By BARNEY JOPSON
Squeezed between a single bed and a giant noodle-maker that would
look at home in a foundry, Saburo Ishiguro sits tensely at his desk.
A light bulb and a teetering shelf of charts hang over his head.
His eyes are fixed on a screen.
With a year-and-a-half of experience behind him, the lanky 65-year-old
is an online day trader.
Profits from mouse clicks now supplement his income from Kokoro,
a quiet restaurant-cum-bar where for 30 years he has served home-made
noodles to salarymen in Akebonobashi, northern Tokyo.
Mr Ishiguro was drawn to trading by the rock-bottom online broking
fees available since Japan's commission system was deregulated in
1999. Now he is one of a small group with an increasing presence
in the market trading several times a day, holding stocks for just
a few hours and grabbing high-speed profits.
While there are no clear definitions of what a day trader is, industry
watchers hazard that, with more than 800,000 web accounts in Japan,
between 2,500 and 10,000 people deserve the label. They have become
icons of a six-month price rally. And fame has meant a warm reception
from some but vilification from others.
On the plus side, the vibrancy of day trading has symbolised a healthy
market with an active menagerie of investors.
It has been particularly good news for web brokers such as Matsui
Securities, Mr Ishiguro's choice, as their revenues have hit new
highs while trading volumes soar.
Less enthusiastic are the purists who say the stock market should
be driven by fundamentals. They blame day traders for taking stock
prices away from reality, creating huge volatility in some sectors
(see the banks) and mini-bubbles in certain stocks such as Softbank.
That may well be true but it does not make Mr. Ishiguro lose any
sleep. "To e-trade, become a demon," he advises aggressively.
"Have strong nerves, throw away your information about stocks,
don't fallin love with any, just be opportunistic to the death."
While the weekly chart books above his head provide a sense of the
general trends, he says they are irrelevant once the market is open.
"Trading is not about charts. It's about the stocks with big
volumes that are moving a lot."
Yohei Sunada, president of the Japan Day Traders Association (JDTA),
finds more use for graphs but agrees there is no need to pay attention
to information about companies themselves.
"As long as you know roughly what your company's business is,
that's fine," he told 30 aspiring traders at a seminar this
month.
"You don't need to know about a company's future or fundamentals
because they are not going to change over the course of one day
and that is all you are looking at."
Mr Ishiguro pays Y3,000 a day to make two or three trades, although
for that fee he can do as much as he likes up to a value of Y3m.
Eighty per cent of his trades are short sells placed to profit from
price falls.
"Most people buy when stocks go up because they think they
will go higher. I'm different," he says. "I think about
whether something will fall and when it will stop."
And then: "Stocks are like vegetables. If you hold them too
long they start to smell."
Ideally, he will make a profit of 12 or 13 per cent before the day
is out and close the trade to lock it in.
"If I sell short at Y115 and it rises to Y116 I get out and
wait for the next one. You can do that because the fees are low."
Mr Sunada says good day traders can normally make a monthly return
of 10 to 15 per cent and most aim for a monthly income of between
Y300,000 and Y500,000 (Dollars 2,750 to Dollars 4,500).
The approach he recommends is more studied and conventional than
Mr. Ishiguro's. Make a watch list of 20 or 30 stocks, follow moving
average charts to see which are over or undersold, which have upward
or downward momentum, and hold around five at a time.
The need for non-stop chart watching explains why salarymen tied
to their work cannot day trade, he says.
The people who do are mostly men and tend to be retired, self-employed,
or redundant - some voluntarily, some not.
Nationwide, Mr Sunada says the number of day traders appears to
be increasing and he is happy to train people - 60 hours for Y500,000
- who have the ability to learn and will use day trading as part
of a broader personal finance plan.
But he tells the seminar bluntly: "I'm not recommending this
to you."
Day traders are vulnerable not only to market risk but also to computer
and connection failures, he cautions. Paying commissions mean they
always begin from a "minus start". Their incomes are highly
volatile. And on JDTA simulation games, 80 or 90 per cent of triallists
finish in the red.
Later, mixing charity and profit-mongering, he summarises why he
is not a day trading evangelist: "If you increase the number
of traders, you increase the number of losers - and you reduce the
number of good opportunities in the market."
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Ltd 2003. "FT" and "Financial Times" are trademarks
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