Day Trading For Professionals

Day traders - private investors quickly moving in and out of shares - once were the heroes of the shareholder society. But as BBC News Online's North America business reporter David Schepp reports, only a hardy few have survived the stock market downturn.

A little over a year ago Eddie Chau was making money hand over fist, day trading in technology stocks.

Today, he still makes money but it is trickier. And the legions of other day traders who speculated on internet stocks are long gone.

Mr Chau is one of about a dozen traders regularly stationed at a day-trading office located in New York's Chinatown. It is the newest such location for All-Tech Direct, an electronic trading network.

Kent Lou, manager of a day trading centre, expects his business to grow

The office, which opened just 3 months ago and targets the Asian community, is but one of dozens located all over Manhattan.

The branch manager, Kent Lou, expects that his business will continue to grow unless the market continues to head southward.

And if that is the case, he sees his business levelling off in the coming weeks and months.

Mr Lou notes that Mr Chau and another day trader, Helen Lam, made money - and a lot of it - on Monday, the day the Nasdaq Composite Index fell to its lowest level in 27 months.

Get in; get out

The philosophy behind day trading, of course, is to buy and sell stocks quickly, while they are moving upward. Ms Lam recently has averaged a profit of $1,000 to $1,500 a day by trading stocks.

For example, on Monday when the Dow Jones index fell by more than 400 points, she made $2,200.

Seated in the Chinatown offices, she points to a chart on the computer monitor, which she says indicates when she should sell her stock. She waits for the red and green bars on the chart to line-up. When they do, she says, she sells.

"Day trading is alive and well and flourishing," says Harvey Houtkin, the chief executive of All-Tech Direct. Mr Houtkin has made a name for himself, guiding investors on how to make money by day trading.

Serious traders

Mr Houtkin says a true day trader is a professional, who employs discipline and uses the latest in technology to execute his (or her) orders.

"The people who came in on the hype of the internet nonsense have mostly disappeared."

Mr Houtkin contends that scores of people who have since given up day trading in a falling market environment weren't day traders to begin with.

"They were the new breed of active traders that came around seeking the riches." Those investors, he says, saw a gold rush and did not invest in a business-like fashion.

"The people who lost money were the [ones] who were holding large positions," Mr Houtkin says, adding that many of those "active traders" lost money because they lost money holding their stocks overnight.

It is a sentiment shared by Angela Knight, chief executive at the Association of Private Client Investment Managers and Stockbrokers in London.

Knight says serious investors with longer-term aims are replacing the high-speed, high-volume share traders of last winter's dot.com frenzy.

"Hopefully this all means a greater understanding that if you are a speculator you bet on the horses and that the stock market is for long term investment," she says.

It is a distinction not lost on Mr Chau who confirms that the single biggest difference between investing today and a year ago is that investors cannot hold onto their stocks overnight.

A year we could hold onto positions overnight, Mr Chau says. "Now we don't want to hold our positions overnight, [otherwise] we get killed the next day."

"The opportunity to make money is still very much intact," adds Mr Houtkin. "The volatility in many [stocks] has subsided. You may have to work harder, but the opportunity to make money is still there."