College Students and Other Future Traders

There have always been an abundance of ET members that have expressed the desire to become traders in the future.

There also have been more than enough members who are quick to criticize young aspiring "not yet" traders for asking questions.

Recently someone managed to get an awful lot of attention asking if his upcoming graduate studies would help him land a job as a "salaried trader".

Another post I read today was from a college student who asked how much he should take into consideration for slippage and commissions for "backtesting" or "paper trading" or whatever his purpose was.


This guy, having not traded, was immediately labeled by someone else as a "piker". This made no sense to me. What is wrong with asking questions? If someone doesn't want to answer a question, that is one thing. But putting someone down for asking a question (good or bad question...that is not really relevant) seems nothing but just mean-spirited to me.

Who has ever been hurt in any way by having a question posted on these forums? Anyone can choose to ignore, or to answer. But to call someone names because they just ask something? I really don't get it!

We have all read a lot of name-calling, a lot of boasting, and been introduced with big splashes to some new "traders" that were going to set the world on fire as soon as their wire transfers were completed and they got their account numbers. Turn 5K into 5mm right out of the gate. And so on.

We have read about guys that clamed to make 5% a day. Guys that have seriously questioned their decision to make a career of trading and have never made money at all. And everything in between.

I remember a thread where some 17 year old said college would be a waste of time for him because he could spend those years making huge money as a trader. And he was actually encouraged by some others in that belief. (A minority, but still....).

Now I certainly don' t claim to know all that is possible. Or impossible. No one can claim to have all the answers.

But from my experience, for what it is worth, I will say that an education is always better to have than not. When a 17 or 18 or 22 year old says that trading is the only thing they want to do in life, it would be humorous if it were not so troubling to hear.

The true number of people that support themselves solely through trading their own accounts is proportionately miniscule. And of those who are successful, virtually all of them were successful at something else previously. If not, they would not have the money to have started their trading careers.

The person who asked with such humility if his mathematical studies at Oxford would help him get a "salaried trading position" got a lot of attention, and very little in the way of realistic or helpful answers.

He then tried to get votes in a poll to validate his increased chances of getting just an INTERVIEW for a "salaried trading position". The results were (last I looked), not encouraging for him. But did people vote with reason? Or with emotion?

The reality is that a good education can never hurt. Employers want intelligent and well educated people. They want as much for their money as they can get. Pretty simple really. Graduate at the top of your class in law school or medical school, and it's easy to get a good job.

Trading, as a career is very different. There is no accredited "Trading School" I have ever heard of. (There was a good clinic offered at the CBOE when I was there...a "simulation"...but not an acedemic program). Can a background in mathematics be useful as a trader? Statistics? Programming? Psychology?

Yes to all. Useful, but not essential.

Virtually all of us that trade get paid on results and results alone. Whether we trade our own money, trade firm capital, trade for a fund, trade managed money....anything.

I don't know of anyone who has ever been hired right out of school to trade other people's funds. Salaried or not.

I have worked as a prop trader, a firm trader, and as a retail broker. I have traded on four different exchanges. I have been involved in this field since 1984, and I have never even heard of anyone getting a "salaried trading position" like the Oxford guy seems to be striving for.

For the most part, trading as a full time career is just a pipe dream for young guys. Unless you have wealthy,generous, indulging and tolerant parents (or other benefactors), it is something that just isn't a realistic way to earn a living. This is NOT to say it isn't worth attempting. I am just saying this is not a way in which anyone can expect to support himself for a significant period of time. The tuition of on the job learning is very high.

I have a nephew that went to grad school at Wharton. When he was finished, he got a job with Merrill Lynch in their M&A operations. His starting salary was more than I ever made as a trader. He no longer is making that amount of money. In fact, the position he was hired for no longer even exists. But his education made him qualified for that job. And his experience and hard work at Merrill have kept him employed. But in a different position and for less money than he was making fresh out of school five years ago. Things change.

