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OTA s John O Donnell Day Trader


									EQUITIES RINGS              INTERVIEW: Euronext’s Deputy CEO Jean-François Théodore on
NASDAQ CLOSING BELL         Creating the First Intercontinental Exchange


     SINCE 1951

    John O’Donnell
    and the World’s Largest Trading School

    NOVEMBER 2007 • $5.00

                                                       BY ANTHONY W. HADDAD

               he top trading school in the      ple of night courses at Marquette Uni-        appetite to be engaged in the market.
               world, Online Trading Acad-       versity, and in 1971 I read a book by         They needed professional tools, band-
               emy offers its students mod-      Harry Browne called How To Profit From        width and software. We built that to 180
               ern facilities and professional   The Coming Devaluation. The book got me       traders, executing about $500 million a
               instruction unavailable any-      interested in Austrian economics and the      day of NASDAQ transactions. We sold
where else. Now, with more than 15 loca-         precious metals story. That summer, I         the business in 2001 to start OTA, the
tions in five countries, OTA is expanding        started a precious metals reclamation         world’s largest trading school.
quickly to meet investors’ thirst for the lat-   business out of my garage. I made more        EQUITIES: What are your courses like?
est market know-how. EQUITIES spoke              money doing that than I did from my           O’Donnell: Our learning experience is
with Chief Knowledge Officer John                teacher salary, and I got seduced by the      through emersion. Our clients generate a
O’Donnell to learn why OTA is leading            precious metals hard-money story. I sold      trading plan that’s centered in their risk-
the online training revolution.                  that company in 1978 to a publicly traded     tolerance level. They spend one to seven
                                                 company. I then became a private invest-      days in a classroom environment, trading.
EQUITIES: You used to be a school teacher.       ment banker.                                  There is a skill involved in this, and it
How’d you get involved in finance?               EQUITIES: How large was OTA when you          takes a lot of training to master. It’s tough
O’Donnell: When I came out of school, I          joined?                                       intellectual work. Our clients are investors.
taught in the Milwaukee public school            O’Donnell: At the time I joined, we had de-   They have an account with an online bro-
system. They put me in charge of the             veloped the largest day-trading floor west    kerage firm. They’re mostly baby
Teachers Investment Club, where we’d             of the Mississippi. We were pioneers in       boomers. It’s 80% male, 20% female. Our
pool our money, and I got very interested        giving day-trading tools and day-trader       ideal demographic is between the ages of
in investing and economics. I took a cou-        education to investors who had an active      about 40 and 65, right in that sweet spot,

                                                                                                      John O’Donnell, chief knowledge officer,
                                                                                                      Online Trading Academy

                                                                                                                                             Photo by Jon Thibault

2       EQUITIES / NOVEMBER 2007                                                         EQUITIESMAGAZINE.COM - 1.800.709.7005
because they’ve got a little life under their                      through an apprenticeship model. We
belt. They’ve accumulated some money,                              think there’s room for a private, for-profit
and I think the common denominator                                 education firm like ours. So far, we’re
that gets them to us is the passion to be                          right. Revenues and enrollment have
engaged in the market.                                             been growing 100% per year for             “I’m not
EQUITIES: What type of investor is your                            the last four years.
typical student?                                                   EQUITIES: And what are the qual-     saying you need to
                                                                   ifications of the instructors?
                                                                   O’Donnell: Without exception,
                                                                   all of them come to us with a
                                                                                                       give up your investor
                                                                   professional trading back-
                                                                   ground. They were either a           bias you just need
                                                                   floor trader or they have a track
                                                                   record we can document where            to get in touch
                                                                   they have traded their own capi-
                                                                   tal. They also need to come to us           with it.”
                                                                   with a communication capability.
                                           Photo courtesy of OTA

