Day Traders Jump Back Into the Game

Low interest rates entice small, leveraged players
By Kevin Spak,  Newser Staff
Posted Sep 16, 2009 8:07 AM CDT
Traders work in the NYSE Amex trading floor on it's inaugural day at the New York Stock Exchange Monday, March 2, 2009.   (AP Photo/Richard Drew)
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(Newser) – Trading volume is rising on Wall Street, but it’s not because of renewed confidence from long-term investors. The surge has instead been powered by a 14% jump from online brokerages like Charles Schwab and TD Ameritrade, and much of the money has been funneled into volatile parts of the market. Day traders, in other words, are back, trying to ride the latest market rally, the Wall Street Journal reports.

Much of this trading is coming not from solo kitchen table dabblers, but from a new crop of small, professional day-trading firms running on borrowed cash. The current extremely low interest rates make it easy to finance these leveraged operations. But the added volatility had helped keep long-term individual investors away. There’s “a hunker-down mentality,” says one analyst, “in spite of the broad recovery.”