Last night, a new BBC2 reality TV show aired its first episode. Million Dollar Traders, the brainchild of a former Goldman Sachs director – Lex Van Dam. I watched with interest, in fact, I remember a colleague forwarding me the application for the show. I didn’t apply – mainly because I have some trading experience (I think even if I had, I would have struggled with the interview – whats 32×32 – my answer “About 1000″ – probably wouldn’t have cut the mustard!)
The concept – take 8 members of the public, give them 2 weeks intensive training, a $1 million account and a custom built trading room in the heart of London and see if they can make any money.
Van Dam claims this to be ‘his own idea’. This surprised me, given that any trader worth his salt will have heard of the now legendary Turtles experiment (brainchild of Richard Dennis).
I guess there is a difference in the two experiments. Where Dennis described in detail to his ‘apprentices’ a detailed strategy (it was a simple breakout strategy – its complexity lay in its money and risk management rules), Van Dam appears to have provided nothing more than an overview of how the markets work. I was surprised at how little the program detailed the training that Van Dam gave his apprentices – especially given how disappointed he was that one of the traders lost £2,000. On the one hand it seems he has given them little real help and on the other he seems angry at such a small loss?
It’s clear from the first show that Van Dam is looking for PR from the show, but will he make a return? Can 8 members of the public become proficient traders, especially in light of the additional pressure’s of the TV camera?
I would have liked to have seen some more detail on money and risk management. Van Dam himself is clearly a successful trader, so why has he given his apprentices what appears to be such a small amount of information?
Each trader was initially given £25,000 and was allowed a maximum risk of 20%. This seems exceptionally high to me? Put simply 5 losses in a row and these traders accounts are blown away. Assuming a strategy that wins 50% of the time, there is a high probability of 5 consecutive losses.
The show will no doubt explore the human side of trading and this could be interesting. Admitting a loss and moving on is hard enough when cooped up in your own private trading room, but for that loss to be exposed on national TV is another thing entirely. It will certainly provide an insight into what makes a bad trader, but with Van Dam’s million at stake, is that what he wants?
I look forward to episode two next Monday January 19th (BBC 9pm)
