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hotcopper in the the courier-mail

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    The day traders are back
    Online broker activity has surged 20 per cent in the past six months, with big returns claimed. Graeme James reports
    August 23, 2003

    CHAT rooms have come alive, with day traders back in force and reaping some big profits in a revitalised stockmarket.

    Many of the market punters have been successful by jumping in and out of everything from biotechs to small technology and resource juniors.

    The surge in volumes for many small stocks has seen the average daily number of transactions on the Australian Stock Exchange grow from about 50,000 early this year to 62,000 this month.

    While well short of the hi-tech boom of 2000 when average daily trades were more than 100,000, the latest upsurge has seen short-term traders leading the charge.

    Online brokers have been busy filling orders on a host of smaller stocks with a 20 per cent rise in online broker activity reported in the past six months.

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    The day traders are back
    Online broker activity has surged 20 per cent in the past six months, with big returns claimed. Graeme James reports
    August 23, 2003

    CHAT rooms have come alive, with day traders back in force and reaping some big profits in a revitalised stockmarket.

    Many of the market punters have been successful by jumping in and out of everything from biotechs to small technology and resource juniors.

    The surge in volumes for many small stocks has seen the average daily number of transactions on the Australian Stock Exchange grow from about 50,000 early this year to 62,000 this month.

    While well short of the hi-tech boom of 2000 when average daily trades were more than 100,000, the latest upsurge has seen short-term traders leading the charge.

    Online brokers have been busy filling orders on a host of smaller stocks with a 20 per cent rise in online broker activity reported in the past six months.










    Smaller technology stocks have recently been high on investor preference lists and that has pushed many of their share prices to 52-week highs in the past three weeks.

    Data#3, Commander Communications, Infomedia, NetCom and Intellect Holdings have been some to feel the effect of speculation on popular internet trading sites.

    Online financial services groups including market leader CommSec and E*Trade Australia have experienced an increase in trading volumes.

    E*Trade chief executive Brett Spork says retail trade has increased on the website.

    "We've definitely seen a resurgence in the retail trade but day traders will also favour using E*Trade due to its immediate access and low cost," Mr Spork says.

    Day traders who operated in the giant US market usually bought and sold stocks in a few hours during a single trading day.

    However, in Australia they were more often short-term traders who bought and sold a stock over a two to three-day period in the thinner local market.

    Mr Spork says short-term traders here usually hunt in the ASX 200 list rather than the top handful of stocks.

    "They go where there's leverage or some activity in chat rooms. It's a bit of a moving feast," he says. "They do like biotechs but they will occasionaly trade big volatility like AMP when they see an opportunity."

    Online investor forum StockCentral Australia executive chairman Austin Hui says biotech stock traders have been having a good time since March this year.

    "The day traders have been having a good time and many have achieved a 30 per cent return since March," Mr Hui says.

    "They (day traders) are a leading indicator of where the market is heading."

    Mr Hui says gold stocks are presently back in favour among short-term traders but they will quickly move on to other opportunities.

    Big returns as well as big losses are possible by short-term trading on stocks with minimal share prices.

    Mr Hui says he knows of one investor who reaped a 189 per cent return in two to three days on CBD Energy, a provider of property-based internet services and energy management solutions in Australia and Hong Kong.

    Amrad Corp and Norwood Abbey group also had solid price movements.

    Other recent price movements have included the Multimedia small technology group where the share price jumped 300 per cent and Kaz Group technology group's price jumping 37 per cent in two weeks.

    According to specialist market research group ACNielsen.consult, there are only about 3000 traders in the local market who make more than 45 trades a quarter.

    However, that number often has a big impact in terms of trading volume.

    E*Trade's Mr Spork says the general upsurge in the local market reflects a return of confidence by investors.

    "I separate day traders from retail investors who are looking for earnings, dividends and yields," he says.

    "Some of that would be driving day traders but they are more interested in leveraged stocks."

    Online forum site Hotcopper.com.au currently has postings by individual investors that include selected stock picks by current return such as Startrack (320 per cent return), Unitract (138 per cent), WorldAudio (100 per cent) and Amity Oil (80 per cent).

    Meanwhile an ASX spokesman says that although the Australian market overall has picked up in the past few months, small mining and resource stocks were always attractive to speculative investors.

    "But it would be too long a bow to draw to connect day traders with extra activity in certain stocks," the spokesman says.

    There are now a lot more considered and professional investors in the market, he added.

    The Courier-Mail


 
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