Kayla Kilbride decided to teach herself how to trade during a dinner at her family home in Los Angeles last November. Her sisters had been showing her their smartphones, displaying recent winnings on the trading app Robinhood and the conversation around the table kept turning to stocks.
Unemployed and in the midst of the pandemic, the 24-year-old quickly became hooked, waking up at 4.30am to study the markets before they opened, watch YouTube tutorials and simulating trades for six hours a day, four days a week.
“When I first heard the words bullish and bearish I had to Google them,” Kilbride says. “YouTube has been the most educational platform for me, which is so funny. I never thought I'd ever say that.”
Kilbride is one of hundreds of thousands of young people bored and stuck at home turning to YouTube to learn the tricks of the trade. Apps like Robinhood, WeBull, ThinkorSwim and eToro have allowed anyone to buy and sell shares and financial instruments, but many have no idea what they are doing. Top trading channels have up to half a million subscribers each, and live streams of traders studying their screens are watched by thousands at a time.
Some are drawn by clips that attract clicks with colourful thumbnail images showing the presenter surrounded by dollar emojis and green arrows pointing up. Titles like “How one 19-year-old took his brokerage account to $187,000 (£135,000) in two months”, “How I made $1,000 in 25 minutes, and “This stock is about to explode!” promise stories of traders having fun and making fortunes at the same time.
One teenage YouTuber known as Biaheza regularly posts about the money he makes on trading apps Robinhood and WeBull to his 725,000 subscribers.
In one, he lets a stray cat decide whether he should buy $10,000 worth of Tesla puts or calls - leveraged options betting against and for the stock respectively - by placing the words “puts” and “calls” on a piece of paper placed under two dishes. The cat picked puts, Tesla shares went down, and Biaheza made $1,000.
This week, the 19-year-old shared a video in which he borrowed $70,000 from Robinhood to place on Tesla, eventually making himself $5,000.
Reddit, a very different social network, has been put at the centre of the GameStop bonanza that rattled markets last month. But YouTube also lit up with videos explaining or promoting the phenomenon. One of the heroes of the saga was Roaring Kitty, a YouTuber who also worked as a financial advisor. A Massachusetts securities regulator is now investigating whether the trader, real name Keith Gill, broke securities rules by advising which stocks to buy. Arguably YouTube's broadcasts have more power over the market than forums because they hit the web as a finished product that cannot be altered, allowing one skilled presenter to broadcast to many.
Tom Sosnoff, who sold his brokerage ThinkorSwim to TD Ameritrade for $606m in 2009, has since become a hit on YouTube with his Tasty Trades channel becoming a stop-off for more risky investment strategies.
Tasty Trades is focused on grey area instruments, like leverage, options and futures. Financial experts warn that these are challenging, high risk and can be low reward. Sosnoff, says the interest in alternative trading is a reaction to the tedium of traditional financial TV.
“There was a demand for intelligent, challenging financial content, because to me, Bloomberg and CNBC and places like that were full of stuff that anybody can watch, but it wasn't intellectually challenging,” he says. “Who cares what somebody else thinks? Who cares what the news is? I'm not looking for somebody to repeat the news to me. I'm looking for somebody to explain to me how the markets work and how can I make this actionable.”
Kilbride, who now trades just one hour a day after finding a job, says YouTube creates more good than harm. When she decided to move from fake trades to real money she started small and, after one big loss, is now up around 20pc from a starting point of $500. But not everyone will take her measured approach.
“I think overall it's probably good for markets that more people are educating themselves and that you don’t need a fancy Ivy League degree to do it,” says Vincent Deluard, a macro strategist for the brokerage StoneX and Professor of finance at Saint Mary's College in California. “Information should be public.”
"The people who fall for the YouTube videos with the man standing by a fancy red car will lose money, that is just the way markets work."
Clem Chambers, chief executive of stocks, shares and cryptocurrency website ADVFN, says people are falling for “conspiracy theories” on YouTube that promise thousands of dollars. “They’re all rubbish,” he says.
Chambers, who has 30 years of trading experience, says he recognises a similar pattern as during the dotcom boom, which he says scared an entire generation off investing.
“It is a tragedy because investing in the stock market is one of the few ways a normal guy can become wealthy,” he says. “But there's a whole group of people that try to ensnare the beginner. There's a whole gauntlet of people that will strip the unwary of their money.”
eToro, a social trading app which is available in the UK, warns on its website that 67pc of retail trader accounts lose money. Even amateurs with a level head are likely to make 3pc gains at most. Those pushing between 5 and 10pc would be destined for some of the best firms in the world, not YouTube.
YouTube traders can still generate revenue from their streams even if they make a loss trading. Those with more than 10,000 views are eligible to receive a cut of YouTube's targeted advertising revenue. Many sell merchandise and some receive compensation for promoting trading apps.
“The problem is when you have got videos saying how to spot ‘hot stock’,” says Susannah Streeter, senior markets analyst at Hargreaves Lansdown. “It’s almost like it has become a game and people are treating the market like it is a form of entertainment, not a strategy.”
Ironically, Streeter says the vast amount of videos and user commentary on YouTube is helping the industry the presenters are trying to disrupt. “I would expect that hedge funds are analysing the YouTube videos that are being posted, as they are watching social media posts,” she says. With algorithms that take into account what is trending on Twitter, it should come as little surprise.
"YouTube is completely unregulated. When you get official investment advice published by a broker then the person publishing the advice is a licensed individual who is certainly culpable for the statements that they make.” says Kevin Mak, a lecturer at Stanford Graduate School of Business, “And that's not really the case for YouTube broadcasters.”
YouTube says it doesn’t allow “get rich quick” schemes but did not return the Telegraph’s inquiries into what it was doing to curb "pump-and-dump" schemes where an investor hypes to stock to sell at the peak.
As regulators will attest, it is incredibly hard to prove market manipulation. Many of the accounts that appear to be spamming comment sections with the names of certain stocks are pseudonymous. The Federal Trade Commission says it is keeping an eye on influencers who promote gambling, and British politicians have called on a ban of celebrities from Love Island and Geordie Shore promoting unregulated foreign exchange trading.
Vocal critics of the disruptors fear speaking out after a social media pile-on for anyone who dared to fault them. Hedge fund billionaire Steve Cohen left Twitter after his children received threats amid the GameStop backlash. Short-seller Andrew Left, whose company Citron was one of the hedge funds to spark the battle with small-time traders, said in a YouTube video last month that his company - once the anti-establishment - would no longer publish short-selling research.
Professor Joel Hasbrouck, Stern School of Business, New York University, says he occasionally finds teachings of value on YouTube, although these are few and far between.
“For better or for worse, YouTube is a repository of popular wisdom, experience and folklore,” he says. “It appeals to our affiliation tendencies. We're told that maybe if we all pull together on this one we can bend the market to our advantage,” he says.
This coordination would be prosecuted by British and US officials if it were arranged by two large banks and caught on trading room chat transcripts, he says. But don’t expect this Wild West to be tamed anytime soon.
“In this instance the players are small and dispersed,” he says, “and the coordination is loose and casual, so regulation seems unlikely.”