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Buy, Sell - And Stress Out

JOHN LOWE and SCOTT BRAGINTON-SMITH
CBS/The Early Show
The Dow Jones and NASDAQ stock exchanges plan to extend trading hours in large part because of a new breed of investors called day traders, reports CBS News MarketWatch Correspondent Stacey Tisdale.

Day traders use the increased access to the markets created by the Internet and online trading services.

Investigators say Atlanta massacre suspect Mark Barton quit his job as a chemist to become a day trader with a New Jersey-based company to ride the bull market phenomenon.

By logging on to high-speed computers linked to the Internet, day traders make their money by rapidly buying and selling shares of stocks on a minute-to-minute basis in hopes of turning a quick profit.

Much of their holdings are sold by the end of the day, at any one of an estimated 100 day-trading firms in the United States.

Clients of day-trading companies are typically required to put up at least $50,000 to open a trading account.

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Some day-trading firms even offer courses in trading.

Thousands more trade from the comfort of their own homes using online accounts, such as E*Trade and Charles Schwab.

Day traders have been around for a long time. But the growth of the Internet and changes in stock-market rules have given birth to thousands, if not millions, of day traders.

"In Atlantic City or Vegas, there - the odds are really against you. Here, I have two, 50/50. It's either going up or it's going down," says Dan Scrocco, a day trader. "It's a good bet."

Day-trading firms have come under fire recently from regulators who believe that the firms do not warn investors about the risks.

A vast majority of day traders were found to lose money.

"Day trading is not investing. It is speculating. It is gambling," said securities investigator Phil Feigin. "If you want to gamble, I suggest you go to Las Vegas, because the food is better."

In May, All-Tech, the brokerage firm used by the suspected gunman, settled a complaint that it had misled customers with deceptive advertising and misused customer funds.

On Thursday, the national association of securities dealers, which regulates many day-trading firms, submitted a proposal to the SEC. The proposal requires day-trading firms and electronic-trading companies to better screen customers and disclose the risks of trading.

Reported by Stacey Tisdale
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