Leo Vallescura, a Canadian brokerage-industry star, says the recipe for success in online trading is straightforward: passion for the stock market, hands-on experience and respect for compliance.
Following this formula, in just four years Mr. Vallescura has transformed himself from a newbie in the financial services industry to the trading manager at Toronto-based Questrade.
"I love coming to work – it's a passion," Mr. Vallescura, 35, said in an interview from his suburban office, explaining how he has become the head of Canada's largest independent online trading service. For the second consecutive year, 11-year-old Questrade was ranked first by the financial analysis firm Investor Economics, based on growth of assets and trade volume. It is the only Canadian firm of 11 surveyed in September that increased its assets during the second quarter, when the markets and financial services companies were slogging through the after-effects of the recession.
Mr. Vallescura first cut his trading teeth while he was a 19-year-old student at York University, after his parents gave him some stocks as a gift.
"I got to know how the market works," he recalls. "I basically got hooked on tracking the pricing and I just dived right into all this information, and got completely focused on every aspect of trading." Back then, Mr. Vallescura would run home to read the stock pages of the newspaper, as online trading was in its infancy.
After graduating with a psychology degree, he worked in his family's construction business while taking the Canadian Securities Course. After years of applying to financial services jobs, Questrade hired him for its client services department, where he handled customer questions, withdrawals and complaints. A few months later, he became an accredited trader after taking courses in derivatives fundamentals and options licensing. He soon worked his way up to supervisor before getting promoted to manager a year and a half ago.
Now overseeing a staff of four traders, Mr. Vallescura says knowledge of how the markets work, a focused mindset and the ability to stay calm even when market activity gets frenetic are the keys to being a successful trader.
While most brokerages consider 20 trades a month as being active, Mr. Vallescura says he started out averaging 20 a day. As a result, he can recognize most of the thousands of symbols for stocks that are traded on various markets. This has helped him get one part of trading down pat: As a manager, he ensures big orders, which all have to be reviewed by the trade desk, are approved or rejected quickly. "There is no room for mistakes in my job," he stresses.
When Mr. Vallescura took the manager's position, for compliance reasons, he could no longer trade his own account. Now all his hands-on trading is done on behalf of clients. When dealing with other people's money he says he takes risk concerns seriously; when the markets are volatile, clients can move in and out of risky positions in seconds.
"I can easily manage that because I inherently understand how fast markets can move, and can balance the needs of the client against [Questrade's] obligations as a regulated business," he says.
Edward Kholodenko, Questrade's president and chief executive officer, said earlier this month that the company is successful because it is pushing down the cost of trading. It was the first Canadian brokerage to offer a $4.95 stock trade commission with no strings attached.
For his part, Mr. Vallescura says despite the ups and downs of the markets, he sees qualities in Questrade that other companies are tough-pressed to match.
"There's company transparency. We have no hidden fees and we're innovative – always looking for products our competitors don't have," he says, "Some banks charge annual fees, but that's really tough to take – I think about it as, 'It's your retirement money.'"
KEY STEPS
Leo Vallescura, trading manager at the Toronto-based online brokerage Questrade, on how to succeed online:
Do a demo
Test online trading through a demonstration account to see whether you can devote the time, patience and effort. "Get a concept of what is out there … a feel for the market before sinking any money into it."
Do practice secure trading
Change your password frequently, use computers you're comfortable with, clear your cookies, and keep on top of your account. If you don't plan to buy or trade for a while, ask about putting your account on hold.
Do your homework
Research public companies you're thinking of investing in. Try to pick companies you can relate to. Learn about their history, balance sheets, what kind of products they make, services they offer. "You want something you're passionate about and you actually understand."
Don't expect a quick fix
Avoid buying stocks with the idea of a fast return to pay next week's bills, and resist throwing everything you have into the market. "I wouldn't promote [stock buying]for somebody who needs the money right away. That's not what investing is about."
Do make a plan
Develop it based on your goals, risk profile and time frame. For instance, determine what you would do if a stock dropped or rose 10 per cent.
Do be wary of stocks that seem too good to be true
"I would definitely avoid the get-rich-quick scheme. I was 19, 20, and buying penny stocks. Now, I don't listen to everything I hear."