Technology

National | Technology | Chris Stamper

The new day-trade parade

For better or for worse, day trading is making a comeback. This practice of constantly buying and selling the same stock repeatedly was considered near-dead after the 2000 tech crash.

Now brokerages report new business, as more risk-takers fill their computer screens with stock data, watching for the right moment to buy or sell. Charles Schwab reported its active-trader business has jumped 80 percent from a year ago. E-Trade's unit that specializes in professional buyers and sellers saw revenue-producing trades double last year.

Day traders survive by riding upward ticks of the market-and rising stocks mean rising bank accounts. Day traders are notorious for borrowing large amounts of money to buy stock. They hope to make enough money off their winners to cover the loan; if the stock tanks, that's trouble. Small-margin losses multiplied by hundreds of trades can cause financial ruin. Although federal regulators recently tightened the rules on margin borrowing, day traders still run heavy risks.

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March 06, 2004, Vol. 19, No. 9

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