If you had a son who wanted to become a trader (of course after you tried convincing him not to do so, lol) what style of trading would you teach him? I mean besides of all the basics like risk/reward, kelly etc. Would you teach him price action trading? How to look for market inefficiencies (aka arbs), statistical/seasonal trading or slap him with the complexity of options strategies in Destriero and Tony Saliba style? Would you make him a scalper or even a swing trader?
What style of trading would you teach your son?
- Thread starter David's faith
- Start date
Value investing
Probably something based on compound investing. If they can play the time factor and wait for it, something with low risk and safe returns for a few years.
Yes ofc that's the most sound option but what if it was about trading?
So the question is what you want to achieve. There are of course lots of easier ways to make money. And if you made a whole lot of money already, teaching a very low maintenance investing style in profitable companies (or even just passive/SPY/QQQ) is the least risky, where risk can be defined as your kid losing the pile of cash you passed on to him/her.
Also, assuming society and the world will be the same in 20 years from now is a tall order with the rate of how things are progressing (AI etc).
Also, assuming society and the world will be the same in 20 years from now is a tall order with the rate of how things are progressing (AI etc).
Good article about Sean Ryan, son of O'Neil protégé David Ryan.
How 29-Year-Old Stock Trader Returned 132% in 2022 (businessinsider.com)
A 29-year-old stock trader who returned 132% in 2022 and remained profitable for 4 straight years shares his top 6 tips for profiting no matter what the market conditions are
His father, David Ryan, had been a successful trader, winning the US Investing Competition four years in a row, according to Norman Zadeh, the competition's founder.
After witnessing his father's success, Ryan decided early in his life that he wanted to make trading a full-time career. This would enable him to make money from anywhere in the world, allowing him to travel and enjoy his life.
Now, at the age of 29, he has followed in his father's footsteps, finishing third place in the stock division for the annual championship in 2022. He returned 132%, according to his brokerage statements viewed by Insider. It was an impressive run considering the stock market had its worst year since 2008.
But it wasn't a lucky year for him. Ryan has been competing in the competition since 2019, returning 51.8% in his first year after entering late, 128% in 2020, and 18% in 2021, according to Zadeh.
After studying business administration and graduating from The Master's University in 2016, he spent two years watching over his father's shoulder and learning how to trade. During that time, Ryan would learn to read a stock chart and review a company's fundamentals, including earnings reports.
"But these last four years, I have completely thrown the fundamentals out the window and I've 100% just traded based on the chart," Ryan said.
He has found that a company's story, such as its promise of earnings or good management, could cloud his judgment. So over the years, he has honed in on his own strategy, where he just focuses on the chart.
"If you think this company is going to come out with a great earnings report while the stock price is slipping, you might be encouraged to hold on a little longer. Whereas if you're just looking at the chart, it might tell you to get out earlier," Ryan said.
He admits that he learned a lot from his dad, but the biggest takeaway wasn't about a particular strategy. Rather, it was how his dad approaches the market: it's a personality trait, Ryan said. There's a humility in his ways that allows him to remain flexible. If he enters a position and the stock turns against him, he's able to accept he was wrong and exit the position. It's not something you can learn from a book, he noted. Direct experience and multiple failures bring you to a realization that the market is like a beast you can't control and you have to be willing to bend when you're wrong, he added.
6 takeaway tips from Ryan's approach to trading
Learning how to lose is probably the most important trading tip, Ryan said. This is why you want to get accustomed to selling a falling stock as quickly as possible. Ryan has quantified the loss he's willing to take by setting hard stops for himself. This means never taking a loss that's higher than 1% of his total trading portfolio. It's something that can save so many traders if they stick to a hard rule, he said.
Another way he mitigates risk is that if the stock is up by 10%, he'll set a sell-stop order at his breakeven price, which is the price he entered at. If the stock drops below the set price, it will trigger a sale. This is a great way to lock in a risk-free trade, Ryan said. However, this step is not without risk. If a stock's price is plunging rapidly, the order may not get filled in time.
He doesn't go for the highly volatile stocks. Since he's a swing trader — which means he holds a stock for weeks or months at a time — he looks for stocks that have been moving sideways for a few weeks and then suddenly begin to increase in price. That increase can be anywhere from 20% to 100% in a couple of weeks. This move should be coupled with an increase in trading volume. It tells him that there's a sudden accumulation of interest.
He refers to this pattern as the calm before the storm. The stark contrast between no movement and then a sudden upswing or reversal indicates that there's a reason behind that shift and the stock could really start moving.
He never tries to buy the first move and never tries to sell on the last because you can't catch the bottom and you can't catch the peak price. This is why Ryan doesn't take a position during the first breakout. Instead, he'll wait for the stock to settle back down. After a few days or weeks, if it begins to move up for a second rally, he buys.
