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"I was in San Diego Last week," at a North American Securities Administrators Association meeting, said Fred J. Joseph, Colorado Securities Commissioner. "I got in a cab, and (the driver) was a guy in his early 40s."

Joseph was his first fare on his first day on the job, the driver said.

What did he do prior to driving?

"I was a day trader," he said.

"He worked for All-Tech (Investment Group Inc.)," Joseph said. A mechanical engineer, he had started with $12,000 and at one point gained $175,000. Now, he was refocusing, he said.

"That's a euphemism for 'I blew it,"' Joseph said.

Day trading: fast trades of stocks rarely held overnight. It differs from online trading in that online investors research an investment, then buy it and hold onto it, Joseph said. Day traders trade at "the blink of an eye," and may not even know what the stock is. If they see a rocket going up or down, they try to make money on it.

"I think it's gambling," Joseph noted. "It's speculating at best and gambling at worst." He cites a NASAA ( study showing that 700/0 of investors will almost certainly lose everything they invest.

"It's a little like visiting Central City," said Susan Liehe, spokesperson at the Denver/Boulder Better Business Bureau. Investors can buy and sell several times their net worth each day, she said.

Colorado has between six and 12 day trading firms, Joseph said. Colorado's are largely in the Denver metro area.

Some things for budding day traders to watch:

* Be careful of any business that lets investors trade with other people's money.

* Be wary of deceptive or exaggerated advertising claiming you could make a million in your first year and the like.

* "Some offer training classes of questionable value," Joseph said. After the class, do you really know how to day trade?

* Don't risk more than you can afford to lose," Liehe said.

Day trading firm problems also can include violation of suitability requirements; questionable loan arrangements; abuse of discretionary accounts, where brokers have day traded customers' accounts; and failure to maintain proper books and records, according to the NASAA Project Group report.

"Our take on it is, it's to be avoided except by those who know what they're doing someone who's been in the business and decided to do it from home," Liehe said.
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Article Type:Brief Article
Geographic Code:1U8CO
Date:Feb 1, 2000
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