VIDEO Some people are addicted to day trading on the stock market. CNN's Mark Marino reports on the risks. Windows Media 28K 80K  ALSO: Special Report: Day Trading 101

July 30, 1999
Web posted at: 2:14 p.m. EDT (1814 GMT)

In this story: 'It takes a lot of nerve' Schwab: The best protection is information RELATED STORIES, SITES

ATLANTA (CNN) -- Day traders are financial adventurers -- pursuing profits in a high-stakes, high-risk stock market gamble that's becoming increasingly popular due to the Internet. It's like waving a red flag in the bull market.

"It's about action, adrenaline, making money very quickly," says Internet financial analyst Tom Taulli.

"The risks are huge," day trader Michael Terry explains. "That's what keeps me on the fence in terms of wanting to get too involved with it and risk too much."

Not all day traders are so cautious. Agencies offering counseling for gambling addictions now are getting calls from online traders.

"The Internet and the availability of an instant trade, without ... even going through a broker ... has really made problem gambling show its face," says Thomas Tucker of the California Council on Problem Gambling.

Day trading requires courage, decisiveness and lots of capital. The game is new and the rewards seemingly limitless, but traders say it's attracting many people who aren't equipped to handle it.

Nick Granko, a former used car dealer who quit his job in Oklahoma City six months ago to try his hand at the stock market, says he's seen traders "who have no business being in there. It takes a lot of nerve disengaging your emotions from trading."

The experts agree. Several firms say that two-thirds of all day traders lose their investments within a month. Nine out of 10 go broke in just 90 days.

That hasn't dampened enthusiasm, however. About 5,000 of the investors use brokerage houses as their bases. Another 250,000 trade full time from home computers. Forecasters predict that by year's end, nearly 10 million investors will be using the Internet as their financial playground.

For some, convenience is filled with consequences.

"They're spending more money than they have," Tucker says. "They become adrenaline junkies."

While the stock market has performed better over the last seven months than many analysts predicted, the fear is that many addicted investors will need professional help if the rollercoaster drops.

One expert believes that's when brokers will be blamed.

Securities regulators recently expressed concern that some day trading companies could be misleading investors about potential profits. Regulators have stepped up scrutiny of the firms.

"Day trading is not as simple as it appears," says Ari Kiev, a psychiatrist and author of "Trading to Win: The Psychology of Mastering the Markets."

"It is easy to get into it and all the ads for it make it seem like it is less expensive and so forth. But they don't really tell you how risky it is," he warns.

Charles Schwab, the No. 1 online investment firm, says a broker's best legal protection is information.

"We believe the way to protect ourselves is to educate our investors ... the best possible way we can," says Schwab's Martha Deevy.

Terry agrees: "Learn your limits ... stay within your comfort zone."

Correspondents Greg LaMotte, Mark Marino and The Associated Press contributed to this report.

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