"I'm typically out after the beginning of the third move. So I'm not trying to buy the bottom and I'm not trying to sell the top. I'm just trying to get that middle section," Ryan said.
Something he has observed from his dad's teachings was that the market seems to move in waves of threes, either up or down. Whether it's three large moves over the span of a month, or three smaller moves within a day, the pattern repeats itself relative to the timeframe. While Ryan doesn't have historical data to back this observation, he has also noticed this pattern. He refers to it as the market's rhythm.
If you think about a stock's pattern in this way, there's a first move, a second move, which is the most risk free, and then a third move that you could possibly trade, but the risk increases. There could even be a fourth and a fifth rally, but risk increases even more, he noted.
An indicator that has helped him most is the relative strength index (RSI), which he recommends paying attention to regardless of what a stock's price is doing. It measures the strength or weakness of a stock based on the closing prices of its recent trading period. If a stock's price is moving higher but the RSI is getting weaker, it tells him the rally is likely coming to its end.
"I've seen stocks grind higher, the price continues to go up, but the RSI is dropping, and that is like the best way to get out early before the stock actually starts dropping," Ryan said.
For example, on February 11, Direxion Daily Gold Miners Index Bull 2X Shares (NUGT) rallied to the upside for the second time after a two-year downtrend. The trading volume also increased as the RSI strengthened. Ryan began to gradually scale in starting with 2,800 shares. Over the next few months, he held a core position while shaving off some profits and buying more. By April, a decreasing RSI tipped him off that the movement had started losing momentum. That month he sold off about 6,000 shares, according to his brokerage statement viewed by Insider.
Finally, pay attention to your mental health. Trading is the most psychologically taxing job you could have, he said. Dealing with the market cycles and the wins and losses that come with it is something Ryan says he's still working on improving. The key is to not tie your emotions to market movements.
For this reason, Ryan was impressed by his peer, Gemy Zhou, who won second place in the competition using a software program he built to automatically trade on his behalf. It eliminates the emotional turmoil that's associated with the swing of the market, he noted. And while you may not be able to build the same program, you can take a cue from the machines' ways by also sticking to a mental program or a discipline that makes things a little more robotic, he said.
Ryan doesn't recommend trying to mimic anyone else's strategy because each person operates in a different way. Instead, start trading and let yourself learn from your mistakes, he said. The market will teach you how to make money on your own. And when you lose money, you'll learn key lessons. You'll also realize that trading is constantly morphing you as a person, he added.
"I used to think, when I was learning from my dad, that there is only one way to invest and this is the only way that you can make a lot of money," Ryan said. "But it just turned out that my dad's style was not something that I was personally comfortable with. And so I just had to find my own way."
How 29-Year-Old Stock Trader Returned 132% in 2022 (businessinsider.com)
A 29-year-old stock trader who returned 132% in 2022 and remained profitable for 4 straight years shares his top 6 tips for profiting no matter what the market conditions are
- Sean Ryan never tries to buy a stock on the first rally and never tries to sell on the last.
- He'll also set a sell-stop order once a stock's price reaches his breakeven price to reduce risk.
- He looks for sideways-moving stocks that suddenly rally and enters on the second uptrend.
His father, David Ryan, had been a successful trader, winning the US Investing Competition four years in a row, according to Norman Zadeh, the competition's founder.
After witnessing his father's success, Ryan decided early in his life that he wanted to make trading a full-time career. This would enable him to make money from anywhere in the world, allowing him to travel and enjoy his life.
Now, at the age of 29, he has followed in his father's footsteps, finishing third place in the stock division for the annual championship in 2022. He returned 132%, according to his brokerage statements viewed by Insider. It was an impressive run considering the stock market had its worst year since 2008.
But it wasn't a lucky year for him. Ryan has been competing in the competition since 2019, returning 51.8% in his first year after entering late, 128% in 2020, and 18% in 2021, according to Zadeh.
After studying business administration and graduating from The Master's University in 2016, he spent two years watching over his father's shoulder and learning how to trade. During that time, Ryan would learn to read a stock chart and review a company's fundamentals, including earnings reports.
"But these last four years, I have completely thrown the fundamentals out the window and I've 100% just traded based on the chart," Ryan said.
He has found that a company's story, such as its promise of earnings or good management, could cloud his judgment. So over the years, he has honed in on his own strategy, where he just focuses on the chart.
"If you think this company is going to come out with a great earnings report while the stock price is slipping, you might be encouraged to hold on a little longer. Whereas if you're just looking at the chart, it might tell you to get out earlier," Ryan said.
