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How to Teach Children to Trade The Markets

Feb 26, 2008
I have been trying to get my 12 year old daughter at least a little bit interested in the idea of trading and doing some of the things that my wife and I do, such as share trading, options and real-estate. It wasn't working but recently I got her attention. Now she is pulling out spreadsheets and working out how to make a profit. But how?

Now our lounge room is no ordinary lounge room. It has five computers in it right now. I play online games with the children. One of my favorite games is called Runescape. It's an adventure game. At any time of the day or night there are about a hundred thousand players online. Even if you have never heard of it, chances are that children 10-15 years either know of it or have played it.

Previously, Runescape players could trade items between each other individually but recently they introduced an automated item trading system that works more or less the same way a stock market does, except trading items instead of stock.

So I started trading in the game and over the past few weeks I have made millions of gold pieces (or GP - the game's money) by spending only 10 minutes a day trading. This got my daughters attention real fast.

I beleive the reason it is so successful is that first of all it's fun and secondly it's practical. They can use the money they make to buy things to enhance game-play.

Before I started trading in real life, I made sure that I had a balanced budget and set aside funds specifically for trading. Budgeting and having a budget is an important step before starting to trade and savings is the simplest form of investment. A person who trades on emotion is much more risky than a person who trades by using a system.

One of my daughter's friends, who is 14 years old asked me "Isn't trading shares risky?". He has also been using the buy and sell strategy on Runescape to make gold pieces (GP). I had forgotten how people perceive risk and reward. I believe that a person is risky, more so than the instrument that they trade. A person who trades beyond what he or she can reasonably afford to lose is a risky person. A person who risks all of their money into a single trade is also risky.

Of course there are differences in trading markets compared to the game but the main focus is finding deals that make sense and resisting the temptation or urge to buy and sell beyond fair value.
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The Grand Exchange
Glen The Goals Guy Blog
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