Son wants to quit A levels early to try day trading

[Gingerbread981]

My 17 year old son wants to quit his A levels, he’s one year through, got an A in maths (fast track) without much revision and is studying further maths and physics.
Hes decided to leave when he turns 18 in a few months without completing A levels because he doesn’t want to go to university or work a 9-5 job lining someone else’s pockets.
he’s adamant he will make it as a day trader and become a millionaire. It’s driving me crazy, he’s so bright yet so silly to throw away the chance of A levels.
im on my own and will lose a little Universal credit, I’ll lose child benefit and have to pay the extra 25% council tax. I’ve said he will have to contribute if he leaves education but this hadn’t put him off.
he now wants to leave asap as he’s got himself behind as mentally he’s left!
I can’t physically push him out the door as he then won’t drive there.
I just don’t want him to waste his opportunities.
any ideas?

@parietal ,

Even though I said (and think) it is a mugs’ game, it is not entirely gambling. Some people do make money out of it.

You need to read lots, to have the right psychology, which is total discipline, the opposite of a typical gambler. You have to be able to see losing as a part of winning and accept that, even if you are good, you will end many days down.

The problem is that you are against professional organisations, fast computers and internets and some of the best programmers in the world. Add into that AI, which wasn’t around when I worked in finance.

The upside is that, if he tries seriously, he will learn that it is really hard work and the opposite of easy money. And quite boring, to be honest. He may realise that, if he wants to make it as a trader, far better to do his A levels, a relevant STEM degree, and get a job in a bank or hedge fund.

It sounds like he’s reading Reddit too much.

I just don't understand why he would rather work some low level job to pay his way alongside trying this out, rather than continuing his a levels while trying this out. It's illogical...

Me neither. I’m exhausted trying to tell him this!

He needs to finish the A levels or we know he’ll regret it. Sounds like it’s not too hard for him either. It’s only a year left!

If he’s an intelligent young man will he see some sense if you give him factual evidence? There are multiple studies (use google on AI mode to help you find them) showing that day trading you will always lose as much as you win. The problem is with confirmation bias people remember their wins more than their losses.

Online of course there are examples of people who have made a fortune. Lots of them are lying for engagement as their job is social media. A few are very lucky but statistically more people make their fortune playing the national lottery. And we wouldn’t say they are genius number-choosing strategists and quit our jobs to play the lottery each week in the hope we win big too one day. These are the odds we’re working with.

I’ve worked in investment management for years so honestly I can say - big bucks can be made in trading. But usually you need access to start ups who might make it big (regular joes in the UK are not allowed to invest in these through platforms), or large amounts of money to begin with (you can make pennies in the pound trading currency so if you start off with £10m you can get a decent return… but if you have £1,000 to start with you won’t make enough to live off). In the UK regulation means it’s really hard to invest in a way as a sole trader that might make genuinely make you rich.

If he’s interested in trading he should finish his A levels and get an internship in a brokerage or literally anywhere.he can day trade his salary in the evenings if he wants. But every study on this ever shows he would be best just sticking whatever he has into a long term tracker fund. At the end of 10 years he will absolutely have more than he would through day trading the same amount over the same timeframe.

I know, it’s crazy. It’s only 8 months really!

I’m sorry but he is being naive and reckless. There are lots of people as good or better at maths than he is. Lots of them end up in the city doing finance jobs. If it was so easy, do you really think so many people would stay employed in hedge funds or investment banks? They will be providing training, employment etc. by choosing to flunk his a-levels he will limit his options massively and show that he is reckless.

The problem will be if he loses all his savings at 18 after he has banked everything on becoming a millionaire through day trading. Is there any way you can give him a portion to do what he wants and say the rest of it is going into a stocks and shares ISA? So he feels he's still trading but diversifying his investments?

When DS1 was slacking at this point in his A levels, I explained to him that I would only be funding him while he was in education. Once out of education, I would expect him to get a job and pay his way.

I would advise you to tell your son that if he’s not going to study for A levels, then he needs to get a job and pay rent and a share of bills. He can start by selling his car. If he wants to live in the real world, he needs to be faced with real world issues.

@Gingerbread981 ,

‘This is what he’s doing, he said it’ll take a year or so to make money 🙄’

What does he intend to do for an entire year? Mock trading?

A lot of people can make money mock trading or even trading small insignificant sums. The problem is that emotions and ego come into it when the money gets real.

The only way you know if you can make money trading is to trade. Sure, take a month or even two to build systems, test out strategies etc, but then you have to commit. And you will find out pretty quickly whether you are in the tiny percentage who do well.

I only know a couple of people who make money trading and they had traded at banks for over a decade before setting out on their own. They knew markets backwards and were experts in trading specific markets.

Maybe he should think of it as a trade! What is the upside and downside of quitting his A levels. How does he stop loss (quit because it isn’t working) out of day trading and back into A levels. How much worse off would he be if he completed his A levels and then took a year off to try trading.

Maybe get him to write it down like that, as a trade with potential profit and loss, and see if it might encourage him to change his mind.

This

it takes years of knowledge and experience to reliably make money from day trading and it seems a bit of a fad get rich quick scheme some fall for

many successful city day traders have a degree and study the market relentlessly to achieve the gains they do

He doesn’t have any savings. This is prop firms. He may be planning to use his 2.5k child trust fund in a few months but he was going to use that for a car.

No. He's trying to design and refine a strategy using real money if he's saying that. Because he's young and impatient.

If he thinks he has an edge, he needs proof of concept and consistent profitability in a demo account first. Ask him what his profit factor is? How much has he back tested? How long has he forward tested? Ask him whether he's got enough data to forward test his strategy at different times of day. What's his usual risk to reward? What's his plan to scale? That's where most people go wrong, they scale too fast and blow their accounts.

