Trade and Travel Founder Teri Ijeoma shares tips for amateur traders and what they should know about day trading.
- With the first half of the year done, a lot of retail investors are also trying to make sense of the current market action. Joining us now is Teri Ijeoma, Trade and Travel founder.
So you have a very interesting story here. Obviously, a lot of retail investors have a lot of options these days. Tell us how you got into the day trading market and how you're passing that knowledge on to people who are taking your course.
TERRY IJEOMA: Thank you, Rachelle. Yes, so I actually used to be an education for about 10 years. But I decided to quit my job and start traveling all over the world.
But I needed something to pay for my bills. Like, how would I pay for the hotel or pay for the flight? And I decided I would do that with trading. I had learned about it at MIT in college. And it was a great time to just replace my income with stocks. That's how I started day trading.
- It's incredible, and what a story it is. I ask you this as a 20-year sportscaster. Can anyone be a successful day trader? And what do you think is the most important skill or maybe trait?
TERI IJEOMA: You know what? The most important thing about day traders is having discipline. You have to be able to follow a trading plan. That trading plan says, like, OK, I'm gonna look at the chart at this time. I'm gonna make a trade.
Even when the news is saying everything's going wrong, I'm buying. Or when everything is going right, I'm selling. But the discipline to be able to sell or buy at the right time is important as a trader.
- Teri, when you take a look at what has been working, what has not been working, the fundamentals of what you're teaching these day traders, what's the most important thing that people need to keep in mind when they're looking to execute their first couple of trades?
TERI IJEOMA: Sure. One of the most important is that your returns as a trader are going to be a percent of the cash amount in your account. So many people think of this get rich quick, or, I'm going to buy and become a millionaire tomorrow. But that's not true.
If you think about someone that's starting with about $2,000 in their account, I tell them on a regular basis, they're trying to go for a small gains, like 1% return. That might sound little-- $20 out of 20,000-- or 2,000-- but that adds up over time. If they can learn how to be consistent with small wins, they can be more successful as a trader.
- Now, when the markets are this volatile, do people tend to retreat? Or have you seen, instead, a lot of growth in your business? Are people still actually trying to figure out the markets and how they can get in?
TERI IJEOMA: You know, what I've found is that a lot of people in 2020 and 2021 were investing without any kind of knowledge. So now I'm getting a large group of people that have been trading for about two to three years. And they didn't have training.
So now they're looking for, OK, how do I get the advanced tools on reading a chart? Or how do I know when to buy the right company or when to exit? And then, for my students, we talk about more advanced things like short selling and options trading. We're getting more people looking for more advanced tools with a more advanced trading environment.
- In fact, you say, sit this one out unless you've learned the strategies of hedging and short selling. Why?
TERI IJEOMA: I think it's important that people who are brand-new are getting the education during this time instead of just buying the dip or following the random advice that's given online. For example, right now, if you're buying the dip, and you're trying to dollar cost average into the stocks, that's a good idea. But if we're in a recession, the stocks can go lower.
You may want to wait on the side, start saving up cash, and then get in at a better price. We know that you won't be able to time the bottom. But at least you can see the market start turning around before you put your cash to work.
- Teri, give us a sense of who's taking your course. Is it Gen Z? Is it millennials? Is it Gen X, baby boomers? I mean, where does the typical student lie when it comes to age?
TERI IJEOMA: I have two big groups. One is around 35. They've been investing for working for about 10 years, and now they're ready to pivot, and then another group around 55. They're looking to retire but want to learn how to make their money work for them. So those are the biggest groups.
And then, in terms of nationality, I have a large group of African American traders. We had a big group of people of color get into the market in the last couple of years. And now they're wanting to learn how to become more successful.
- And I know that there's a big investing event that's coming up in Atlanta in August. I believe you're participating in it. For people who are trying to get their head around this, if they're seeing, you know, they're seeing these low prices in stocks, what sort of strategies should they use to differentiate what's just a cheap buy that won't last-- say, like a meme stock-- versus something that will actually give them wealth?
TERI IJEOMA: I think it's important in this environment to look for things that are healthy companies and things that normally would have been at all-time highs just recently, but they've fallen off just because the market is going down. So I'm thinking of stocks that are the best in breed in terms of technology, like the Amazons and Visas. It might be Chipotle, the stocks that, normally, they would be at their all-time highs, but they've come down a lot.
You're also gonna want to look at earnings. Earnings is coming out in this next month. Listen to what the companies are saying about their success.
Are they still healthy? Are they running into supply chain issues or other issues? And, if they are healthy, those are the companies we want to look at during this recession.
- And, Teri, it's not for the faint of heart. You're gonna make some mistakes. And I believe you shorted Tesla in 2020. What did you learn from that mistake, and what's your warning for people to accept that reality?
TERI IJEOMA: A couple things-- one, quantity size matters. When you are thinking about taking a trade, you might want to-- especially in this environment-- to take smaller positions. You won't get rich overnight, but small and consistent positions.
Another thing is be able to pivot quickly. If you are trading, and your position is going wrong, you don't have to hold it forever. Some of the advice is buy and hold forever. But in this market, you may want to be more nimble, more flexible, to exit a trade and be able to get in at a better price later.
- Great advice for so many of our viewers out there. Teri Ijeoma, thanks so much for joining us, founder of Trade and Travel. We hope to have you back soon.