Page last updated at 09:15 GMT, Monday, 28 September 2009 10:15 UK

Day traders return to the market

By Nigel Cassidy
Business reporter, BBC News

Helal Miah
Helal Miah says he is building up his skills base trading from home

Six months ago, 32-year-old financial trader Helal Miah worked in a swanky City of London tower block with marbled hallways and sleek glass-lined lifts.

Today he spends much of his day sitting at a bank of three trading screens set up in the bay window of his semi-detached North London home.

His computer is right next to his bed.

Not that Mr Miah needs to get out of bed to do a deal - he admits that sometimes he might be doing a trade during the small hours on his Blackberry while in bed with his new wife of three months.

One of thousands of City of London financial workers made redundant in the credit crunch, Mr Miah is determined to bounce back. He is one of a new breed of brave - some would say foolhardy - independent investors of a kind that last came to prominence in the dotcom era.

And he says he's already made "more than thousands" second-guessing small movements in shares, gold, oil and currencies.

Opportunities from volatility

Yes, day traders are back. At the turn of the century, market speculators often gathered together in specially-hired rooms to swap tips and play the markets. Some made their fortune, but more lost their shirts when the technology-led boom turned to bust.

Today, most private investors still don't trust these rising markets and have missed out on recent gains. Yet the current volatility is providing opportunities for the brave.

Computer screen
Fast broadband connections give day traders access to real-time data

The market is becoming a lure for a new generation who had set their sights on the City high life and are now trying their financial luck in the only way they can.

Now, thanks to fast broadband connections, they have ready access to the real-time data, research and trading tools used by City professionals.

Mr Miah does not miss commuting in the City of London, but says he can feel isolated at home without the company of his old workmates in the City.

"Now I usually wake up at half past seven and start by looking at the Asian market, which gives me an idea of what will happen in Europe and the US later in the day," he says.

"It could be a life for me trading at home, and I'm building up skills in terms of understanding the market and assessing risk, so I can trade on my own without getting wiped out."

Virtual competition

Nobody knows for sure how many day traders there are. What is known is that home trading through US online brokers surged around 14% in August alone. Here in Britain, the return of players like Helal Miah to the fray have helped boost such online transactions by 77% so far this year, according to Barclays Stockbrokers.

Dary McGovern
Dary McGovern says day traders have to have a strategy

One difference is that this time, individual traders tend to work in combination.

Mr Miah is in constant touch with other home traders from Asia to the Netherlands and the United States and spends part of his time working with Amplify Trading.

This company sees opportunities in the present climate and has been seeding the best players it can find with a little capital and sharing the profits of their successful trades.

It is a new kind of virtual competition for the more traditional trading institutions with costly offices to maintain.

Practised skill

Dary McGovern of Time To Trade has founded a company providing private individuals and investment clubs with tools to plot and automate their trading according to pre-set criteria.

"Anybody who has has just read some piece of gossip somewhere and never placed a trade in their life is likely to be very exposed - they have no strategy for getting in and out," he says.

"A day trader then becomes an investor when it goes wrong and has to ride things out. Like any skill in life, this is one that has to be practised."

Past experience suggests that eight out of 10 home traders will eventually lose their money. A few bad calls, a whopping tax bill, or even just the cost of dealing can too easily wipe out your holdings.

So fortune-hunters should study the markets' machinations carefully before diving in the deep end of today's still murky financial waters.



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