What difference would it make to your child’s future if you could inspire them to pursue trading or investing early in life?
I mean really early – like start investing before they have even left school.
For example, Warren Buffett purchased his first stock at 11 years old!
Do you remember any moments in your childhood that inspired you to want to do something in your life?
I don’t just mean happy memories, I am thinking of those things that really caused you to think about investing for your future.
I have one memory that I wanted to share which has really influenced my path. When I was a young teenager I played a board game called “The Stock Market Game” over and over with my family. I was fascinated by how we could make so much money from the prices of companies going up and down.
The game covered capital gains, dividends, earning money to pay for share purchases, probability, stock splits, broker costs and sudden unexpected requirements to sell shares (with a hefty penalty). All of these are valuable lessons which I still carry with me!
Fast forward to today and as a trading coach and educator I am doing my best to teach my kids about how to trade in stocks. I have:
- played that original Stock Market game with them
- invented games to teach particular lessons
- paper traded with them.
- spoken regularly about my own trading results with the kids
- shown them price charts and where my entries and exits were so they can figure out the gains.
I would love to hear about your experiences either as a child or with your own children:
How did your parents teach you about money and investing when you were young?
How have you captured your child’s imagination about trading or investing?
What are you doing with your own children to teach about money and investing?
Please comment below and share your stories!
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Hi Adrian,
I fell into the trap of investing money but not knowing how to exactly make the trade. In other words I just did what they advised.
I have just started a leaning course on Forex costing me £749 but my real hope and downfall was in stocks and indices.
The simple question I need an answer for is this.
Knowing my stop loss from the graph, equity and amount to risk. How do I calculate the lot size.
The trading companies I had money with, failed to answer that simple question. Once they had my money they were too busy to answer and so I left them.
Hi Leonard,
This is a really great question and super important that you understand how to size your positions to manage your risk properly.
I have attached two images below that explain the best way to calculate your position sizing for stock trading (or Forex as well). You need 4 numbers to do the calculation:
1. Entry Price – Determined from your chart or preferably by your trading system
2. Stop Loss Level – Determined from your chart or preferably by your trading system
3. Current Equity – From your brokerage account
4. Risk per trade – Determined by your trading system
If you have a backtested trading system then the risk per trade will be part of the system, but if you are trading with a discretionary approach then you need to select a risk level that is right for you. I would suggest that 0.5% – 1% of your account is the range you should look in. Note that once you select the risk per trade level, this should be constant for all trades. I often use around 0.5% risk per trade.
Now that you have the 4 numbers, follow these steps:
1. Find the risk per share (Entry Price – Stop Loss Level)
2. Find the dollar risk per trade (Current Equity * Percent Risk Per Trade)
3. Calculate the number of shares to buy (Dollar Risk Per Trade / Risk Per Share)
Here are the images so you can see all that visually:
Step 1:
Steps 2-3:
