Why Aren’t Universities Teaching Trading?

I just returned from Penn State for a talk with some future traders (perhaps). Some serious college traders inside of an investment club reached out for my visit. My charge? Discuss what it’s really like to be a profes-sional trader so that some might better understand what we do.

In a recent New York Times article the rise of trading labs was highlighted. Many of these trading labs are not trading labs at all, judging from the emails I get. They are investing labs. Investing is not trading! All things fundamental analysis. Too much buy and hold. I don’t wish to paint broad strokes; I’m just relaying the emails I get from college traders and sharing my frustration at the frustration of college traders who have no campus training or mentors. How can they prepare for a career in trading without proper training?

Trading is a skill. Just like Shane Battier schooled by Coach K developed professional basketball player skills in college, so must college traders. We wonder about the failure rate of traders yet keep asking 20-somethings to master the trading game without years of highly developed skills. How many 21-foot jumpers do you think Ray Allen, the all-time leading three-point shooter in the NBA, shot before declaring for the pros? Yet most young traders have made zero bullish flag pattern trades before they start their pro trading career. What would the failure rate be if traders showed up at prop firms after years of high level practice and game experience?

Today we’re finding a learning curve closer to 18 months before we see the greatest leaps in progress. Four years of trading in college would land a future trader with the experience and skill necessary to start from day one. Trading stars do not arrive on day one be because unlike college athletes they have little-to-no skill.

With schools pressed to raise money how about this idea? Go pitch some wealthy alumni to pledge for a new Rich Ex Donor Trading Center. Those who crush it after graduation with the help of this training center will then give back to the school creating a new stream of alumni giving. And the students will be exposed to trading enriching their college learning.

If you’re on campus and like the work being done at Penn State and Rutgers, start a trading sub group inside the investors group. If you need some help inspiring the students we’d be happy to visit and share what its like to “eat what you kill.” After my talk last night a student approached, making the four-hour dive down and four-hour drive back in a torrential downpour worth the trip: “The reason more students are not trading is they do not hear enough inspiring talks from people like you.” So for the professional traders in the community we should make ourselves available to college traders to encourage them to work on their game and help them build their trading communities.

As our world becomes more niche focused and where we watch the Internet from our iPad-controlled TV, education will be forced to cater to what the students want. I see college traders/students thirsting for a real college trading curriculum. When will the universities listen?

Mike Bellafiore
Author, One Good Trade

28 Comments on “Why Aren’t Universities Teaching Trading?”

  1. I hope you can understand this.

    Somos tres personas nativas de Costa Rica que hemos tomado en serio el sueño de llegar un dia a ser traders profesionales. el esfuerzo nos ha tomado mucho tiempo porque no tuvimos, ni tenemos un mentor que nos guie durante estos 4 años pasados.

    Navegando nos hemos encontrado con tu twetter primero y luego con tu blog, asi llegamos a tu pagina web.

    Tratamos de seguir a Corey Rosenbloon en sus comentarios y compramos tu libro, de a poco y con paciencia dejamos de perder mucho dinero en el mercado, pero no logramos estabilizar los resultados, un dia ganamos otro perdemos.

    Hemos pensado en visitarte a Nueva York, pero no nos sobra el dinero, es un proyecto que tenemos juntos y me gustaria saber si nos puedes recibir, seria un privilegio para nosotros algun dia conocerte.

    Que tal una vacaciones en Costa Rica?,

    greetings.

  2. They do teach trading.

    They teach that capitalism is the bane of humanity and that trading is the essence of capitalism.

    You’ve not noticed that academicians are so far left that they could truthfully be called communists?

    You’ve not noticed that the first thing commie gov’ts do when they come to power is outlaw speculation?

  3. You touch on a bigger issue of applied vs. theory being taught throughout the college curriculum. Theory was fine when the goal of higher education was to produce a fully rounded individual for society. Unfortunately, the cost of higher education has become so burdensome, that the focus for the student must change, from becoming a well rounded individual (learning theory), to applied learning which will actually prepare them to win and succeed in a job after graduation.

    The same can be said for finance curriculum at universities. It’s time they start teaching applicable skills like trading and risk management, and less financial theory and economics. I believe the market will demand this down the road, and all will benefit.

  4. I agree. This point is all over my emails from college traders. Trading is a performance based sport that should be taught from a younger age.

  5. I agree. This point is all over my emails from college traders. Trading is a performance based sport that should be taught from a younger age.

  6. I’ve been the president of my school’s trading club for the last three years. I have been fighting the entire time to get permissions to do less investing and actually do some trading. Our fund is “long only” and it has been made quite clear that we are not allowed to speculate. The administrators of the school want us to focus on buy and hold. It has been great to get students involved in real portfolio management and analysis. However, I agree that there is a major flaw in the current business school’s approach to teaching trading skills. I’ve been fighting to get a trading lab set up for years, but there is no budget for that kind of thing on our campus. I appreciate your work to spread the word.

