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 He traded (green) places
By Christina Rexrode
Originally published on www.charlotte.com, April 20, 2008. Click here for a PDF version of the article.
Justin Krebs, a business school grad and former golf pro, became interested in stock trading in late 2006, when he received a flier in the mail from the Online Trading Academy.
Krebs, who was living in Southern California at the time, signed up for a class on foreign exchange transactions at the company's Irvine headquarters. There, he found a channel for his entrepreneurial ambitions. Krebs, 29, moved to the Charlotte area soon afterward. Last month, he opened a franchise of the Online Trading Academy in Cornelius with eight employees.
The Trading Academy offers courses in stocks, futures, equities and the like. It encourages graduates to trade through sites that offer direct access to the markets, like Terra Nova Trading or TradePortal.
The company emphasizes that the courses, taught by veteran traders, are hands-on: Students use the company's money to practice trading, each making 100 to 200 trades in a one-week class. Most students lose the company about $1,000 in commissions and bad trades, Krebs said. The staple course, a seven-day "pro trader" class, costs about $5,000.
Krebs spoke with MoneyWise about his new career and new home. Questions and answers have been edited for clarity and length.
Q. So what do people learn in your classes?
You learn what's behind the markets. Most stuff that you hear about the markets now is just what brokers and the market makers want you to think. They want you to have a bias about the market. That way, they can trade and they can take advantage of you.
What I learned from class is that you can trade directly with the market by simply charting -- looking at where a stock or currency has been, and what you expect it to do now or in the future. So you look for things such as support and resistance lines, you look for trends, you look for supply and demand via price action.
Q. Do you ever read analysts' reports?
I rarely read anything an analyst has to say, because they're analysts, not traders. We don't recommend that you go to brokers, not that all brokers are bad, but brokers are there to make money, not necessarily to make you money. Brokers are generally paid on assets under management. They're really not paid on performance.
Q. You've said that some of your students are looking for a career change, and others just want a way to make money part time. Tell me more about your students.
About 80 percent are male, although women actually make better traders. Women don't have the ego problem. Women are more likely to make a rule and follow it.
They're typically 45 to 55 years old, they have a pretty high net worth, and they have been involved in finance in one way or the other. We do get a lot of mortgage brokers.
Q. Do people understand the risks of trading when they come to you?
Most people who come to us have lost money. People take all the skills they have in other areas of life. Successful business people think that because they've made good decisions in business, they can carry it over to trading.
(But) when you don't know the underlying principles of the market, it doesn't matter how intelligent you are, you'll still succumb to people who know what they're doing.
Q. This is your first entrepreneurial venture. What's it like being in charge of people?
Most people think that whenever they become a manager, it gets easier. Well, it gets harder, because you're responsible for people, they look up to you for the answers, and if you don't have them, there's nobody else to go to. And if somebody's not doing their job, you have to discipline them, and that's not always fun.
Q. You moved here from Southern California. Can you compare their economy with ours?
In California, people are more impulsive with things that they purchase -- it's always keeping up with the Joneses. They're more willing to go into debt for something they want. They would buy a house when they really didn't have the ability to pay for it if anything ever happened. We have a very big problem in this country with borrowing.
Q. Why would you start a business in a down market?
Well, it's an excellent time (to attract) anyone who's facing career changes. Whenever the economy has a downturn, a lot of people turn to education to improve their chances of getting a better job or to make a career change.
Q. What's your best advice for trading in a downturn?
When the market is going down, you can make money just as fast as when it's going up (by) shorting the market. Shorting is essentially selling the equity in anticipation that it will fall.
Q. Isn't shorting the market kind of risky?
That's a big, big misperception. A lot of people think, "Well, this is a good time to buy because (stocks are) lower in price." But the stock could still be falling, and it probably is, seeing how our economy is really starting to slow.
You do not buy in a down market, you sell. The market makers and the big institutions, they're selling. (And since) they need someone to sell to, they recommend you to buy, they get a good price for what they've sold, and you're left holding something you just bought and it's falling backward.
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