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Regulators Issue Warning on Dangers of Day Trading

November 26, 1998| From Reuters

WASHINGTON — State securities regulators Wednesday warned investors of the risks of so-called day trading, in which investors try to profit from stock movements by rapidly buying and selling shares in a single day.

"For the typical retail investor, day trading isn't investing. It's gambling," said Phillip Feigin, executive director of the North American Securities Administrators Assn.

Day traders dart in and out of stocks hoping to make a quick hit, shunning the more traditional buy-and-hold strategy in hopes of accumulating profits of pennies per share on several transactions.

For the sophisticated market player, Feigin said, speculative day trading is fine. But the state regulatory group said it is concerned that brokers who specialize in day trading services might not adequately inform investors about the risks.

It also raised concerns that some firms might be trying to attract Main Street investors unaware of the potential risks.

The regulators' warning is posted on the group's Web site at http://www.nasaa.org.

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