check out the freshman (Trader mag)
He trades. He helps run an endowment. He's 14.
Most kids his age pass their time playing Wii, posting on Facebook or checking out the latest hilarious cat-on-a-treadmill video on YouTube. Christopher Davis prefers studying 10K's.
Sharing the same the name as (but no relation to) a famous money manager, this 14-year-old Florham Park, New Jersey, *resident might well be on his way to running his own fund. He trades his own account, and has an advisory role helping to steer the endowment at Newark Academy in Livingston, New Jersey, where this fall he'll enter the ninth grade.
This precocious trader got started at age 11, when he bought a handful of shares of his local thrift, Peapack-Gladstone Bank, with money he had saved. Since then, he's up more than 90 percent on his personal principal, and still holds those shares of Peapack. "They have very few non-performing loans and pay a nice dividend," he says of his first investment.
In 2002, Newark received an anonymous gift of $100,000 to its endowment to be managed by students. Sam Goldfischer, the school's business manager, oversees the student-run pool, whose investments are restricted to low-cost Vanguard mutual funds. Davis helps set the asset *allocation. "Christopher is one of the more active members of our Student Endowment Committee," Goldfischer says. "He often shows up to my office to discuss *investment ideas with the Wall Street Journal in his hand."
With Davis's input, the student-run fund was up 4 percent in the first quarter of 2008, following solid returns of 13.7 *percent in 2007. In addition to helping burnish the student-run portion of the school's endowment, Davis sits in on *meetings of the school's formal investment committee (which is run by adults).
"I keep them on their toes," he says. "It's fun showing up at meetings and being introduced alongside members of the class of 1948."
Like the other Christopher Davis, the freshman follows value-investing principles -- but his true inspiration is his father. "I guess what I do has rubbed off on Christopher," says Paul Davis, who manages portfolios for high-net-worth clients at Oppenheimer and Co. in New York. "We often talk about trading ideas at the dinner table."
The younger Davis's best play to date? Buying Nokia in the teens and selling in the 40s. As for the market in general? "I think it's going to be crazy until the election," he says. "But I have a long time horizon. I'm only 14."
1) A good brokerage MUST and HAS to be painstakingly chosen. My criteria is that if a player is into a certain Spread Trade or Futures / CFDs, then she/ he has to look out for the necessary edge ( say, in terms of for eg. Brokerage A gives a tighter SPREAD than B or A gives a lower commission quote than B ) and possible BETTER Next Day quote ( even better if there is no carry forward trade fee or charge for commodities futures ). - Leading to lower starting costs and overall lower Risks Factor! The history of the brokerage and the Total Holdings of Monies ( including Paid Up Capital ) it has is Very very Important - there are sooo maannyyyy online ones having gone bust, giving the public no clue why they go ............... !!! Some brokerages are just Fronts for Money Launderers who would have no qualms about closing Business once their plot is discovered!
2) Lowest Possible Fees/ Charges Factor - LPF/CF ( the lowest it is achieveable, the better the rating of the brokerage will be ). Brokerage A might be giving a no carry over fee for its Spread Trade/ Bet or Contract! Which is not possible for CFDs, but highly likely for Spread Trading. There are also the concern for stamp duty and tax for CFDs and others like FO ( future options ).
3) Discipline and Money Analysis/ Management - BOTH control GREED, which is a MAJOR SIN! For those of you, who do not play FOREX ( FX for short ), it is good to know what is the brokerage's requirements ( USD or GBP - even other currencies like Rupees or Yuan ). For latest info, USD is up at 1.79 against 1 GBP and that will probably strangthen even further!
4) Using Tools like FA, TA, RA and also the many others of the Whole Kaleidescope of Methodologies! A good Open Source like the Open Office suite ( as Excel is expensive considering the cost ) would prove useful for normal buggers like you and me.
5) Consider the 95 % losers and 5 % even or profit-winners stats! Awful, but true! Nature - is such, a cold and grim world!
