Day trading: time to take stock

Many investors were alarmed at the slide in the FTSE Techmark index which lost more than a fifth of its value in a month, whereas daytraders saw the falls as an unprecedented opportunity

Technology stocks took a battering this week, proving that they do not really have a magic power to turn investors - or their creators - into instant millionaires. But ironically it was technology that enabled some ordinary people to use the situation to their advantage and make quick returns on their money.

Technology stocks took a battering this week, proving that they do not really have a magic power to turn investors - or their creators - into instant millionaires. But ironically it was technology that enabled some ordinary people to use the situation to their advantage and make quick returns on their money.

These were the growing army of so-called "daytraders" - people who buy in and out of shares over the course of a day. They were equipped with exactly the same sophisticated software that traders from the City of London's most prestigious investment banks use when they buy and sell millions of pounds worth of stock every day.

Many private and institutional investors were alarmed at the slide in the FTSE Techmark index which lost more than a fifth of its value in a month. Techmark was in turn effected by another technology-heavy stockmarket, the US-based Nasdaq, which at one point fell nearly 1,000 points in a day and a half, recovering only half of that by last Thursday. Many of the daytraders who visit Britain's first daytrading centre on Cannon Street, in the City, saw the falls as an unprecedented opportunity.

"Volatility is a great opportunity for daytraders to make money," said David Whitehead, a frequent visitor to Cannon Street. He explained that, as daytraders move in and out of shares many times during the day, they can take advantage of rapid price movements.

He said daytraders follow one golden rule: Close your position at the end of the day. Unlike other investors, who take the risk of a price change overnight and were hard hit by the fall in technology stocks as a consequence, the daytraders dived in and out of the stock all day, but sold up at the close of play. Although fortunes were not made at the Cannon Street centre this week, one man made nearly £1,500 in a day and a half. One trader said people earn an average of £500 a day.

But Mr Whitehead, who also works for a sports magazine publisher, warned: "The current market is full of great opportunities but also great possibilities to lose money."

He said that he, as someone who began daytrading in January without a financial background, has played it safe. "A key word is discipline. You have to learn to set yourself guidelines for what you are prepared to lose, as well as a target that you want to make, and walk away if you reach that point."

Mr Whitehead joined the Cannon Street centre after attending a course run by its owner, Investin, the US company which has opened centres across America.

This week Investin gained membership of the London Stock Exchange, which prepares the way for daytrading on the FTSE in the near future, and it is the only company which has complied with the necessary red tape to get a licence for a daytrading centre in Britain. It is also aware that the practice has had a bad press, after the tragic case of Mark Barton. Mr Barton, a daytrader from Atlanta, Georgia, hit the headlines last year when he lost $100,000 through daytrading before he killed his wife and two children and then shot dead nine people from two stockbrokers firms.

Ian Peacock, chief executive for Investin in Europe, said: "We have had no [legal] cases against us. We let people trade to double what they have in their account but no more." Investin also knows many of its 150 users are not hardened dealers. "We monitor people's progress. If they look as though they are losing a lot we give them advice. We can suggest they go on a course, we have beginners as well as more advanced courses, or possibly try to spread their investments, rather than putting it all into one stock," he said.

Currently the majority of Investin's users have the software on their computers at home and trade over the Internet. The firm intends to open up to 10 other centres across Britain, including branches in Scotland, Manchester and Leeds, as well as a couple planned for the suburbs. The costs at Investin are £500 a month to trade from the floor, with a reduction of £200 if you make 300 trades. If you opt to trade online - which gives you access to exactly the same information, which is downloaded onto your computer - the service will cost you £200. This is fully rebated if you make 50 trades in a month. The cost per trade is between £10 and £7. Investin says this allows you to execute a trade in an eighth of a second - crucial to take advantage of the types of volatile prices around last week.

The firm hopes daytrading will be taken up enthusiastically on the LSE. "You have to pay stamp duty of 0.5 per cent in Britain, which brings down profit. But there is more opportunity to save money on the LSE too, as the spreads between buying and selling prices are greater here. If you go through a traditional broker they make the profit on this. If you trade directly, you do," said Mr Peacock.

But is this game really only for the frustrated red-braced brokers out-there who love the stock market and speak about it as though it is an unpredictable but wonderful creature?

Not according to Mr Peacock, who says: "People are becoming increasingly sophisticated investors. They are unhappy with traditional methods and want to use the Internet. They also want to have direct access to more and more information to make their choices."

News
Ian Thorpe had Rio 2016 in his sights
people
Sport
world cup 2014A history of the third-place play-offs
News
Tommy Ramone performing at The Old Waldorf Nightclub in 1978 in San Francisco, California.
peopleDrummer Tommy was last surviving member of seminal band
Life and Style
Swimsuit, £245, by Agent Provocateur
fashion

Diving in at the deep end is no excuse for shirking the style stakes

PROMOTED VIDEO
Life and Style
Several male celebrities have confessed to being on a diet, including, from left to right, Hugh Grant, Benedict Cumberbatch and Ryan Reynolds
life...and the weight loss industry is rubbing its hands in glee
Sport
The Mexico chief finally lets rip as his emotions get the better of him
world cup 2014
Voices
Spectators photograph the Tour de France riders as they make their way through the Yorkshire countryside
voicesHoward Jacobson: Line the streets for a cycling race? You might just as well watch a swarm of wasps
Life and Style
lifeHere's one answer to an inquisitive Reddit user's question
News
peopleDave Legeno, the actor who played werewolf Fenrir Greyback in the Harry Potter films, has died
Arts and Entertainment
'Eminem's recovery from substance abuse has made him a more potent performer, with physical charisma and energy he never had before'
arts + entsReview: Wembley Stadium ***
Finacial products from our partners
Property search
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Information Security Manager (ISO 27001, Accreditation, ITIL)

    £70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...

    Biztalk - outstanding opportunity

    £75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...

    Trade Desk Specialist (FIX, Linux, Windows, Network Security)

    £60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...

    Service Desk Analyst (Windows, Active Directory, ITIL, Reuter)

    £35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...

    Day In a Page

    A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

    A History of the First World War in 100 Moments

    Peace without magnanimity - the summit in a railway siding that ended the fighting
    Scottish independence: How the Commonwealth Games could swing the vote

    Scottish independence: How the Commonwealth Games could swing the vote

    In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
    Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

    A writer spends a night on the streets

    Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
    Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

    UK's railways are entering a new golden age

    New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
    Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

    Conchita becomes a 'bride' on Paris catwalk

    Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
    Pétanque World Championship in Marseilles hit by

    Pétanque 'world cup' hit by death threats

    This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
    Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

    Why did we stop eating whelks?

    Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
    10 best women's sunglasses

    In the shade: 10 best women's sunglasses

    From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
    Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

    World Cup final: Messi? Mascherano is key for Argentina...

    No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
    Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

    Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

    18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
    The true Gaza back-story that the Israelis aren’t telling this week

    The true Gaza back-story that the Israelis aren’t telling this week

    A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
    A History of the First World War in 100 Moments: The German people demand an end to the fighting

    A History of the First World War in 100 Moments

    The German people demand an end to the fighting
    New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

    New play reveals what Oscar Wilde said at trials

    For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
    Can scientists save the world's sea life from

    Can scientists save our sea life?

    By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
    Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

    Richard III review

    Martin Freeman’s psychotic monarch is big on mockery but wanting in malice