Amateurs risk all to be Soros for a day

A London entrepreneur will bring the controversial day-trading phenomenon to the UK early next year. Dan Gledhill reports

There are those who would argue that this is the worst possible time to be launching a day trading venture in the UK, but not Clive Cooke. The 41-year old from London's Fulham, who has spent the last eight years domiciled in New York, has watched the craze take hold of his adopted nation. There are now more than 60 American companies providing members of the public with the opportunity to exchange their turgid nine-to-five routine for the non-stop buzz of trading on the US stock market. These aspiring dealers are thrown together in a custom-built trading floor, given a desk, telephone and computer screens and let loose to compete with the likes of George Soros in the jungle of the financial markets.

Alas, rather than emulating the great Hungarian speculator, many American day traders have had more in common with the ill-fated Nick Leeson. A survey commissioned by a US watchdog last week revealed that 70 per cent of day traders lose money. It identified one office in Massachusetts where all but one of the 68 resident dealers were in the red. Rogue firms who oblige their customers to execute hundreds of trades a day, running up huge transaction charges in the process, were singled out for particular criticism.

Whether they make money or not, day traders are nothing if not hard workers. While millions of investors on both sides of the Atlantic have made stock market fortunes simply by watching their investments appreciate, day traders are constantly buying and selling shares to profit from the small variations in price that long-term investors can comfortably ignore. Only adrenalin junkies need apply.

The Atlanta killing spree last month, which left nine people dead, provided an extreme example of the effect of the job's unique pressures. The perpetrator, Mark Barton, was a day trader whose failure had left him owing thousands of dollars to a couple of firms. All of a sudden, the world's media could not learn enough about a profession that had supposedly spawned a mass murderer.

So it is not, on the face of it, the best time to be bringing the concept to these shores. Mr Cooke disagrees. Fresh from two interviews with the BBC, he has indeed been thrust into the media spotlight by the disclosure of his plans. But not even the revelation that his partner in the venture, Momentum Securities, had links with Barton has curbed his optimism.

"I think that only those in the financial market place would have taken note of this had it not been for the tragedy in Atlanta," he says. "It is quite extraordinary how this was picked up on and clearly it is not just because of what is going on in the markets."

By the first half of next year, Mr Cooke is hoping to open a dealing room in the City where an initial quota of 25 punters will be equipped to make a living from buying and selling US stocks. Unlike most of the dealers employed by Square Mile banks, who usually keep about 10 per cent of the money they make, any profits will be theirs to keep. The inevitable downside is the absence of a multi-billion-pound employer to make good any losses that might accrue.

No doubt Mr Cooke realises that it is those who "drop a million" who will attract the headlines, rather than the ones who generate a steady income. Day trading is not the instant gold mine portrayed in some quarters. Certain unscrupulous American operators have exploited the misfortune of their unsuccessful traders by offering them easy credit, a sure-fire way to multiply their losses. Encouraging novices to execute unnecessary trades just to boost an operator's revenue is another way of milking unsuspecting losers for all they are worth before they go bust.

Mr Cooke, however, recognises that for his venture to be profitable and reputable, the bulk of the traders will have to make money.

"There are a lot of trading companies in America where inexperienced people have been involved," he says. "We want to bring in professional people, preferably those who have traded before. They will be vetted heavily, and those who do not understand the risks will be told they aren't suitable."

Mr Cooke takes issue with the portrait of the industry in the watchdog's recent survey, pointing out that its conclusions were based on one operator. Nevertheless, he recognises the need for an image overhaul.

"The regulatory environment will get stricter in the US," he said. "It is important not to have a cloud hanging over the industry."

Since the Financial Services Authority gave it the go-ahead earlier this year, City-based InvestIN Securities has been offering the technology for the public to deal from home.

"We are a regulated company," says Stephen Coles, InvestIN's finance director. "We look at the suitability of our traders and if they've traded before, we want to see some proof. They need to deposit a minimum of pounds 20,000 and some have pounds 50,000 with us."

Like Mr Cooke's prototype venture, InvestIN's customers deal in US stocks. The obligation to pay stamp duty on each purchase means that trading on the UK stock market in this way could never be profitable.

But it is Mr Cooke's venture that will create the first dealing room set aside for independent traders to gamble their own money on the stock market. Although his guinea pigs are likely to be drawn from the hundreds of traders displaced by last year's round of City job cuts, dedicated laymen with the right attitude and deep pockets could also get a chance.

One thing they may reflect on, however, is that even traders of the stature of Mr Soros and Julian Robertson of Tiger Management, the mighty hedge fund, have struggled to make money this year.

If these lords of the jungle can lose their way, it would be wise for the tyro explorers to tread carefully.

Start your day with The Independent, sign up for daily news emails
Bill Gates, founder of Microsoft and co-chair of the Bill and Melinda Gates Foundation
businessUber, Snapchat and Facebook founders among those on the 2015 Forbes Billionaire List
news... and what your reaction to the creatures above says about you
Homer’s equation, in an episode in 1998, comes close to the truth, as revealed 14 years later
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: A Customer Service Advisor is r...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Day In a Page

The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn
Yvette Cooper: We can't lose the election. There's too much on the line

Yvette Cooper: We can't lose the election. There's too much on the line

The shadow Home Secretary on fighting radical Islam, protecting children, and why anyone in Labour who's thinking beyond May must 'sort themselves out'
A bad week for the Greens: Leader Natalie Bennett's 'car crash' radio interview is followed by Brighton council's failure to set a budget due to infighting

It's not easy being Green

After a bad week in which its leader had a public meltdown and its only city council couldn't agree on a budget vote, what next for the alternative party? It's over to Caroline Lucas to find out
Gorillas nearly missed: BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter

Gorillas nearly missed

BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
Downton Abbey effect sees impoverished Italian nobles inspired to open their doors to paying guests for up to €650 a night

The Downton Abbey effect

Impoverished Italian nobles are opening their doors to paying guests, inspired by the TV drama
China's wild panda numbers have increased by 17% since 2003, new census reveals

China's wild panda numbers on the up

New census reveals 17% since 2003