  7. Hi Mr. Bellafiore, I’m grew up in the midwest, and living in D.C. now. I’m also starting Development in a couple weeks once my papers are finished being processed. In my experience, the majority of people outside of NYC think trading anything in the markets is gambling, or have a negative perception of trading. I don’t know why or where it comes from. I have two younger brothers that are freshman in college majoring in mathematics/comp science. They will be following in my steps and taking the training program at SMB in the near future. They told me in their economics class that their professor lectured in class that stock investments is extremely risky and that real estate is much safer. Also, they say their university investment club subscribes to Graham/Buffet teachings and looks down at trading. My uncle, a family doctor, told me that I was crazy to pursue this field, b/c all the guys on Wall Street are Ph.D’s in finance. So, I think one barrier is this conventional assumption that a lot of people have on what they believe goes on in the financial world. I don’t know … I just had to do my own research, not listen to them, and pursue my passion for trading and the capital markets with SMB.

  8. Could colleges see the attrition rate as a pretty good reason not to push trading as a career choice?

  9. where do you go to school? investments clubs at colleges are terrific! but why not trading clubs and a trading curriculum as well?

  10. i am sure that has something to do with it. very good question. but what would the attrition rate be if traders developed skills like a pro athlete before they went pro as a trader?

  11. I attend, until May, the Goddard School of Business and Econ. at Weber State University in Ogden, Utah. Overall the school has been a fantastic education experience. I would love to see them offer courses on trading in the future. I have been teaching trading during our club meetings and I have had a really good response. I think that universities are starting to see the importance of trading, they just aren’t ready to make the paradigm shift.

  12. Reading a chart doesn’t exactly take skill. Even Joe 6 Pack can do it; Jim Cramer does Technical Tuesdays… everybody knows how to read the basics of a chart. so lol @ nobody has traded a bull flag pattern

  13. to trade you need cash which no one seems to have these days. no skin in the game and the results are all hypothetical. selling 10k shares on a thin bid gets you paper profits but probably massive slippage in the real world. colleges are out to make money. besides, any competent trader would not be teaching others how to trade successfully.

  14. Schools don’t teach trading because trading isn’t a realistic career path. Most proprietary firms, I think including your own, do not pay a worthwhile salary. And, most students (and people for that mater) don’t have the capital required to trade on their own. I think it would be a terrible idea to teach trading as part of a general university course, honestly. Being a skilled trader is worth little without capital.

  15. I guess this depends on how you define what is useful to be taught in college. Certainly this article which claims to site how little students learn in college is discouraging: http://read.bi/hgGR9F Trading is a profession that so many attempt after they graduate. I see so many thirsting for trading education while in college. You learn more about yourself as a trader than anything else you could try. There is a disconnect between the interest, the value of learning trading, and what is being offered. Finally if a trader develops a track record with even a small amount of capital it is very easy to find firms, SMB included, interested in providing more capital for those who need it. Thxs for your thoughts. I appreciate your contribution to this discussion.

  16. I wonder why there can’t be a larger emphasis on general personal development, with trading one of the fastest paths to finding out about one’s self due to the constant appearance of P/L as a measure of growth. I think a better approach to getting universities to buy into this would be to find SOMEONE at the school that believes in personal application over theory, and use a syllabus consisting of Gladwell, Taleb, Coyle,etc…kind of psych, kind of econ, kind of finance, kind of sociology, but definitely one in which students could get a multidisciplinary look at what makes top performers tick

  17. Well trading is an aspirational field, like game design or acting. There have been some schools such as Full Sail that catered to aspirational desires. However, many of the students who did graduate ended up getting entry level jobs (that they could have got with a general education) but were saddled with huge debt.

    Remember, most universities are not trying to teach a specific skill set but a wide aptitude for success. If one were to structure a trading university in the same way then it might teach probability, statistics, programming theory, business, financial, and then trading. Most of those courses except for trading could be taught in regular university.

  18. Because of value investors like Warren Buffet, and Benjamin Graham fundamental analysis is still considered the way to go. I’m glad I discovered trading and technical analysis on my own, but I don’t know if it should be taught at an undergrad level, just because most people really aren’t cut out for trading. That, and I don’t know if I’d want to learn from a professor who wasn’t busy being a trader himself.

  19. It is risky for the schools to teach methods that might change in the future. School does not want to be liable when things changed.

  20.  I am starting to see a lot of CFA partner programs pop up.  Would be awesome to see at least one CMT partner program.  I would be enrolled in a flash.

  21.  Hola Estimado Randall.
    Te comento que un grupo de traders experimentados estamos en proceso de iniciar un Programa De Trading Profesional en Costa Rica con clases presenciales. Si tienes interes [email protected]

Leave a Reply