Ask probing questions that he probably can't answer. He might still do it anyway but if he's as smart as he thinks it is, he'll stop and think. Trading is like starting a business, not a get rich quick scheme. Losses can be treated as an expense, if they're properly managed. Profits shouldn't be treated as a 'win' or luck but a return. If he treats it more like a business plan he'll hopefully find the flaws and pitfalls before he loses money, not when he loses money.

Also be aware of revenge trading. Id argue that a man of his age is particularly vulnerable to this kind of impulsivity. it's when you lose, and immediately make stupid new trades to try and win it back. That's when it's gambling and a slippery slope.

Statistically more people make a fortune on the lottery than sole day trading.

All the discipline you outline - maybe 20 years ago that might have paid off but today for the reasons you outlined a normal person is not going to beat big global investment banks with billions and algorithms and phd quants and experienced traders on their side.

So on that basis it basically is gambling as the only way to really make money is to take a punt something unexpected happens and hope you win.

It’s worth remembering that what we can invest in in the uk as individual unregulated people is stuff like listed stocks and shares and currencies. The banks themselves don’t make real money out of this stuff either beyond just the regular ebb and flow of the market. Investment banks make their profit from listing new companies and debt and m&a and commodities - all stuff regular joes can’t touch

I know exactly one person (among a dozen or so) who has successfully day traded.

He was a strange character. A social hermit, obsessive and maths/beating gambling systems was very much his special interest. He was a maths genius and the kind of person who wrote code as a hobby to automate winning at online poker competitions so day trading was just another challenge to him. He kept his day job too.

Every other person lost money, some quite a lot. Two of them have unhealthy gambling habits still, one ended up divorced because of it. These are all university educated, otherwise 'intelligent' people.

I would have a serious talk with him. Tell him he needs to continue the a levels so he doesn't leave with nothing. Why not complete just the two maths a levels. Drop physics rather then fail it. That will leave him plenty of free time for day trading on a dummy account.

I don't know how far you are willing to go but I may tell him you won't support him out of education. You don't have to house him beyond 18 etc unless he completes the a levels. If he continues regardless despite the ultimatum then you could withdraw support. No food cooked for him, no laundry, no lifts, no pocket money. All the nice things he would get as a supported child are removed. You need to cut back anyway. Maybe this is too harsh I don't know.

Another option. He needs to prove his plan is workable. (Which may fall through) He needs to show you the graph that indicates a consistent success rate on a dummy account. 2/3 months of growth, not the amount of money he 'earns' but a percentage of growth that shows it isn't just luck but skill.

I'm hoping this very pie in the sky for him and all it takes is one big failure for him to realise the world doesn't work like he wants it to.

Exactly. Where is he even getting the money from?

Well he can do that once the A levels are done then!
Also he could trade longer term while doing A levels. There’s no need to quit!

To be fair when i say I don’t know anyone who has successfully day traded I do know one. But he’s 50, a maths genius and has 30 years working on the trading desks at global investment banks. And it’s a long term strategy he’s stuck his pension in. A few years in and it’s still outperforming anywhere else he could have put his money so I’d say it’s a success but he’s not taking an income from it

Im 60, when I was a teenager the dullest most ridiculed job was stockbroker ironically.
I invested a large chunk of my parents estate when they passed into "the market". I have professionals trading my money and doing pretty well, but the markets go down as well as up and even my people cant guard against unforseen crisis, for example in 2022 everyone lost money. I had to listen twice now to detailed explanations of how and why trading isnt a certain thing. And these are highly educated trained professionals, all with degrees from universities.
I have spoken to people who invest their own money and I read the advice from the money experts in the Daily Telegraph to people who manage their money themselves, and it makes me so glad I have professionals doing my investments.
I think your son will have to find out on his own that when a thing seems too good to be true that's because it isnt real.

Thank you, useful to share with him.

First thing I’d check is whether he’s been taken in by a scam- “you can make £££” day trading with this method, just pay ££ for the secret” is a well known con.

The chances of making any money are minuscule while the chances of making substantial losses are huge. Some people might make some money over the short term but this is likely down to
luck.

Professional traders are now largely using tech (inc AI) to make calculations and decisions instantly. They even place their trading servers physically close to stock exchange servers, to minimise the time it takes to transmit orders by a few milliseconds . There is no way that a teenager in his bedroom on an ordinary broadband connection can compete with any of this. It’s not about whether he’s clever or not.

So a very bad idea all round. If he wants to experiment set him up with a dummy day trading account on eg etoro so he can learn a bit more about it. You could also encourage him to think about careers in finance and markets generally. But at the moment he sounds
like he’s just fallen for a get rich quick scheme and is going to get fleeced.

I’ve said this. He plans to get a job to fund it. He hasn’t found one yet!

Does he actually have a job. Or has he ever had a job?

Is it back to the traditional response of parents for decades, you can quit but only if you have a job? I'd put in further parameters like 'and stick it for a month' or save at least '£1k'.

Does he understand how many hours he'll have to work for the funds to trade with?

I agree with using the mathematical arguments. It's x number of hours at minimum wage versus x on a financial graduate wage.

And if all else fails, how old is he? Can he still get funding for A levels next year if this plan doesn't work out?

DD had a long term relationship with a man who followed Andrew Tate.
He told her that he would be a millionaire by the time he was 30 - he was 22 at that point.
He had a special Tate recommended book to record all his transactions. They were pennies rather than pounds.
When they split up up he owed her around £7k. And still does