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Wednesday, 1 December, 1999, 23:29 GMT
Day trading comes to London


The first American-style day-trading centre, where speculators attempt to profit from short-term movements in share prices, has opened in London.

The centre - on Cannon Street in the City - allows private investors to use computer systems offering real-time price information to trade US stocks on the same footing as the professionals.

Day traders aim to exploit short-term price changes
It has been set up by InvestIn Securities, an American stockbroking firm which says it will open six more centres across Europe during the next two months.

Day trading has become hugely popular in the US, where about 100,000 private investors now account for more than 15% of all activity on the American high-tech index, the Nasdaq.

They try to exploit short-term movements in share prices to make a quick profit, and can opt to use credit offered by the broker to double the amount of money they invest.

Concerns

Newcomers can be caught out by the fact that there can be some delay between their instruction to buy or sell and the broker executing the trade on the market.

This can sometimes wipe out the profit they were hoping to make on the deal.

Professional investors have complained that the growing level of funds being moved around at speed by day traders has increased the volatility of the markets - particularly the Nasdaq.

There is growing concern that day trading is much like gambling and that, while fewer than 30% consistently make a profit, some traders can become addicted.

The shooting dead of nine people at stockbrokers' offices in Atlanta by US day trader Mark Barton has also been linked with his losing hundreds of thousands of dollars on the markets in the weeks preceding the killings.

Costs

Day trading took off when online services made it possible to deal in shares much more cheaply than using telephone-based alternatives.

It has forced dealers in the US to adopt more competitive charging structures, radically reducing the "spread" - the difference between the price a broker will quote to buy or sell a given stock.

As commission charges in the US are also very low and there is no tax on share deals, day trading is much cheaper there than in the UK.

Stamp duty is levied at 0.5% in the UK on every share purchase.

Although London-based financial institutions have been lobbying the government to scrap the duty over fears that it will drive dealing overseas, so far the Treasury has remained unconvinced.

"Advantages"

InvestIn's chief executive, Laurence Briggs - an Englishman living in the US - described his firm's new centres as "a great advantage for European traders".

He said: "European traders can still keep their day jobs while learning to trade and, importantly, find out if they are any good at it."

But until share dealing becomes cheaper for private investors in the UK, day trading is unlikely to catch on in the way it has in the US.

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See also:
30 Jul 99 |  The Economy
What is day trading?
21 Oct 99 |  Your Money
UK warning on day trading
30 Nov 99 |  Business
Online share dealing - is it safe?
11 Aug 99 |  Your Money
Day trading - Your experiences
18 Nov 99 |  Business
Online share dealing triples

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