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Thursday, July 29, 1999 Published at 22:13 GMT 23:13 UK


Business: The Economy

What is day trading?

US investors can trade shares easily anywhere in the country

The news that many people were killed in the stockbroking firm All-Tech in Atlanta has raised concern about the growing practice of day trading.

Murder in Atlanta
The huge stock market boom of the last few years has made many Americans into millionaires, and has attracted many others into day trading - the practice of trading shares on a daily basis for profit.

All-Tech is one of the largest day trading firms in the US with about 1,500 active accounts, each trader having to put up $50,000 to open an account.

But the growth of the Internet and of low-cost Internet stockbrokers like Charles Schwab and E-trade has made it easy for private individuals to get involved in the stock market for much less. Each trade now costs as little as $9.95 (6), and can be carried out from home, or at the offices of many stockbrokers.

A risky gamble

Some people have even given up their day jobs, attracted by the possibility of huge gains on the stock market.

But many people, who have only begun trading in the last few years, have not experienced a severe stock market reverse, only the boom conditions of the last few years.


[ image: Internet brokers have made daytrading cheap and easy]
Internet brokers have made daytrading cheap and easy
Although he had not traded since April, witnesses suggested that the man believed to have carried out the killings, Mark Barton, may have sustained big losses in his stock market trading.

On Wednesday, all the major US stock markets fell sharply, on worries that inflation may be on the increase, and interest rates may have to rise.

The Dow Jones Average fell more than 180 points, or 2%, while the Nasdaq stock market, which appeals to many day traders because shares are cheaper, fell by 3% and has dropped by 7% in the past two weeks.

There have already been sharp reversals in some highly speculative stocks, especially in the Internet sector. Stocks like Internet bookseller Amazon.com, which increased in value nearly 10 times in the past year, are now worth only half its value of a few months ago.

Now there are fears of a more general decline in stock prices.

That could hurt not just day traders, but the millions of Americans who have stopped saving and have relied on the gains from their shares to pay for large purchases made on credit.

The boom has spread share ownership widely in the United States, attracted by the promise of ever-increasing wealth.

But it now appears that the risks of day trading could be tragically large as well.



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The Economy Contents

In this section

Inquiry into energy provider loyalty

Brown considers IMF job

Chinese imports boost US trade gap

No longer Liffe as we know it

The growing threat of internet fraud

House passes US budget

Online share dealing triples

Rate fears as sales soar

Brown's bulging war-chest

Oil reaches nine-year high

UK unemployment falls again

Trade talks deadlocked

US inflation still subdued

Insolvent firms to get breathing space

Bank considered bigger rate rise

UK pay rising 'too fast'

Utilities face tough regulation

CBI's new chief named

US stocks hit highs after rate rise

US Fed raises rates

UK inflation creeps up

Row over the national shopping basket

Military airspace to be cut

TUC warns against following US

World growth accelerates

Union merger put in doubt

Japan's tentative economic recovery

EU fraud costs millions

CBI choice 'could wreck industrial relations'

WTO hails China deal

US business eyes Chinese market

Red tape task force

Websites and widgets

Guru predicts web surge

Malaysia's economy: The Sinatra Principle

Shell secures Iranian oil deal

Irish boom draws the Welsh

China deal to boost economy

US dream scenario continues

Japan's billion dollar spending spree