He admits that he learned a lot from his dad, but the biggest takeaway wasn't about a particular strategy. Rather, it was how his dad approaches the market: it's a personality trait, Ryan said. There's a humility in his ways that allows him to remain flexible. If he enters a position and the stock turns against him, he's able to accept he was wrong and exit the position. It's not something you can learn from a book, he noted. Direct experience and multiple failures bring you to a realization that the market is like a beast you can't control and you have to be willing to bend when you're wrong, he added.
6 takeaway tips from Ryan's approach to trading
Learning how to lose is probably the most important trading tip, Ryan said. This is why you want to get accustomed to selling a falling stock as quickly as possible. Ryan has quantified the loss he's willing to take by setting hard stops for himself. This means never taking a loss that's higher than 1% of his total trading portfolio. It's something that can save so many traders if they stick to a hard rule, he said.
Another way he mitigates risk is that if the stock is up by 10%, he'll set a sell-stop order at his breakeven price, which is the price he entered at. If the stock drops below the set price, it will trigger a sale. This is a great way to lock in a risk-free trade, Ryan said. However, this step is not without risk. If a stock's price is plunging rapidly, the order may not get filled in time.
He doesn't go for the highly volatile stocks. Since he's a swing trader — which means he holds a stock for weeks or months at a time — he looks for stocks that have been moving sideways for a few weeks and then suddenly begin to increase in price. That increase can be anywhere from 20% to 100% in a couple of weeks. This move should be coupled with an increase in trading volume. It tells him that there's a sudden accumulation of interest.
He refers to this pattern as the calm before the storm. The stark contrast between no movement and then a sudden upswing or reversal indicates that there's a reason behind that shift and the stock could really start moving.
He never tries to buy the first move and never tries to sell on the last because you can't catch the bottom and you can't catch the peak price. This is why Ryan doesn't take a position during the first breakout. Instead, he'll wait for the stock to settle back down. After a few days or weeks, if it begins to move up for a second rally, he buys.
"I'm typically out after the beginning of the third move. So I'm not trying to buy the bottom and I'm not trying to sell the top. I'm just trying to get that middle section," Ryan said.
Something he has observed from his dad's teachings was that the market seems to move in waves of threes, either up or down. Whether it's three large moves over the span of a month, or three smaller moves within a day, the pattern repeats itself relative to the timeframe. While Ryan doesn't have historical data to back this observation, he has also noticed this pattern. He refers to it as the market's rhythm.
If you think about a stock's pattern in this way, there's a first move, a second move, which is the most risk free, and then a third move that you could possibly trade, but the risk increases. There could even be a fourth and a fifth rally, but risk increases even more, he noted.
An indicator that has helped him most is the relative strength index (RSI), which he recommends paying attention to regardless of what a stock's price is doing. It measures the strength or weakness of a stock based on the closing prices of its recent trading period. If a stock's price is moving higher but the RSI is getting weaker, it tells him the rally is likely coming to its end.
"I've seen stocks grind higher, the price continues to go up, but the RSI is dropping, and that is like the best way to get out early before the stock actually starts dropping," Ryan said.
For example, on February 11, Direxion Daily Gold Miners Index Bull 2X Shares (NUGT) rallied to the upside for the second time after a two-year downtrend. The trading volume also increased as the RSI strengthened. Ryan began to gradually scale in starting with 2,800 shares. Over the next few months, he held a core position while shaving off some profits and buying more. By April, a decreasing RSI tipped him off that the movement had started losing momentum. That month he sold off about 6,000 shares, according to his brokerage statement viewed by Insider.
Finally, pay attention to your mental health. Trading is the most psychologically taxing job you could have, he said. Dealing with the market cycles and the wins and losses that come with it is something Ryan says he's still working on improving. The key is to not tie your emotions to market movements.
For this reason, Ryan was impressed by his peer, Gemy Zhou, who won second place in the competition using a software program he built to automatically trade on his behalf. It eliminates the emotional turmoil that's associated with the swing of the market, he noted. And while you may not be able to build the same program, you can take a cue from the machines' ways by also sticking to a mental program or a discipline that makes things a little more robotic, he said.
Ryan doesn't recommend trying to mimic anyone else's strategy because each person operates in a different way. Instead, start trading and let yourself learn from your mistakes, he said. The market will teach you how to make money on your own. And when you lose money, you'll learn key lessons. You'll also realize that trading is constantly morphing you as a person, he added.
"I used to think, when I was learning from my dad, that there is only one way to invest and this is the only way that you can make a lot of money," Ryan said. "But it just turned out that my dad's style was not something that I was personally comfortable with. And so I just had to find my own way."