                                                                   They need to be good communicators,
                                                                   and they have got to be compassionate,
                                                                   patient and want to teach. Most of our in-     units that run anywhere from $49 to $500,
                                                                   structors trade a week, teach a week, trade    and we have, I don’t know, thousands of
                                                                   a week, teach week, and they integrate         people that have used that experience.
                                                                   the teaching side of their brain into their    EQUITIES: You offer a free workshop. What
O’Donnell:  Students coming to us, espe-                           lifestyle. Their primary source of income      can someone who is considering attend-
cially in the 40-to-65 age bracket, have a                         is their trading activity. But they need to    ing expect?
buy and hold bias that was conditioned                             give us demonstrated skills.                   O’Donnell: We host it in all of our locations
through media, Wall Street, and culture.                           EQUITIES: If they’re such great traders, why   virtually every week. We have, you know,
I’m not saying you need to give up your                            do they teach?                                 workshops going on in all of our centers.
investor bias—you just need to get in                              O’Donnell: The simple answer is, they do it    Just go to our website and check our “lo-
touch with it. There’s a time to buy                               because they enjoy it. These guys are at a     cations” tab, and you’ll see a date, time
equities, there’s a time to sell them.                             stage in their lives where they don’t meas-    and place. They’re going to get an intro-
There’s a time to be in cash. Markets fluc-                        ure their self-worth by money. Now, for        duction and meet the instructors. They’re
tuate. That’s what history teaches us.                             some people who’ve never been there,           going to get a sample of how we teach the
EQUITIES: Do your students come in look-                           they have a hard time figuring that out.       class. They’re going to see the classroom
ing for more training on investment ve-                            There are other ways to get satisfaction in    and the computers and the professional
hicles they’re familiar with, or are they                          your life than money. We offer travel, the     staff that serves them. They’re going to
looking for new vehicles?                                          opportunity to show off a little bit, and      learn a little bit about fundamental analy-
O’Donnell: Ten years ago, they came in                             excellent compensation. It’s a very high-      sis. They’re going to learn a little about
wanting to be engaged in stocks. That’s                            quality lifestyle.                             technical analysis. The theme of the sem-
now changed. The top digital platforms                             EQUITIES: How does your tuition-reim-          inar is to bridge the gap between their per-
today allow you to have exposure to mul-                           bursement program work?                        ception and reality when dealing in the
tiple asset classes. You could have one                            O’Donnell: Our students have to be able to     stock market. There is a huge gap be-
account today with a brokerage firm and                            use a broker-dealer that has advanced          tween perception and reality. We want to
you can have access to stocks, bonds, fu-                          platforms. So we went out and part-            fill that gap.
tures, options and currencies. The people                          nered with seven broker-dealers who            EQUITIES: What’s the one thing that you
who come to us today may be interested                             compete to serve our graduates. Our af-        want students to know when they leave
in stocks, but by the time they get ex-                            filiate broker-dealers agree to give our       your school?
posed to all these other opportunities, it                         clients a 20 to 25% discount off their         O’Donnell: There are two things. Rule one:
broadens their horizons.                                           commission tickets per trade until they        Don’t lose money. Rule two: Re-read rule
EQUITIES: You can’t learn to trade options                         recoup the full tuition they paid OTA,         one three times, take two aspirin, and go
in college.                                                        and it doesn’t expire until they get all       to bed. But that is the secret sauce to a
O’Donnell: Exactly. You can’t go to a Whar-                        their money back.                              good life. Don’t lose money.
ton and learn how to trade options. Cer-                           EQUITIES: How many students have com-          EQUITIES: Any final thoughts?
tainly you can’t go to UCLA or USC and                             pleted a course at OTA?                        O’Donnell: One of the things I’d like to rec-
learn how to trade foreign currencies or                           O’Donnell: I would say there have been         ommend is all your readers is to go to our
futures contracts. There are a couple of                           over 5,000 who’ve completed our class-         website,, and
university educations near Chicago where                           room courses. Then we have another sub-        sign up for a free newsletter, Lessons From
you can get exposure, but most of these                            set of that who’ve taken our CD-Rom            The Pros. They can also check out our free
skills have traditionally been taught                              home study courses. Those are low-priced       webinars, which are very educational. E

EQUITIES MAGAZINE - 1.800.709.7005                                                                                          EQUITIESMAGAZINE.COM             3

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