March 4, 1999
that anyone can trade stocks on the Internet, a hefty batch of "day
traders" are becoming a force to be reckoned with for seasoned traders.
Ray Johns of Daytraders.com and Marc Beauchamp, of North American Securities
Administrators Association, Inc., answer your questions.
Lassinger of Oak Hill, WV asks:
I am presently semi-retired and on SS. I have been thinking about doing some day-trading or commodities. Have never been able to invest in stock market, etc. Any suggestions on how to get started or where I can go to get help?
Johns of Daytraders.com responds:
Both day trading and especially commodities trading, can be very high risk in nature. If you are semi-retired and on SS as your only means of income, we would strongly suggest you look into other means of income and wealth production, as day trading may not be appropriate for your current situation.
As mentioned above, we feel day trading should be used as only one part of an overall investment package. Again, no money should ever be risked in day trading that cannot afford to be lost. Since I do not know your specific situation, I would strongly suggest you contact a qualified financial advisor (such as at your local bank or national brokerage firm) for further information and guidance before undertaking day trading as your means of supporting yourself during your retirement.
At the same time, if you do meet the requirements for day trading (e.g. very low or no short or long term debt, other liquid assets/investments/income and the ability to meet initial capital requirements for day trading while using less than say 20% of your overall net worth) then perhaps day trading could be enjoyable and worth while to you (assuming one understands the risks associated with trading). Certainly, being retired is no preclusion to day trading, as long as you have other income to support yourself. My only point here is that someone with limited funds for retirement would probably not be wise to direct all those assets to an account intended for day trading only.
For further information about day trading, please do not hesitate to visit our Web site located at http://www.daytraders.com on the Internet. A two week free trial of our services is available, as well as other helpful information geared towards short term investors and those interested in day trading the US stock market.
Beauchamp, of North American Securities Administrators Association,
Unless you have a LOT more assets and income than your monthly Social Security check, you should not, repeat not--consider day trading. Like commodities, day trading is extremely risky and only for a select few. Regulators believe most people lose money day trading. A joke going around Wall Street sums it up: "Want to know how to end up with a million dollars? Start with two million and become a day trader."