The only education that qualifies someone to trade someone (or anyone) else's money is trading itself.

Seems like one of those paradoxes. Catch 22.

So where do traders come from? Who trades for the hedge funds, the mutual funds, the managed accounts at the big brokerages? The banks?

The answer is it is the guys (and gals) that paid their dues and learned to trade by being clerks, assistants, runners, interns, etc. (Or in rare instances those who established a track record on their own. Which can be a long and expensive route as the majority here can attest to).

It is hard work. It is low paying work. It can even be demeaning work at times. But that is how it works.

If you want to be a movie director, you start by getting coffee, observing, working hard, being cooperative and making yourself "exceptional". Same thing with trading.

Anyone who has been on an exchange floor, or even just observed from the galleries can easily see that there are a huge amount of people that are NOT trading. They are working a job and doing what they are told to do. They make no decisions when it comes to initiating or closing a trade. They learn to trade like we learned to speak. Exposure. Listening and observing and accepting that whatever we think we know is not sufficient. Infants don't have the kind of ego that interferes with learning.

Traders that trade for themselves (like many ET members) learn mostly by making all the mistakes that come so naturally. Which is why trading is always an uphill struggle in the beginning.

Now it takes only common sense to realize that NOBODY is going to get paid to make mistakes. Nobody is going to entrust someone who has no actual trading experience with anyone else's funds.

The choices are really pretty simple. Make the mistakes, and pay for them with you own money, or work hard alongside and for traders that actually know what they are doing (from their own experience), and get paid a very nominal salary to just be in a learning environment.

That's it. There is no such thing as the "salaried trading position" that the "Oxford Guy" thinks his education will entitle him to. (If there is, it has been a pretty well kept secret. News to me).

Being a "gofer" can be a humbling experience. And will help anyone who is too arrogant to come to terms with how the real world works. Should be perfect for the "Oxford Guy".

Peace,
RS

 

Well put, RS...

I agree with most everything you say with the exception of the treatment of some of the newbies asking questions...I have found that many of the newbies that enter the room and have the RIGHT attitude, which is "I dont know much, but I am humble and can you answer my question" type of thing...They typically dont get hassled...But its the guys who list all their credentials, in an obvious attempt to try and impress or maybe intimidate others, those are always the guys who get the treatment...And, you know what, they deserve it...I think its better they get their act together and their attitude in check on this place and learn how to deal with others, especially since they are in no position of authority...If they took that same attitude into a place with real people, not just anonymous chit chat like elite trader, they might get even more grief...

In some ways, its not their fault...After all, when you pay $30-40k to get a high priced private school education, everyone around you tells you that its something special, until you realize there are a heck of alot of hard working intelligent guys who paid about a 1/5th the cost and got a similar education...Then you have to ask yourself who is smarter...

 

I agree with you in almost all respects, but I think that many other traders are like me. I started during my senior year of high school with just chump change. I grew it to a large account. I then started my hedge fund during my senior year of college. I graduated a few weeks ago, and I have more or less supported myself with a little help from my folks since the start of college.

I personally think that college was a huge waste for me as a individual trader. If I wanted a job at Goldman, I'd need a degree though. It depends on which route you take. I think that college cost me tons of time that I could have used to learn real lessons.

For an aspiring trader, I recommend that you take out some money and trade it and learn the hard way how to make money. If you can't get a grub stake, go prop, or work a job for a few years and save it up.

Good luck all!!

 

After Phillips...tulane.. A switch to MIT??

I noticed your poker assessment.

I agree with the stocktables.com great place for BO's but why 50 trades a day????

 

Yup...I agree with you also. I specifically singled out the Oxford guy as someone who needed to learn some humility, and thought I made clear that the other guy that asked a question without an "attitude" did not deserve to be called a "piker". Or anything else. All he did was ask a question. Politely.

P2....maybe it was a waste as far as furthering your ability to trade. And certainly your success is exceptional. However I don't believe that I said anywhere in my post that a formal education would help anyone to be a successful trader. I thought I said pretty much that it would not.

