Student trader: Why undergraduates should embrace the free market

Trading is a potential money-maker for everyone with any degree of disposable income. Observing students who've made millions by investing their student loans, I believe that a culture of financially educated students would be good for the individual, good for the economy, good for the state and good for society.

Stock ownership has failed to return to the pre-Credit Crunch levels (in America, it's only 50%). Perhaps financial trading appears to still be the arena of a privileged few, despite the consequences often having global economic ramifications for good or ill.

The story of controversial ex-student Elijah Oyefeso led me to conclude that this need not be the case. The first-year dropped out of his International Football Management degree and bet his student loan on the stock market. He claimed to make up to £50k a month and enjoy a luxurious lifestyle, although he's since been accused of scamming investors.

This specific individual practised a particularly dangerous all-or-nothing form of investing - binary trading - more akin to gambling. This obviously is not an ascent possible or a route advisable for most of us, but it did prompt me to think why I couldn't have at least some measure of success in the financial sector.

And remember, students are currently charged interest on their loans of no more than 4.6% - RPI (currently 1.6%) plus 3%. I aim to generate returns well in excess of that.

My story

As a philosophy student with no financial background, I taught myself how to navigate the online markets through research and practice. This was all done amid optimism that, given markets have experienced growth overall (despite periods of grinding downturn), a degree of informed investment with what little capital I had available was more likely than not to yield a modest income (admittedly with the hope of making a career out of it).

By committing to education and by using a more risky leveraged trading platform, I have made a 350% profit - trading US tech stocks and flirting with cryptocurrency - four months after beginning.

Having made a decision to sell my Bitcoin for a profit, given that the volatility could wipe me out if this 24-hour product plummeted overnight, I am currently considering opening a non-leveraged position in Ethereum, a new cryptocurrency with a better and more manageable system that appears very promising.

My journey so far has been exciting. I'm about to launch an 'acorn' fund co-managed with a friend who shares similar goals and interests, coincidentally similar degrees and different areas of market expertise. We'll adopt a similar, but more developed and safer strategy to the one I started out with, overseeing assets under management of only £2,500 from investors. There could be much more to follow, depending on how we do.

We are very optimistic and have created a set of rules to adhere to, which will protect our positions from the risk of liquidation that leveraged positions carry, while still allowing us access to 20:1 profits.

It's a never-ending learning process, and managing other people's money with CFDs requires relentless vigilance, but it's exactly the sort of thing I want to be doing. It's a journey I started by picking up two books (How to make money in stocks by William O'Neil, and The Wealth Game by Peter Alcaraz) and I couldn't be more excited about where it's going.

Trading for all

Despite an increase in the number of students who invest, the overall picture is bleak - according to a Harris poll carried out in the US last year, 80% do not invest and 34% say they have no idea how. I believe educating students on why they should, and how they can, will have astronomical benefits for all.

I'll begin with the counterargument - why not just stick with the status quo of saving your student loan in a bank account? This has merit, of course. After the Credit Crunch, a regulatory clampdown on the banks means a similar failure is far less likely, so you almost certainly won't wake up to a bad news headline and an empty bank account.

A depressing realisation, however, is that by storing money with a high-street lender, you are effectively losing money - even interest rates at their highest currently are half the rate of inflation, and a tenth at worse. It means the value of your money decreases every year. This also doesn't include interest charged on your loan.

If you'd stored your money in FTSE 100 stocks last year you'd have made a 14% profit before dealing costs. Of course, along with potentially high rewards there are risks to this approach, but I believe that benefits of making trading mainstream through education could help both personal development, and deliver big picture benefits.

To begin with, financial education will help students later on in life, when managing one's finance becomes paramount, regardless of wealth. It gives confidence in maintaining and manipulating assets and reduces reliability on banks, helping people become better with money in general. This in turn makes us more employable - getting our house in order demonstrates organisational skills essential for any kind of management role.

At a deeper level, managing your own finances rather than let banks do it for you (at a loss to you, remember) increases your agency - your finances and your worth are yours, not your bank's, and you will define and determine the extent to which your fortune grows.

Agency in turn begets responsibility - given that the decisions are your own, you must own both your victories and your losses. This sense of personal responsibility is essential to your character and professional development, and indeed to your sense of self-ownership. Fiscal autonomy leads to a deserved sense of independence.

