By Kristin Millis      
Staff Reporter  July 7, 2000

Life's a gamble.

Two local brothers have proven that in spades by parlaying profitable careers as card-counting blackjack players into a thriving day trading business that cleared $45 million in profits last year.  After establishing Bright Trading Inc. in 1992 with partner Ed Franco, Bob Bright enlisted the help of his brother, Don Bright. Today, the company uses computers to monitor 400-plus day traders in 34 offices across the country. In 1999, the company traded 2.5 billion shares, more than 1 percent of the entire New York Stock Exchange volume. 

Bright Trading's day traders are independent agents who lease space and electronic access to the NYSE from the company for $600 a month. With modern technology, traders can buy and sell as quickly as they could if they were on the floor of the NYSE. Fifteen years ago everyone was on the floor, Bob Bright said, limiting talented traders to living in cities such as Chicago or New York to trade on the floors of the Chicago or New York Stock Exchanges or work in-house as "upstairs traders." With the advent of high-speed modems, 90 to 95 percent of the trades are now routed electronically.

After making a $25,000 deposit, traders can use Bright Trading capital for every transaction. New traders start small, with 100 shares to trade at a time. As the neophyte day traders display competence, the Brights allot another 400 shares to trade per transaction. A typical trader is doing 1,000 to 2,000 shares at a time, trading between 50,000 and 60,000 shares a day.

"Our job is to make sure they don't lose their money, or our money," Bob Bright said. The Brights said most of their traders make money, or they get out of the game. A typical day trader earns an income in the low six figures. A good trader earns an income in the low seven figures. A first-year trader is lucky to break even. With so much at stake, the Brights don't leave their traders' success to chance. Don Bright teaches a one-week course on the basics of day trading at his firm's Las Vegas office. The curriculum includes lessons on trading tactics and techniques, the art of tape reading and how to find short-term market indicators. He teaches traders how to calculate quick odds to make a profit. He teaches them how to gamble.

Many students are what Don Bright called "at-home yahoos," investors who have ridden the bull market wave of prosperity with online trading using services such as E-trade. He said he believes the yahoos will have a quick reality check as the market stabilizes. "I hope they're having fun because they're not going to make a living," Don Bright said.  According to Don Bright, 13.5 million "at-home yahoos" in the country can't effectively compete with professional day traders because middlemen charge commissions that eat up potential profits. They also lag behind in receiving information to make quick decisions, lack the necessary information to make good decisions and lack the ability to react immediately to cash in on their instincts in a market that changes within seconds.

The Brights broadcast live audio from the Chicago S&P Futures floor, a dependable indicator of how stocks will perform on the NYSE. This gives them moments to react before the information is typed into the NYSE.  "A few seconds, maybe up to 10, which is a lifetime in our business," Don Bright said.

He referred to a study on predicting the future returns on the market commissioned by one of the biggest trading companies in the nation.  After one year of research, the study's results stated that the market could be predicted with 70 percent accuracy for up to six minutes. Everything else is a random walk. Day traders are not investors, Don Bright said. They're educated gamblers who calculate quick odds as they buy and sell throughout the day.

Though tempting, day trading is not an easy way to make money. Don Bright said he scares away 50 percent of the firm's potential students before they even enroll. Fifty to 60 percent of the students who pay the $1,000 fee drop out when they realize day trading is so difficult. Of the few students who finish the course and become traders, another 20 percent give up within the first year because they lost money or couldn't make a living. A gambler who believes that long-term investments are a fool's lottery ticket, Bright said he does believe in making a long-term investment in educating traders. Armed with knowledge and ability, traders make more money. The more money traders earn at one of the Bright Trading sites, the more money the brothers earn each year through commissions, which average about 1 cent per share.

The Brights find great traders in Las Vegas by looking for blackjack and poker players. One of their top traders is Chris "Jesus" Ferguson, who won $1.5 million as champion of the 2000 World Series of Poker at Binion's Horseshoe Casino. While bluffing is a significant part of successful day trading and poker playing, the Brights said Ferguson's mathematical skills make him a true professional.

The Brights still play blackjack, but only until casino personnel ask them to leave. When the brothers start raking in the cash, images from surveillance cameras positioned near the tables are sent to Griffin Investigations for identification. The Brights are known card counters in Las Vegas. While card counting is legal, local casinos will ask blackjack winners to stop playing or leave the casino if they suspect card counting.

"They don't want you to be able to play if you know how to read a book," Don Bright said, stating that blackjack is the only beatable game in the casino.

That's OK with the brothers. They found a way to use their gambling skills in a profitable way.

"The stock market encourages skillful players," Bob Bright said.