Editorial: Day trading needs judicious oversight

Tuesday, Sept. 21, 1999 | 9:20 a.m.

As day trading's popularity has grown so, too, has the controversy surrounding the risky nature of this practice in which investors quickly trade stock, hoping to make profits off small changes in share prices. Federal regulators and members of Congress are worried that novice investors are losing too much money through this volatile trading. The National Association of Securities Dealers estimates that 70 percent of day traders lose money, figures the day-trading industry disputes.

While this growing industry should be better regulated, the federal government should be careful not to overreact. If people want to invest through day trading, then they should be allowed to do so. Every day people lose money by investing in stocks and that includes longtime professionals. Still, day-trading firms need to be regulated so they're not taking advantage of customers through deceptive marketing or allowing investors to make trades beyond federal rules that limit the amount of money that can be borrowed to buy stocks.

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