About Us: interview with FTS Founder Peter Hall
Peter, you were nearly 50 when you first started trading the stock market in the late 80's. What made you get involved?
I had often thought about it. Don't forget, in those days, trading required a relatively high investment capital - unlike today where you can start with as little as £100 or so. The spare cash came when my wife and I sold our newspaper. I was looking for a spare-time, money-making hobby. Stock market trading sounded like my kind of home business opportunity. A 1-hour a day armchair trader!
How much did you already know about the stock market?
Virtually nothing! But then everyone has to start somewhere. There was a whole new world to discover: shares, options, commodities such as gold or oil, index futures, etc. I don't think financial spread betting existed in those days.
Did you follow any investment courses yourself?
There weren't any!
I had never heard of P/E ratios, EPS values or the top stock movers. I thought a PEG was a bit you moved on a board game. I had seen stock and options price quotes and the FTSE volume on CEEFAX... but I hadn't a clue what that was telling me about the stock market. No one could even tell me how to make sense of the UK Financial Times, let alone key technical analysis indicators.
Did you follow any particular trading strategy?
Not in the beginning. As far as I knew, George Soros could have been a pop star, Jim Slater a roofer, and Warren Buffett something women did to fingernails.
Do you feel envious of newcomers who have so much information at their fingertips these days?
Yes and no. Mostly no. It's true that there is much more readily available information. However, information overload doesn't make you a better trader - you've got to know what information is useful and how to use it to make objective decisions.
How long does it take on average before one can expect to make regular trading profits?
If you try to learn on your own, it can take a very long time! If someone had been able to teach me what I know now, I could have saved a couple of nerve-racking years and tens of thousands of pounds.
Some FTS students feel ready to start trading after about a month. Others take a few months. It also depends on other time commitments. It's up to each person.
In any case, I always recommend that students start by paper trading. Mistakes are inevitable, but there's a lot to learn from them. Paper trading is a great way to test your knowledge and skills without risking any real money.
Your net worth today is nearly 100 times more than when you first started trading. Did you ever make any big mistakes?
Lots! Expensive ones, too. I nearly gave up completely.
As a successful trader, why on earth did you start FTS?
It was more coincidence than anything else.
Remember, I had made a lot, lost quite a bit, and had decided to build up again - but more slowly. We're back in 1990, the first Gulf War was looming, everyone was talking about recession, and so on. I can't remember exactly how things happened, but for one reason or another, the Independent on Sunday decided to run a feature on how I was able to make £1,500 a week despite the gloom and doom climate. That article led to an unprecedented 400+ phone calls from people asking how I did it. The London Stock Exchange newsletter picked up on it... what was I supposed to do? Say "go away"?
I wouldn't have minded answering a few phone calls a day, but it soon became unmanageable. The phone was never free. A lot of the things people wanted to know about were similar, some people were curious, others wanted to share their experiences. One day, I thought, if we're getting this many phone calls, let's group people and answer their questions and share experiences together. I talked it over with my wife. She agreed, and that's how FTS started... informally in our living room, believe it or not. A lot of fun.
How successful have your "students" been?
In terms of absolute statistics - to be honest, I'm not sure. Many keep in touch, others don't. One former student recently told me he was making an average of £12,000 a week. I have no doubt that I didn't teach him everything - nor did he achieve that level of success overnight. Incidentally, he's a pub owner, not a financial expert. I know that many students are making around £100-400 a week. Not bad for an hour's work a day, if that.
Is it difficult to make regular profits during a recession?
No, but I know that this is a popular myth. People who haven't traded before tend to think that you can only make money if share prices are rising. Probably largely influenced by the performance of unit trusts, etc., which tend to offer better returns during a bull market than during a bear market. Reputable institutions are locked into what they can - and can't - do with other people's money... And of course, you're paying for that long-term security.
Basically, you can make profits from the stock market whether it's going up, down or sideways. But you need to recognise what the market is doing, adjust your strategy, be patient, weigh the probabilities in your favour, then take action decisively.
What advice can you offer would-be traders?
1. Think about yourself: your goals, your personality, etc. Not everyone is made for trading, but a lot more people could make substantial profits out of the stock market with training. Some people rush into day trading when it doesn't suit their lifestyl e or level of experience. Take it easy, do your homework, don't rush.
2. Make sure your first investment is in a quality course that will give you the grounding you need. Blindly following a single strategy is like following the North Star - fine for a while, but what do you do in thick cloud cover? You get lost and end up going in the wrong direction.
3. Get your house in order. Pay your debts, don't let your credit card run up. Don't ever, ever, think about trading as a way to pay off your debts. Never take a loan to establish your capital. The pressure will most likely lead you to make bad decisions.
4. Always paper trade before using real money. I didn't when I first started, but I should have done. Paper trading can teach you a lot, not only about market forces in practice, but especially about your own reactions. And it's free! Ideally, you should paper trade until you have at least doubled (preferably tripled) your original capital and are achieving around 75% accuracy rate in terms of profitable trades. A consistently high rate of profitable trades is just as important as your profit/loss balance, as anyone can simply be lucky with a few successful trades.
5. Start slowly. Don't risk mor e than 1% of your investment capital on any one trade. Get good and the profits will build up faster and faster. Don't try to get rich quickly - you won't.
6. If you think that you need a lot of spare cash - this is no longer true. You can start with £100 or so in the UK and trade with just one penny! What's important is to determine an amount that you could really afford to lose.
7. Always work out when to get out of a trade before you get into one. Everyone knows they should run with their profits and cut their losses. However, in the heat of the action, it's harder to do than you'd think. If the trend turns against your chosen direction, you'll want that "get-out" (or stop loss) figure already worked out so you can act on it quickly.
8. Accept that there will always be the occasional bad trade. You can't be right 100% of the time. Think of your occasional losses as business expenses. Every business involves expenses, just keep them as low as possible. If you can get it right 70-80% of the time and you exit quickly if the trend shifts in the opposite direction, then you're still making serious money.