Day traders, like Andy Lindloff, above, enjoy the thrill of do-ityourself investing.

Many trade stocks, and many lose money. (About 80 percent.)


ENCINITAS, California

REMEMBER THE DAY traders?

They were hard to miss during the tech-stock mania a decade ago, when the Nasdaq seemed like a casino built by morons and a chimp with darts could pick winners. You would hear about these guys ? nearly all of them were guys ? and wonder: Could anyone make a living this way? And if the answer was yes, why were the rest of us suckers still holding down regular jobs?

No doubt, it’s been a long time since a question like that troubled your imagination. And perhaps you assumed that the twin calamities of the Internet crash and the Great Recession had doomed the day-trader species in the unruly jungle of American capitalism. But some dreams refuse to die, and few, it seems, are more resilient than the dream of beating the market while sitting home in your underwear.

Or, if you are Andy Lindloff, a pair of jeans and a black waffle-pattern shirt. “Banks are seeing a nice little lift,” he says, staring at computer screens one recent Wednesday morning, sipping coffee. “The European banks are up, so that may bleed over to ours. Bank of America might be one to watch.”

Mr. Lindloff, 49, is sitting in his living room here in a city known as “surfer’s paradise,” just north of San Diego. Surrounded by the playthings of his daughter, he appears to be alone. In fact, he has plenty of company. With a handsfree headset, he is speaking to Steve Gomez, his partner in Today Trader, a two-year-old Internet venture that is “about helping traders find success through virtual technology,” as it says on the company’s Web site.

The company charges aspiring traders $199 a month for a live, real-time view of Mr. Lindloff’s computer screen, along with the running banter, commentary and advice that he and Mr. Gomez provide through the morning.

The service is billed as a chance to look over the “virtual shoulder” of two veteran stock traders, but you don’t really see anyone’s shoulder. It’s more like staring at the instrument panel of a jet while eavesdropping on the pilots, plus the ceaseless tap-tap of a keyboard.

When the market opens, 21 subscribers are logged in. This is the new frontier in do-it-yourself trading. Today Trader and its rivals are tiny operations, and they have modest followings. But they are harnessing all the crowd-sourcing features of the Internet circa 2010: You- Tube, Twitter, and companies like GotoMeeting, a Web conferencing service.

They are also harnessing a lot of market-related rage. The gruesome stock plunge of late 2008 and early 2009 was a searing moment for many people. Even many of those who took the safe route and years ago bought index funds have seen little upside. Look at the performance of the Standard & Poor’s 500, the most popular index out there. If you put $1,000 in it in 1999, you now have slightly less money in your account .

If the motto of the original day-trade boom was, “If the pros can do it, so can we,” the motto today is, “We can’t do much worse than the pros.”

“There’s this idea out there that retail investors are dumb,” says Howard Lindzon, the cofounder of StockTwits, which curates a gusher of stock tips and financial news alerts tweeted by 20,000 regular contributors. “Well, it turns out that the institutional investors are pretty dumb. They nearly blew us all up with leverage.”

Of course, anyone hoping to join the day-trade caravan had better wear a seat belt, as Mr. Lindloff’s experience on this Wednesday morning demonstrates. Before lunch, he will buy and sell about 44,000 shares, in 17 trades. He starts off poorly, losing about $500. But a timely bet on a company called Rackspace Hosting (“I don’t know what they do,” he says), as well as quick investments in Applied Materials, Eagle Bulk Shipping and a few others, have turned things around.

“Up $210,” he says, removing his headset. Factoring in commissions, he has made $60.

It is hard to say how many day traders are currently working in the United States. Brokerage firms track the activity and demographics of their customers, but they have been reluctant to share that data. About the most we know is that the day traders skew male, and the number of trades per $100,000 in client dollars is a little less than half what it was back in 2000, according to the Charles Schwab brokerage firm.

Even that figure seems high.

Mr. Gomez and Mr. Lindloff are among the few who started day trading in the late ‘90s and never stopped. For years, Mr. Gomez was a manager at a selfstorage facility, but he couldn’t resist trading commodities during office hours, and he had a hard time keeping his mind on his work. Mr. Lindloff worked at an Isuzu dealership for years, then made cold calls ? knocking on doors ? for Edward Jones, the brokerage firm. He left after three months.

“I knew I wanted to trade,” he says.

How good are they? Mr. Lindloff, who Mr. Gomez says is the more skilled of the two, says he has averaged $100,000 to $120,000 a year for the last 10 years, even during the worst part of the recession. With low expenses, he lives comfortably, though hardly extravagantly.

“I basically have $80,000 to $100,000 in my trading account every day,” he says, “and take my earnings out of that account to live.”

It is, to be sure, an odds-defying performance. The great mass of studies point to the same conclusion: trading is hazardous to your wealth, as an academic paper memorably put it. The losers far outnumber the winners.

Exactly how far is clear from one of the most comprehensive looks at the subject in a yet-tobe- published study conducted in Taiwan. (The country is ideal for this kind of research because all trades go through one place, the Taiwan Stock Exchange, which is willing to share the information.)

The authors sifted through tens of millions of trades, from 1992 to 2006, and found that 80 percent of active traders lost money.

“More importantly, we found that if you were to look at the past performance of these traders, only 1 percent of them could be called predictably profitable,” says a co-author, Brad M. Barber, a finance professor at the University of California, Davis. Everyone else, it seems, was on a short-term winning streak. Even those who did modestly well found their that profits were wiped out, and then some, by transaction fees like commissions and taxes.

“It’s not impossible to make money actively trading,” Mr. Barber continues. “There are slivers of people out there who are quite good. And everyone thinks they will be in that group of 1 percent.”

So why do people persist in this line of work?

“The technical term is thrillseeking,” says Hersh Shefrin, a professor of behavioral finance at Santa Clara University in California and author of “Beyond Greed and Fear,” an exploration of investors’ mindscapes.

Also, he says, “people enjoy trading.”

The Intelligence column will return next week.

By DAVID SEGAL


SANDY HUFFAKER FOR THE NEW YORK TIMES