This summer I'm planning to start teaching my smart 14 year old son to trade. Has anyone gone through this experience? Any ideas as to books, tools, methods, etc I could focus on? I would appreciate any suggestions you may have. TIA
like maybe introducing him to drugs and/or alcohol! Why do you want to teach him about trading at 14?? I would stress the importance of a good solid college education instead. There will be plenty of time to learn about trading later on!
You might consider teaching him to trade via the spectrum of knowledge that underlies the markets: science, economics research, mathematics, learning and behavioural theory etc. My Advice: focus on learning the basis for the markets, and learning the tools and techniques that allow analysis. Few 14 year olds have all this knowledge in hand to perform sophisticated analyses. Books ? Just the classic references - Edwards and Magee and some of the pioneering research papers as points of discussion .... They are accessible to a 14 year old with a bit of coaching ..
Has no business learning how trade. Unless you yourself are adept at the psychological adversities that a trader predisposes herself too, how to handle it, how to detach yourself, and how to apply the rigouroous emotional ups and downs to life in general, then I don't think anyone should be teaching a kid to dance with the market. The repercussions, the negative emotions are such that a 14 year old child doesnt even know whe he is yet. How is this child going to know what emotions he faces, how to identify then, and act correspondingly. A child who is less than complete, and most adults are not even a complete person, may end up dealing in a very negative way, the feelings of loss, inaptitude, failure, dichotomies, and myths. Good luck, my advice, don't even think about it.
Age 14? I would give him Reminiscences of a Stock Operator and How I Made 2,000,000 in the Stock Market to read. My dad handed me those around age 16 and they changed my career path forever. He'll not only likely enjoy reading them he'll learn more from them initially than any thing he will learn from something with a bunch of charts and indicators which might bore the hell of him if he doesn't yet understand the psychology that underlies alot of that stuff. Cheers.
DO NOT GIVE HIM ANY BOOKS ! Show him different timeframes, let him pick two indicators, 2 MA's and let him papertrade Bonds and DJ. Then introduce supp/res. You will be surprised what clean mind can do. Walter
GD, CT, Thanks guys, Of course he'll learn what he needs to learn through the school system, college, etc - he's a top student and absorbs new material / understands new concepts quite easily (brag, brag... ) The ideas about the trading classics are great - I thought of Alex Elder's "Trading for a Living" book, but some fundamental and some technical analysis books would also be appropriate. As he gets deepr into this and if he feels ready for something better, I was also thinking of arranging for him to have the use of a simulator and play with some realistic trades. Any suggestions?
W - Good idea - I do have Tony Oz' stock trading course on CDs and he may actually see this as a giant video/computer game. Thanks!
After 11 is a good age. You can either use a discovery process or if you are successful you can just mentor using your method. Sixth formers are perfectly capable of running their own accounts. One phenomena of learning to trade in a formal educational setting is that the students and their parents have a total renaisance in their relationship. I got into this by accident in Greenwich Conn; I was running an evening course for parents (a la Kemeny) to retool their mathematical decision making basis. They recommended it be taught to sixth formers. I started this and always had one or more families finance their child's efforts. It became well known that a student was capable of financing their own education. This was in the early 60's. Since I had the luxury of doing what I wanted it went this way: Ancient systems of numeration (To find out what limited the civilizations mathematically and learn to do maths research) Running a families finances (we simulated wealthy families such as theirs completely) Investment (We used 7 keys to value (NYSE) and developed 17 indicators for analyzing annual reports- each student harvested facts from 10 corps ) Standard and Poors gave us a full blown brokerage firm service support- we had an add and delete done daily on all publications they overnighted) TA All students hand charted daily their 10 corps we used 4 th Ed of Magee as basis. They did investing and short term trading continually through the year and we filed in March the 1040 with all schedules. This fit into their family finances. We always went to NYSE on 29 OCT and once I had a B'day in class so I had the floor sing happy birthday. It was before glassed in balcony. We had lunch at Lehman. What was the most important was how the students pooled their knowledge and connected it to the daily news in their suscriptions to the WSJ. We did back plotting of any stocks they wanted to add and one wall of the classroom was shelved so that for each stock on their lists there were ten copies of annual reports for several years and the interims. I was retired after grad school and completing five years of employment. My focus was making 10 to 20% a month in equities so I served as an example to the students. In those days the market did not demand anything close to watching it real time. The daily data was in vogue and there ws no formal commercial charting available. We did it all by hand. The formations and P. V relationship were the primary thing they chose to succeed. The 17 measures they made on annual reports also ran along as important filters for getting a focus. If you are nailing 10 to 20% a month it will be fun for you and your sone. If you are doing commodities etc, my guess is that the relative increase in ROI over equities will be the major attraction. I was working in a setting of wealth and noblese oblige so there was and understanding that success was an obligation. Money for run of the mill people can take on a religious orientation if you are not careful. This is best done in a context of understanding wealth is all part of life and maintaining it is not a difficult routine from generation to generation. With it comes the responsibility to be integral in the responsibilities and fabric of society. It is very true that students who are in this orientation then go to higher education to learn to contribute through their life choices.
In the book I just finished, "Dumb Money", about a guy who was in the right place at the right time and made a killing and then dabbled in daytrading, he had this to say... "I was raised on videogames. Asteroids, Pacman, Doom... daytrading was a lot like that, only more violent." Speaking as someone who was a 14 year old kid once: Yes, teach him. Why? Because until he reaches college, the school system only exists to warehouse children safely. It bears almost no relation to reality. You'll actually be teaching him something real and concrete that is useful in the real world. I know lots of former 14 year olds who would have been a lot better off learning about finance than investing their time in wargaming or comic books or drinking or carousing. Buy him a nice telescope, too. Loxley