Day Traders Hope First-Ever Trade Show Will Lift Sagging Image
Dow Jones Online News, Friday, September 17, 1999 at 11:04
By Sean Davis, Staff Reporter
NEW YORK -(Dow Jones)- Looking for signs that day trading is here to
stay? Here's one: the fledgling industry is about to have its first
trade show.
The International Day Trading Expo will take place in Ontario,
Calif., next Saturday and Sunday, Sept. 25-26. The organizers expect
more than 90 exhibitors and 2,000 attendees.
At least one day-trading guru, Harvey Houtkin of All-Tech Investment
Group in Montvale. N.J., thinks it's about time for an industry confab.
Day traders aren't joiners by nature, according to Houtkin. "They want
to sit in front of their computers, make their trades and be left
alone," he said.
But day traders need to come together to counter the bad publicity
that has engulfed the business since a day trader killed several people
in Atlanta, he said.
Day traders buy and sell stocks very quickly to profit from small
changes in price. A true day trader starts and ends the day owning no
stock, hence the name, but the term sometimes is applied to all
short-term investors.
Although some day traders use online brokers such as E*Trade Group
Inc. (EGRP), not all online traders are day traders. Most serious day
traders use fast, sophisticated trading systems that connect directly to
stock exchanges and private electronic networks, called ECNs, that match
buyers and sellers.
No one knows how many day traders there are, but some in the business
have put the number at 5,000 to 6,000. There are about 60 to 70
day-trading firms. Some of the biggest, such as Cornerstone Securities
of Austin, Texas, have hundreds of customers in trading salons around
the country.
The day-trading expo is the brainchild of two Southern California day
traders, Jim Sugarman and Tim Bourquin. "I think the time is good for
it," Bourquin says. The public hasn't heard from the day traders who
make a living and are doing just fine.
Thirty-year-old Bourquin used to be a stockbroker, but after three
years, he decided being a salesman wasn't for him. He became a Los
Angeles police officer, busting gang members and career criminals.
Because he worked nights, he was able to keep his hand in the market by
trading stocks from home during the day.
This was in 1995 - the prehistoric era of day trading. Bourquin had a
choice of two vendors of stock quotes, in contrast with the dozens of
vendors today, and he was connected to the market via a 28.8
kilobits-per-second modem, which is to the cable modems and T-1 lines of
today what a biplane is to an F-15 fighter jet.
In late 1995, Bourquin and another trader cop started Day Traders of
Orange County. The third founding member was a trader who answered a
classified ad in the newspaper. The group grew by word of mouth. Then a
magazine for online traders profiled Bourquin, and membership
mushroomed.
Now the group, which has changed its name to DayTraders USA, claims
400 members in Southern California and 1,200 members worldwide.
Bourquin, meanwhile, stopped trading to organize the expo; he works as a
reserve police officer to make ends meet.
Sugarman, 41, used to be a salesman for two big pulp-and-paper
companies. A stint as a stockbroker at the penny-stock firm Stuart James
Investment Bankers in the late 1980s introduced him to the financial
markets. He started trading futures on his own, and by 1997 he was day
trading futures contracts pegged to the Standard & Poor's 500-stock
index.
In February, Sugarman spoke at a meeting of DayTraders USA. He and
Bourquin got to talking about "doing something bigger," Bourquin says,
and the idea of a trade show was born.
"There is a void in the marketplace for a conference put on by day
traders for day traders," Bourquin says. "We are attempting to fill that
void."
The day-trading business doesn't get much respect these days. In
July, disgruntled day trader Mark O. Barton killed nine people in two
day-trading offices in Atlanta before taking his own life. Barton, who
also killed his wife and two children prior to the shooting spree, and
was suspected of killing his former wife and mother-in-law, appeared to
have more problems than the $500,000 in trading losses he ran up.
Nevertheless, the shootings led many to wonder whether day traders
are ticking time-bombs about to explode any moment.
Shortly after that, a group of state securities regulators put out a
stinging report on day trading that concluded almost all day traders
lose all their money.
Meanwhile, Congress and federal regulators have turned their
attention to day trading. They are trying to find out, among other
things, whether day-trading firms warn customers of the financial risks
of day trading. In a Senate hearing Thursday, Securities and Exchange
Commission Chairman Arthur Levitt said, "I am concerned that some people
may be lured into the false belief that day trading is a surefire
strategy to make them rich." He also said many day-trading firms have
"extremely lax compliance practices."
Sugarman and Bourquin, who say they are profitable traders despite
some losses, would like to change the public's image of day trading.
"One of the things Tim and I are very sincere about is responsibly
communicating the realities of day trading," Sugarman says.
To that end, they are planning what they feel is a balanced
conference. Along with seminars on sophisticated trading techniques will
be courses on using margin responsibly. (Margin is a loan used to buy
stock; it can increase profits, but can also lead to devastating
losses.)
Attendees should leave the expo with two things: a mentor and a
trading plan. "Finding a mentor is important because that's the quickest
way to shorten the learning curve," says Bourquin. A mentor can teach a
new trader about cutting losses. "The discipline of admitting you're
wrong about a trade and moving on is as important as handling your
profits."
Having a trading plan is another way to guard against catastrophic
losses, Sugarman and Bourquin say. A trading plan lays out, in writing,
why the trader wants to day trade, how soon he wants to be profitable
and how he will react to a loss. One trader, for example, might plan not
to trade any volatile Internet stocks for the first six months. "By
writing it down, it's going to force you to trade your plan and not get
caught up in the hype of the market," Bourquin says.
One goal of the expo, Sugarman and Bourquin say, is to turn a profit.
Attendees who take part in the seminars will pay $199 in advance or $249
at the door. Passes to the exhibit hall only are $25 and $50. Exhibitors
who want a corner booth will have to pay $3,000; regular booths are
$2,600. And a number of sponsors, including some of the biggest
day-trading firms, have agreed to contribute $10,000 to $50,000 to
underwrite the expo.
Sugarman and Bourquin hope to repeat the conference three to four
times a year in different parts of the country. They have tentative
plans for an expo in New York early next year, and another in Miami next
summer.
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