But I would be pretty comfortable in assuming that overall, your college education has already enhanced your life, and will continue to. Trading is not all of what your life is about.

Did you not have learning experiences in college other than academic? Did you make close friends? Learn how to party? Learn to be an adult? Get to see what it was like not to have your parents involved in your life on a daily basis?

And though you may not think it matters now, in the years to come, it is my bet that you will appreciate your college experience more and more.

Put it this way. If and when you have children, would you advise them to go to college, or would you advise them to go to work right out of high school (assuming there is a choice to be made)?

Peace,
RS

 

I barely attended college, and only did it part time in night school. Maybe my response would be different if I took a full class load. I think I did all the important things. I joined a fraternity, and had many crazy adventures. I thoroughly enjoyed myself.

I don't know if I would force my kids into college. If they could make 6-figures without college, I'd definately give them their college money to add to whatever business they wanted.

 

P2...I don't think anyone can "force" their kids to go to college. You can pay their tuition and room and board. But there's no way to make them go to class or open a book. I know you know that.

My son just graduated from HS last week. He is most definitely not ready to go to college. Everyone has their limitations and/or their willingness, commitment, or maturity at different times.

He's going into the Navy. Fortunately for him (and for me too), they are putting him through Nuclear School (based solely on his IQ...certainly not his academic achievement in HS). THEY will hopefully teach him a thing or two about commitment and responsibility. For him it should work out beautifully. For me, at his age, it would not have worked at all. Everyone is different.

Some kids walk at 9 months. Some at 2 years.

As far as your statement about your kids making 6 figures without college......well you of all people should be able to assess the odds. Just because you defied them, it doesn't change them. Someone posted a list here on ET just a few days ago about successful people who did not go to college (or finish).

There is no absolute right or wrong. We all know that. But you cannot discount the statistical probabilities of being more successful with an education than without.

Peace,
RS

 

Speaking as a "new guy", as potential meat for the grinder, not all of us are coming in totally unprepared. Some of us are prepared for the long haul with living expenses, a back up career and support from friends and family. Some of us practice with real cash and create viable strategies before we go prop. I think people like us have a greater chance of success. I guess I try to take the attitude of humble, willing to learn but not meek.

I can say I much appreciate the older traders who've posted the little nuggets of wisdom on Elite. It's saved me from many blind alleys like my "Can't fail dividend strategy!" Maybe that's what Elite is great for. People may not post great strategies all the time but they do say what not to do. This is a great thread started off with a great post.

 

Yep. We all KNOW that trading success/failure is NOT a function of intelligence, formal education, how you dress, what you eat, etc. etc.

However, education still plays a role in one's life though. Either as enriching source of entertainment or just intellectual curiosity.
And on "average" as RS pointed out, most people will not make it trading. Having an education broadens your horizon and opportunities to do other things that you might possibly be better suited for. So, dont' totally discount education yet at the same time don't make it be the be-all end-all to life and how your judge people.

Learn to respect people from all walks of life with all different kinds of talent.

good luck trading and in life!
-99

 

There is not a more valuable thing anyone can learn than "what not to do".

However, human nature being what it is, in most cases, even after being forewarned, newer traders will still make the very mistakes they were cautioned to avoid.

I can't explain why, but really that's the way it is.

I have NEVER seen a new trader not "chase".

I have NEVER seen a new trader be patient enough.

And I have NEVER known of a new trader that wasn't informed about these things and ignore the advice anyway to some degree. Guess we all need to learn some stuff for on our own.

Steven Schonfeld used to say that it was too bad that new traders had to lose money. He said it was necessary to lose in order to learn from the mistakes. His contention was that new traders that made money right off the bat were in truth losing time in exchange for the money. Because their luck prevented them from learning. Better to lose and learn sooner than later when the stakes are higher.

I always believed he knew what he was talking about.

Peace,
RS