Day trippin'

Dallas' little fish swim with the Wall Street sharks at an online trading house

After he sends his transaction into the ether, Whitlock can see exactly where his trade is ranked among all the others being offered. The exchanges' systems class the trades according to their price, size, and time of entry. Whitlock's buy order for a stock is completed when it is matched with someone looking to sell at the same price, and vice versa.

Theoretically, a day trader should be on the same playing field as Wall Street stock dealers. They have the access to the same information and the same instantaneous trades. Known as market makers on the NASDAQ and as specialists on the New York Stock Exchange, the Wall Streets dealers are brokerage houses and banks that have agreed to sell and buy a stock to make the market move in an orderly fashion. On the NASDAQ, there are an average of 11 dealers on any given stock. If there's a sell-off and no buyers appear, a dealer must step up. But most of the time dealers operate to their own accounts' advantage.

For the day trader, it's often a guessing game about what the dealer is going to do. Small investors can now see what previously had been the purview only of Wall Street dealers, but day traders do not have the stock inventory or financial resources to compete evenly with Wall Street investment banking firms.

Mark Graham
Carlton Whitlock keeps an eye on the TV monitor tuned to CNBC while he plays the stock market at 1 800DAYTRADE.COM.
Mark Graham
Carlton Whitlock keeps an eye on the TV monitor tuned to CNBC while he plays the stock market at 1 800DAYTRADE.COM.

After a day trader places an order, much can happen that remains out of his control. Heavy demand can force the bidding higher. The supply can be exhausted and the stock no longer available.

Then there are the computer glitches. One of Whitlock's fellow traders had his worst day -- losing $4,000 -- because a computer system went down and his trade didn't go through. Even veteran Evan Rogers cursed his monitor when it blacked out during trading last week. "Technology rules my life," he moaned.

Regardless of the potential pitfalls, for Whitlock the seduction of day trading is simple. It means the end of bosses and the possibility of buckets of cash.

In the past few years, Whitlock has done well enough in long-term investments to day trade for six months without turning a profit and still support his family. He hopes to break even for six months, trading small amounts, often not even trading at all, just tracking the market closely to see what would have happened had he made a transaction. After that he wants to make at least enough money to match what he brought home with his corporate job.

"This is a much better job for me," Whitlock said not long after he had lost the $1,600. "It gives me freedom. I don't have to check in with a boss, but I don't have any overhead."

For starters, Whitlock appreciates the regular hours. The markets open at 8:30 a.m. Dallas time and close at 3 p.m. They are closed on most bank holidays.

Whitlock had never chosen a risky path before he started day trading. Born in France, he is the son of a career military officer who started his own real estate business when he retired from the service. When Whitlock graduated from the University of New Mexico with a degree in accounting and computer science 15 years ago, he moved to Dallas to work for Ericsson, a Stockholm-based wireless telecommunications company with offices in North Texas. Whitlock moved to Nortel two years ago. "Bad group, bad boss," Whitlock says succinctly when asked why he left.

As he grew frustrated at work, Whitlock started plotting an escape. The plan calls for him to execute about two trades a day, based mostly on his knowledge of the high-tech industry as well as online briefing services, and make between $500 and $800 a day in profits. With that kind of money, he believes, he can more than make up for his lost Nortel salary and live a less stressful life.

Whitlock says he views his possible losses in this first six months of trading as tuition while he learns the game. He will quit, he says, if he loses half of the $40,000 he started with or if he hasn't started making money by six months. "I hope that doesn't happen," he says.

So far, with six weeks of trading behind him, Whitlock says he has lost about $11,000. Does his wife, who relies on his income, know? "She doesn't know how much. She knows I'm not very happy," Whitlock says. A moment later, he adds, "She's not worried. She knows I'm very disciplined in everything I do."

His decision to day trade surprised friends and family. His teenage daughter learned about her father's idea shortly after the Atlanta incident splashed across the front pages.

"'Oh no, Daddy,'" he recalls her saying. "'You are not going to be one of those crazy day traders.'"

Another member of his family, however, surprised him. Two weeks after Whitlock took the course offered by 1 800DAYTRADE.COM, he arrived one morning to find his younger brother Mitch in the trading room. "Next thing I know, he was sitting right next to me," Carlton recalls with a shudder. Although Carlton, the oldest of four boys, professes to love his baby brother, he worries that he may lose sight of his business plan with the emotional tugs from his nearby sibling.

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