A new breed of traders Pizza guys to lawyers heed market's siren song
By James Kim
Fri., May 22, 1998
FINAL EDITION
Section: MONEY
Page 1B
LAS VEGAS -- Hate your boss? Bored with your work?

 For having the guts to quit their old jobs and try something fresh, the new stock traders at Bright Trading are now staring at garishly lighted computer screens, tracking the market, twitching to trade. They're aggressive, focused and greedy. Other than that, they have little in common with traditional trading pros. Few here have been to business school or apprenticed on Wall Street. The Bright big-swingers include Ed McQuarters, former software programmer, who is sweating out a Lucent buy. Keith Patrick Franklin, former restaurant manager, is riding Pfizer. Tammi Bright, founder's daughter and still a blackjack dealer, is rolling with several stocks, giving her ``a natural high; it's wonderful,'' she says. Bright traders also include former lawyers, accountants, doctors, stockbrokers, even a pizza delivery guy.

 This motley bunch represents a budding phenomenon among devotees of the almighty stock market: Thanks to the rise of new day-trading firms like Bright and Internet investing, it's as enticing as ever to quit your job to live by your market wits. More people seem to be making the leap, pushed by faith in their trading prowess, career angst, work- and lifestyle needs and the raw thrill of gambling, er, trading. ``Technology is making all this possible,'' says Bob Bright, CEO of Bright Trading, as he monitors his Merck positions. ``People used to have to go to New York or a major city to be a trader. Not anymore.'' He calls it the ``democratization'' of professional trading.

 While hard statistics are scant, anecdotal evidence is strong. A new breed of trading firm has blossomed the past three years. The best known -- such as Block Trading, Broadway Trading, All-Tech Investment and Momentum Securities -- began as companies that let rank-and-file customers directly access the Nasdaq market, via the controversial Small Order Execution System (SOES). Their members were decried as SOES ``bandits.'' Many of these firms are evolving in the face of competition, and many now offer customers direct access to the New York Stock Exchange and other exchanges. The biggest firms all sense growing demand. Bright, which trades mainly NYSE stocks, operates 16 offices nationwide and plans to open six more this summer. Start-ups such as JPR Capital, of Roslyn, N.Y., also are aiming for a slice of the pie. The Electronic Traders Association, founded just 15 months ago, already has more than 40 member firms.

 People can also trade for a living at home. Some still use traditional stockbrokers. Others trade via personal computers with sophisticated software from day-trading firms that links them directly to major stock markets. Others use on-line brokerages, such as E*Trade.

 The common trait: Day traders tend to be hyperactive, darting in and out of stocks -- fast. Damn the Fundamentals! In typical fashion, former T-shirt vendor Dan Brenner, in the New York office of Block Trading, is nervously trying to lock in a profit of a few ``teenies'' -- one teeny equals 1/16, or 6.3 cents -- on 1,000 shares of stock he knows only by its ticker symbol, TCNOF. ``I have no idea what they do,'' he says. ``It doesn't matter.''

 I trade, ergo I am

 Former criminal attorney David Hilburn, 34, of Bossier, La., loved being in court but hated all else about the law business, like prying money owed to him out of clients. So he is lowering his shingle to trade full time via the Internet from his one-bedroom apartment. ``This is my job now,'' he says. He started with $30,000 in October, half from a friend who splits all profits.

 Making a living will not be easy. To cover rent and other expenses, Hilburn can't sit back and hold on for the long term. He has to buy and sell and buy and sell some more, hopefully making a profit with each turn. He makes about 10 trades a day, and rarely holds a stock overnight. Aware that a bad-luck streak could sink him, he is living frugally, plowing most profits back into the business. ``Once I boost the size of the account, I can get a little looser with the spending money,'' he says. His goal: to be able take $3,500 out of the account every month as salary.

 For most at-home traders, a big draw is the work style it affords, allowing them to work in bathrobes, with their feet on their desks, with no boss save Mr. Market.

 Humera Aliuddin, of Lincolnwood, Ill., recently quit a job at First Chicago bank after six months. ``I wanted to stay home and trade,'' says the recent graduate of Loyola University in Chicago. It's doubtful that any bank would let her work at home with two TVs on, one for CNBC, the other for soap operas, especially Days of our Lives. She doesn't want to miss a thing. On her PC, she monitors the market with TradeStation software, and is frequently on the phone with her J.B. Oxford broker and her cousin, who works for a brokerage. She controls a personal portfolio of about $150,000 and trades private accounts for two friends. And ``I'm teaching my mom to trade,'' she says.

 When the markets close at 3 p.m. Central time, she works out, rides her motorcycle, visits a friend in her new Lexus or just ``whatever,'' she says.

 Of course, there are the common drawbacks to working at home, like forgetting to shower before the rest of family comes home. And ``there is a strong sense of isolation,'' says Josh Clark of Pittsburgh, who quit his architecture firm last month to trade full time. ``But you are alone with your dream, your passion. I think of all the people in offices who are miserable.''

 Buy! Sell! Buy! Sell!

 At Bright Trading, no one lacks camaraderie. The 14 traders in the home office are usually at their computers by 6 a.m., coffee in hand, half an hour before the markets open in New York. They chat about how to play the opening. With the market falling early, the clickety-click of people entering orders at their PCs grows. A few jokingly whistle as if bombs are falling. ``We've even got sound effects,'' says Bob Bright. Adds brother Don, who heads up marketing, ``It's like a big computer game.''

 Day-trading firms have various trading and commission arrangements. At Block, Broadway and others, traders put up their own capital, which they trade using their firm's software, paying per-trade commissions. Many traders use margin to effectively double their buying power.

 At Bright, traders put up a minimum deposit of $25,000, and pay $600 a month for use of a computer and office space. Then they are able to trade the firm's combined capital (the private company will not disclose the amount). That arrangement enables traders to take positions worth far more than their deposit. Seasoned traders control more than $1 million in stocks. The company monitors the trading of all members to determine how much capital they can tap.

 Bright traders give the firm 25% of the profit, but get it back at the end of the year in the form of a bonus. (That is incentive to stay for at least one year.) At Bright, traders also pay commissions to the firm, an average of 1.2 cents per share.

 As the day winds down, Franklin has made 30 trades, about average at Bright, where ``long term'' means about 30 minutes. ``This is an excellent day for trading,'' he says, pointing to his screen, which shows the Dow Jones averages plunging. ``Lots of volatility. You just got to be in the right stock.''

 Across the room, McQuarters is in Lucent -- and winning. ``I love this. This is it -- for life,'' he says, vowing never to go back to programming. Next to him, Tammi Bright buys 2,000 shares of Hewlett-Packard at $705/8. Within minutes, the ``bid'' ticks up to $71, she enters a sell order, and quickly gets confirmation. She makes 37.5 cents a share on 2,000 shares, which works out to $750. She makes a string of similar trades and soon is up about $3,000. The week before, she says she notched an $11,000 day and an $8,000 day. Unsurprisingly, she plans to give up her blackjack dealer job.

 While the Bright bunch is making it look easy right now, more than half of new Bright traders crash in the first six months. Former restaurant manager Franklin nearly joined their ranks. Last year, he couldn't stop losing, and soon frittered away much of his initial deposit. ``I took unnecessary risks,'' he says. But he raised new money from friends and started over, designing a system that he sticks to religiously. With a few minutes to close, he's up $5,000, and feels good enough to take a short Doritos break. ``Sometimes,'' he says, ``it seems so easy. Right now, I couldn't even think about doing anything else.''

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