The next Wolf of Wall Street may be living in a Sarasota dorm room.
Students at New College of Florida are spending the interlude between first and second semesters playing the stock market — employing trading strategies, debating when to buy or sell and watching their accounts rise and fall with the whims of the market and the wisdom of their choices.
“The Dow Jones dropped 100 points in a day. I got hosed on that day,” said Eric Brigham, 19. Last year Brigham’s overall investment of $100,000 netted him roughly $3,000 in profit.
But the 21 students learning the basics of day trading at New College aren’t in danger of squandering their student loans or driving their parents into debt.
The money is fake.
The Dow Jones dropped 100 points in a day. I got hosed on that day. - Eric Brigham, 19
Assistant Professor of Economics Sherry Yu is leading a three-week crash course in the stock market as one of the college’s Independent Study Projects.
Students play the role of day traders, using an imaginary $100,000 and employing different trading strategies on TD Ameritrade’s Thinkorswim program. The simulator allows participants to use fake money in real markets to see how they would do.
But the last thing their professor wants is for any of them to emerge unscathed.
“It’s unfortunate when they are making profits. It’s never good for them to be making money,” said Yu, laughing.
Instead, she hopes the exercise teaches them how the stock market works and instills the students with a healthy respect for it.
“The trading strategies you can learn from books or online from experts will never work,” Yu said. “But students do learn the idea of what to look for, and they learn some key insights about financial markets, and hopefully they can make better decisions later in life.”
Day traders buy and sell stocks in the same day, investing large amounts of capital into a stock, hoping for small upticks in value to pay large profits.
The trading strategies you can learn from books or online from experts will never work. But students do learn the idea of what to look for, and they learn some key insights about financial markets, and hopefully they can make better decisions later in life. - Sherry Yu, Assistant Professor of Economics
“Trading on the stock market seemed like something I only saw in movies,” said Brigham, who is one of the teacher’s assistants leading the class. “I never really thought I would do it or understand it; it would always be this black box of how people made money somehow in New York.”
With 21 students, the project has become one of the largest Independent Study Projects at New College. Students at the school are expected to complete a project each January in the interim period between first and second semester.
Nathan Ambrose has worked with Yu on the project for the last two years, and this year he is leading the class with Brigham. He said he got interested in it because of watching his parents lose money after employing trading strategies endorsed by a friend. Now Ambrose’s caution and respect for the markets mirrors that of Yu.
“I’ve had a lot of students that ended up making a lot of money on a fluke trade. ..they end up thinking they should go into trading, but over the long term they would end up losing money,” Ambrose said.
And even if the program spawns one or two students who think they may be able to make it in the market, the majority will emerge with much more financial literacy than they had before.
“Money is the language we speak every day,” Yu said. “You can’t avoid talking about money, and students should be able to understand the basic news.”