by Craig Bicknell
There are lots of sure ways to lose
money in this treacherous world, and a
new report suggests that day trading on
the stock market may be one of the
No kidding, says at least one day trader
who promises to continue to day-trade,
despite the report released Monday by
The most damning finding? "Seventy
percent of public [day] traders will not
only lose, but will almost certainly lose
everything they invest," wrote Ronald L.
Johnson, an independent consultant who
analyzed a sample of day-trading
accounts for the North American
Securities Administrators Association.
Only about 1 in 10 day traders actually
makes a profit, the report concludes.
Those nasty numbers are fueled by
misleading marketing, poor guidance, and
dubious loan schemes at many
day-trading firms, the study said.
Day-traders typically buy and sell shares
several times a day, trying to capitalize
on small fluctuations in stock prices.
Dozens of brokerages have set up
day-trading shops around the country,
wooing novice investors with the lure of
heady returns assured by sophisticated
software and computer networks that tap
straight into the markets.
"Day trading appeals to ... anyone who
recognizes the unlimited earnings
potential and quality of life which an
Electronic Day Trader may achieve,"
reads a promo tag for All-Tech
Investments. "Trading allows people to
work a 6-1/2-hour trading day, to take
vacations on demand and to leave for the
day on a whim."
Problem is, regulators say day trading
ain't investing, it's gambling.
"Day trading is analogous to guessing the
outcome of a coin toss," says the NASAA
study. "However, the odds with day
trading stocks are actually worse than
this, akin to guessing the results of
tossing a coin that sometimes lands on its
The damning report comes just two
weeks after day-trader Mark Barton went
on a killing spree in two Atlanta
day-trading offices. According to
published reports, Barton had lost more
than US$500,000 in less than a year at
the two firms.
While the doom and gloom report may be
bad PR for the day-trading shops, at
least one day trader thinks it won't do
much to deter new traders from jumping
into the fray.
"It's like telling someone who's going to
Hollywood to be an actor that only 1 in
20 succeed," said Joey Anuff, a San
Francisco day trader and author of a
forthcoming book on the subject. "The
fact that day trading is risky and most
people lose money is common knowledge.
This study simply confirms the
Yup, said Michael Harral, a day trader in
Austin, Texas, who dove into full-time
day trading last year despite being
warned in advance that 95 percent of his
predecessors had failed.
"I'm a hard-headed individual, and I
always pictured that I wouldn't be part of
that 95 percent."