The bigger picture benefits concern more than the economic arguments for such a zeitgeist shift. Firstly, students gain a sincere economic stake in society. One of the main criticisms of student politics is that we are moved by appeals to emotion than anything else, and the evidence suggests that our philosophies shift when we start to confront real world issues of equity and finance.

Getting educated and then involved in the global financial markets en masse is a phenomenal way to add perspective to our world view, noble as it may be to be focused on emotional issues. Becoming more invested in fiscal policies and economic issues will help us shape a better future for ourselves, as these are the policies that will broadly determine our average standard of living.

An important nuance to be aware of here is the first commandment of investing, as with gambling - never invest more than you can afford to lose. This is because the cycle of financial markets, which includes periods of sometimes significant downturn as well as growth. You can't invest money you're not prepared to experience losses on.

An important thing to note about me personally, and something that can possibly be extrapolated to other students, is that I've never lived through a crash. This confers a perception of invincibility in one's portfolio that needs to be tempered constantly - as in chess, you might have victory in your grasp, but it's all for nothing if the building explodes. My point is, making smart value investments after significant research and peer review is no good if the market crashes.

Let society share the profits

A greater degree of society sharing in the profits of corporations can also be achieved by share ownership. If owning stocks can be made more mainstream for students to a greater extent than saving in banks, a significant tranche of society - the country's future - would be financially rewarded when companies they've invested in do well.

This can't quite be classed as redistribution of wealth, because the wealth isn't being taken away from anyone, but it is perhaps even superior. Corporations profit and, as a direct result, the man in the street will profit.

This is extremely important to me personally for other reasons, too - as any student knows, a pernicious neo-cultural-marxism is practised in many educational spaces, pitting the working class (and the middle class on their behalf) against the upper class and against corporations. Helping everyone profit from the profits of business allows everyone to share the wealth.

It must be said that more people than it appears own stock, anyone with a pension, for example. This doesn't mean that it's less important for people to be educated on stock trading; in fact, it's more important. People must understand how their future finances are being determined so they can take a more active role in it.

Interestingly, this isn't limited to the British public benefiting from profits made by companies operating in Britain. Investing platforms can be wide-ranging in their scope, and so our economy could just as easily benefit from a Chinese company buying out an American railway holding in Venezuela.

Much of the intelligent discourse during the UK general election around nationalisation used the concept of the Dutch government profiting from ownership of some of our rail companies as an argument in favour of it - by the same logic we should encourage individual public ownership worldwide to attract money into our economy from global profits.

If this encourages corporations to appeal more to ordinary citizens, there could be a range of benefits. Certainly, greater spending power for the average citizen would typically stimulate the economy.

More intricately, the UK's biggest export is financial services - financial and related professional services make up over 10% of the economy. Combining that with a new financially savvy generation would take our expertise to new heights and attract investors or wealth in need of management around the globe.

This is especially important in our political context - the UK's exit from the European Union necessitates a shift in the way our economy functions (given our impending exit from the free trade zone). Further capitalising on our dominance of the financial services market could be a fantastic way to make this happen, and educating the 2.28 million students in the UK could be a fantastic way to add billions of pounds of buying power to the UK markets.

One of the most valuable things about being a student is the emphasis on moral considerations, which has driven so many invaluable student-led movements across the years. The implications with trading are that it is morally bad to trade stocks in a company whose practises you deem unethical. I think this is reductive - one is only complicit in the sins of a company to the extent that they have the capability to change such practises.

By this logic, you'd only become immoral if you reached the point at which your ownership of the entity allowed you to effect change and you elected not to. Admittedly, this is unfeasible with some companies - you couldn't buy control of an oil company then make it both profitable and environmentally friendly.

Of course, trading carries risk, and prolonged bear markets are painful, I'm told, but part of my vision is to create a culture in which education and responsible guidance on investing strategies are as commonplace as, or taught alongside, life skills such as budgeting or tax management.

The more people educated on the topic, the more we can create a culture of expertise in which ordinary people begin to benefit financially from the profits of larger corporations - it's something akin to welfare redistribution, except much more effective as it bypasses the sieve of government inefficiency.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.