeStation also shows a grayed-out “SA” (strategy automation) indicator when automation is inactive. Kevin shows his own live accounts as a comparison, where the SA box is green and red (active), not gray. A presenter claiming to trade “live and automated” with a grayed-out SA box is not trading live.

Red Flag 3: Performance Results Without Verified Audit

Equity curves and performance statements are trivially easy to fabricate. Photoshop can modify brokerage statements. Backtest results can be cherry-picked over the period that looks best. Kevin recommends several verification approaches:

Look for third-party verified track records: Legitimate CTAs (Commodity Trading Advisors) must register with the NFA (National Futures Association) and submit independently verified performance records. Anyone claiming professional performance without being registered should be questioned.
Check the NFA database: The NFA’s public BASIC database (basic.nfa.futures.org) allows you to look up any registered trading professional and see their disciplinary history, registration status, and whether they’ve had complaints filed against them.
Ask for a forward-tested track record: Backtests prove nothing. Even a live track record on a demo account (paper trading) means nothing. Real performance requires real money at risk in real markets with a real custodian holding the funds.

Red Flag 4: The Lifestyle Marketing Formula

Kevin identifies a specific marketing pattern that appears across scam after scam: the lifestyle montage. Fast car (often a Ferrari), luxury home, European vacation, shots of a yacht. The implicit message: trading this system will give you this lifestyle.

He notes with some irony that he knows where one famous scammer lived at the time – a rented mobile home in central Florida. The cars were rented for the photoshoot. This is not unique to trading scams, but the trading industry is particularly prone to this form of aspirational marketing because it attracts people motivated by the idea of financial freedom.

The legitimate counter-example: Kevin’s own public profile shows his home – a normal house – and his trading setup, which is functional rather than glamorous. Real trading success looks boring from the outside.

Red Flag 5: Unrealistic Return Claims

Any claim of consistent monthly returns above 5-10% should prompt immediate scepticism. Kevin is direct: if someone was genuinely making 20-30% per month through trading, they would be managing billions of dollars for institutional clients, not selling a $97/month trading room subscription. The economics don’t work.

Related to this: claims of impossibly high win rates (90%+, 95%+) with no meaningful drawdown. Real systematic strategies have drawdown periods. Real strategies have losing trades. A strategy showing an unblemished equity curve with tiny maximum drawdown in a backtest has either been optimised to death or is fabricated.

Red Flag 6: Contracts Designed to Trap You

Kevin covers the contractual side as well. Some trading services require you to sign terms that restrict your ability to seek refunds, require ongoing membership for access to materials you’ve already paid for, or include non-disclosure agreements preventing you from discussing the service publicly. These contractual structures are designed to protect the seller, not the buyer. Legitimate products with genuine value don’t need to lock customers in.

Where to Research Before Paying

Kevin recommends several resources for due diligence:

NFA BASIC database: For any futures-related service.
SEC EDGAR: For any service offering securities or investment advice in the US.
Google search with “scam” or “complaint”: Unhappy customers often post online. A search for “[service name] scam” or “[service name] review” can surface legitimate user experiences.
Trading forums: Established communities like Elite Trader and Trade2Win have sections where members discuss specific services, often with direct experience.

Kevin also maintains content on his website (kevinsdavey.com) specifically aimed at helping traders identify and avoid trading scams, drawing on his own experience both as someone who narrowly avoided scams early in his career and as someone whose identity has been used in scams without his consent.

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