Day trader Darren McRae at Swift Trade in Toronto
Online Investing
Rise of the kitchen table traders
Theresa Ebden
Special to The Globe and Mail
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:Tips for building a portfolio - How to figure out your investing goals. Plus: sample portfolios
Part 9
: Ways to invest in mortgages- Let's Talk Investing video: Investing: Riskier than you might think
- Let's Talk Investing video: Dangerous investments: Don't go there
- Let's Talk Investing video: How much investing risk can you stomach?
For this, customers pay between $250 and $375 a month. Cyborg has seven employees, is not yet profitable, and represents "a partnership between the trader, a human, and his ability to think, and the reliability and automation of a machine. What we're trying to do is take the best traits from each party," Mr. Bittrolff says.
That is what it takes to succeed at day trading now, he says, adding that just as before, some day traders will go down in flames.
"It is not for everybody, it is actually for very few people. Would you like to live a very stressful life, in an environment that changes so rapidly, there's no right answer?" he asks. "This world is not for the casual guy who thinks he can beat Wall Street, because he can't."
For now, Mr. Bittrolff day trades mainly to test his software. For his own serious investing activity, he has slightly longer-term horizons: He owns a condo, which he shares with his wife, who is pregnant with their first child.
You start to believe your own predictive powers. I think day trading is right, but for the right person.— Patricia Lovett-Reid
"Day trading has its sacrifices - no, I'm not living with my parents, but it's about making lots of money, not knowing when it will stop, then having it stop. Then it might start again. It's a massively variable income," he said.
Day trading can be exciting at first, but with poor timing or preparation the result can be trouble, says Patricia Lovett-Reid, a certified financial planner and senior vice-president at TD Waterhouse Group Inc.
"I worry about early successes, and about early gains," she said. "You start to believe your own predictive powers. I think day trading is right, but for the right person."
Ms. Lovett-Reid said she was approached by a savvy woman recently after giving a talk in Oakville, Ont. The investor had recently begun to day trade, using a portion of her savings to do so. This person was well aware of the risks, and was taking the right approach.
Preparing a plan, setting aside large amounts of time each day, and using third-party research - fundamentals, as well as technical analysis - are keys to success, Ms. Lovett-Reid said.
Even so, she recommends extreme caution.
"An active trader at home has to realize they are trading against the big banks' own trading floors, who have the latest information, the best software and technology," she says.
"So if you're acting on news you heard yesterday, everybody already has that and has acted on it already."
Even so, newbie day traders are increasingly emboldened. Even those looking to "swing trade" over slightly longer periods - days, weeks and sometimes months - are on the rise, especially with exchange-traded funds that mirror the movement of an underlying commodity by two or three times the price, says Questrade chief executive officer Edward Kholodenko.
"I have seen it, particularly with leveraged ETFs," he said, adding that these funds' ability to make long or short bets [for or against] a particular commodity, such as gold, is a popular feature with day traders.
As for the proving grounds for a day trader, he has succinct advice:
"If they don't understand, it's like anything. Some people don't understand business, but it doesn't always stop them from opening one. ...
"But then the market takes care of itself."
