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FSA warns of Net trading dangers

Only 30 per cent of day traders make money

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The head of the Financial Services Authority (FSA) is warning investors about the hazards of day trading on the Internet. Howard Davies, chairman of the UK persoanl finance industry regulator, said investors needed to be made aware of the risks associated with using the Internet to buy and sell shares on the same day, in the hope that such fast transactions will net a profit. He said that only three out of ten day traders in the US made any money, while the rest lost out. "Seventy per cent of day traders in the United States lose money and it is important that people are aware of the risks and understand the nature of the expenses they will need to cover before any possibility of making a profit," said Davies. "There is nothing illegal or unethical about day trading. But investors need to know what they are doing." He also warned companies and investors about the gossip and misinformation that circulates on the Net. Firms need to monitor chat rooms for unauthorised investment advice, or share ramping through suggestions or gossip, he said. "Investors need similarly to be on the alert. They should beware of stocks which appear to be being 'promoted', when the interests of the promoter are unclear," he said. In July, US investor Mark Barton ran amok killing his wife and two children before shooting dead nine other people at the Atlanta offices of day traders Momentum Securities after he had suffered substantial losses. ® For more financial lead for your Net Smith & Wesson, tune into Cash Register and turn on to our daily Net Finance News

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