6) Balancing your personal costs and your earnings/ profits - again thrift is the Word! Being a money pincher can be a gain for the new chap, what with the rising cost of energy, food and travelling .......... and perhaps Time ( in terms of opportunity costs ).
7) So, One Important Last Point, if you find that you can't handle the Adrenaline Flow and the Stress, then Stop ( not just inputing the STOP LOSS ) ......... really just stop and retrace! A good gambler does not only try NOT to stay after a major win, he also stop if he can't win! Most, spread traders / betters have the uncanny ability to think and act like gamblers! Time to Stop That as well!
8) To sum up, even if you can get through the said 7 points, you must have a Back Up Plan as well! In the good old days of Trunk line accounts trading, the bookmakers and the brokerages are making small profits unlike the modern technological age, whereby the Internet has brought the Online Gambling Dens ( Casino ) and the Brokerages to the House together with the temptation and the ease of looking at the informational data ( which are mesmerising to some, but crap to those who know! )
8.1) Back Up Plan means what do You Do When You can't trade - it's like a way back out of the game if you find it unsuitable!
8.2) Also applies to the Plan that what if the Internet Fails ( a good recent eg. would be the LSE that crippled FTSE index spread trade/ bet for a few hours due to glitches!
So, the IT IS EASY TO TRADE, but ................. it is not for any, but the few 5 %!
Making serious money from any type of business is as easy as falling off a log, any fool can do it but most dont have the psychological makeup or willpower to do what it takes.
Trading however is just the most ridiculously difficult way to make a living known to mankind. Doing what needs to be done will probably cost you your health, your relationships with family, friends, partner etc, a substantial financial sacrifice in terms of loss of earnings, and possibly even your sanity.
I found the answer to this one is to run a demo account, whenever I am not sure, or it does not meet my creteria 100%, I trade on the demo it gets rid of that mouse click temptation!
but there have been times when my gambles have proved right, Would you believe I sold cable at 1.7450.on the demo
If 90 % of traders fail, then I guess that's a clue to how difficult it is.
The thing is trading is very counter intuitive. A bit like a golf, the harder you try and hit the ball the worse you play. To do either you have to discipline yourself to act in a way that does not feel natural.
Keep on practising until you over ride all the natural intuitive stuff. The problem is that by the time you realise this , you won't have any money left.
It's not an easy thing to be a trader because it's a big risk. You are investing money, time and effort. It is difficult to anyone who is not willing to learn how to trade but it's not rocket science. If you work hard and learn the market, it shouldn't be that difficult.
It's not easy to start any business though. I have often met people who have large debts taking years to pay off because their businesses failed. Any sphere of operation - import/export, decorating, opening a shop, financial advisory services, you name it.
Those are just more acceptable things to most people in society, so perhaps they perceive the risk to be smaller.
I guess it's why parents advise their children to become lawyers, doctors and accountants. Good money for low risk.
So what was the conclusion of this thread though anyway? An open verdict?
In comparison to other professions, to become a successful trader, on a scale of 1 to 10, where 1 means occupations like dustman, streetsweeper, McDonald's staff and 10 is astronaut, armed forces commander, international drug baron, I'd say it was 8/10.
On the one hand, you can start trading if you decide to, you don't have to persuade Goldman Sachs or Deutsche Bank to employ you first, which is presumably very difficult and I'd imagine only 1 in 20 or even 1 in 50 people who apply are given trading positions.
But after starting, 9 out of 10 or perhaps 19 out of 20 hopefuls will lose their capital and stop. So if you think about it in comparison with applying for a job at Goldman Sachs who reject 49 out of 50 candidates, it's actually easier.
There's a poll at the moment asking how many people are actually active full time traders making a living at it. The answer is anyone's guess. It might be a lot less than we think. only 19 (50% of people who answered the poll) say they are, but almost 1000 people have read the thread - so assume the rest of the 1000 are people who are trying but not succeeding, that's 1 in 50.