Everyone’s a Day Trader Now


Michael Glenwood

Stuck at home in lockdown, millions of Americans are trading the markets like never before.


E*Trade Financial Corp.,

ETFC -0.08%

investors opened roughly 260,500 retail accounts just in March, more than any full year on record. Newer rival Robinhood Markets Inc., maker of a wildly popular trading app, logged a record three million new accounts in the first quarter.

Individual investors’ last big binge was for dot-com stocks in the late 1990s. That era saw money-losing technology companies vaulted into the stratosphere and spawned a culture of day traders who played the markets as a full-time job.

It appears even bigger—and broader—this time around, amplified by digital communities on


and Discord, a popular online chat hangout. Investors have transformed those social-media platforms into virtual trading desks, a place to swap tips, hype stocks and talk trash as they attempt to trade their way to a quick fortune.

The market’s extreme moves this year have made trading especially enticing. With professional sports largely on pause and group gatherings discouraged, users have flocked to day-trading apps to cure isolation and boredom from lockdown.

“I feel like Sonic the Hedgehog, collecting my coins,” said real-estate agent Sharmila Viswasam, 38 years old, of Lake Linganore, Md., referring to a videogame where the character collects gold rings.

Before the pandemic, she hadn’t considered investing beyond the money she had put aside in her 401(k) retirement account, much less day trading. Now, she says, she trades thousands of dollars in stocks every day.

Ms. Viswasam’s identity had been so entwined with her real-estate job that she named her dog Sold, and made him an Instagram account under the name SoldTheRealEstateDoodle. But when she couldn’t work, her unemployment checks weren’t enough to pay her bills. Her boss suggested she try day trading. She read “Trading for Dummies,” watched YouTube videos, opened an E*Trade account and dove in.

Ms. Viswasam embraces a risky trading style. “Scared money makes no money,” Ms. Viswasam said.

When the pandemic hit, real-estate agent Sharmila Viswasam started reading ‘Trading for Dummies’ and watching YouTube videos on investing. She now trades thousands of dollars in stocks each day.


Marlena Hanna

She mostly buys blocks of stocks that trade for less than $5 a share and sells many of them within a day or two. She doesn’t ever consider other more conventional stock picks, such as

Amazon.com Inc.,

because shares of those companies are pricier and tend to be less volatile day to day.

The potential for big gains—increases of mere pennies per share in some cases—outweighs the risks, she said. Starting with $25,000, Ms. Viswasam said she had played price swings on penny stocks to a $65,000 profit through early July all on her phone.

Gaining Influence

Retail traders like Ms. Viswasam are gaining influence in financial markets.

Trades this year by individual investors more than doubled the usual level of retail activity, said Joseph Mecane, head of execution services at market maker Citadel Securities. Individuals now account for a fifth of all stock-market activity and a quarter during the busiest sessions, he added.

The influx of traders has increased the demand for most stocks and sent shares of some individual companies soaring, analysts say. As the benchmark S&P 500 has climbed more than 40% from its March lows,

Goldman Sachs Group Inc.

said stocks popular with individuals have generally outperformed those held mostly by hedge funds and mutual funds.

But there are reasons for concern about the overall performance of individual investors. For one thing, some academic studies have demonstrated the challenges individuals have in trying to beat the market.


examined trades by Robinhood customers between March and early June and concluded that the more they bought a specific stock, the worse that stock performed.

It’s never been cheaper to trade. Robinhood pushed commissions to zero, a move Charles Schwab Corp. and other brokeragesfollowed last year. To lure new customers, brokerages are now offering incentives including free shares of stock and free access to riskier financial trading tools.

“How much of this is a permanent or temporary change? My best sense is it’s a little bit of both,” said Mr. Mecane, referring to the impact the elimination of trading commissions has had on retail activity.

Brokerages make money on free trades by sending customer orders to trading firms in exchange for cash, a controversial but legal practice in the brokerage industry called payment for order flow. While customer orders must be executed at the best available price, trading firms have numerous ways to use the trades to their advantage, including to mask larger buying and selling by the firm or its clients.

Brokerages also can profit from cash that sits idle in customers’ accounts.

‘I Don’t Know Much About That’

Enticed by Robinhood’s offer of free stock, Granit Selimaj opened an account on his 18th birthday in December 2018. He received one share of gaming company


and sold it shortly after, he says.

Mr. Selimaj has mostly traded stocks since then. For a time, he considered options trading as a way to amplify his gains, and filled out an application to do so on the Robinhood app. Moments after applying to trade them, Mr. Selimaj found himself approved by Robinhood for an options-trading account that allows him to transact puts and calls, or contracts that give investors the right to buy or sell stocks at a specific price, later in time. But he has avoided such trades so far, saying he doesn’t really understand how it works.

Enticed by Robinhood’s offer of free stock, Granit Selimaj opened an account on his 18th birthday. He quickly got access to options-trading tools.


Malike Sidibe for The Wall Street Journal

“I’m a Level 2, and I don’t know much about that,” Mr. Selimaj said, referring to the trading tier Robinhood had approved for him.

Still, Mr. Selimaj, who is now 19 and is attending Manhattan College in New York, credits the app’s user-friendly interface and simplicity with getting him into investing, as well as turning him on to a potential career in finance after college.

Big Gains, Big Losses

Amid the volatile markets of the past few months, traders’ gains have sometimes been huge, and so have their losses. Retail investors suffered deep routs when a popular oil-futures contract fell swiftly negative in April. Others lost thousands of dollars on penny stocks and bankrupt companies, such as car-rental company

Hertz Global Holdings Inc.

Many also have been burned by bad bets in options, where it’s sometimes possible to lose more than you put in with some complicated trading strategies. Selling so-called naked calls, for example, can saddle investors with theoretically unlimited losses.

Those losses have reanimated a long debate among financial-industry executives and regulators about whether novice investors should be protected from riskier corners of the markets. One flashpoint was the suicide in June of a 20-year-old trader, Alex Kearns.

Mr. Kearns had made a sophisticated options trade. When his bet soured, his Robinhood account’s cash balance showed a loss of three-quarters of a million dollars, according to a screenshot of his account Mr. Kearns included with his suicide note, his family says. But Mr. Kearns likely didn’t actually lose that much, a relative says, and the negative balance Robinhood showed him may have been a figure representing one leg of the trade that was losing money, but not the opposing leg that was gaining value and would have capped his losses.

In a note written just before his death, Mr. Kearns asked how someone his age, with no income, had access to a trade that exposed him to such deep losses. When he ended his life, Mr. Kearns may not have understood that he likely never owed that money, his relative says.

“How was a 20 year old with no income able to get assigned almost a million dollar’s worth of leverage?” Mr. Kearns wrote in his note to his family. “I also have no clue what I was doing now in hindsight…A painful lesson.”

The death moved U.S. Securities and Exchange Commission Chairman Jay Clayton to explore action to prevent a repeat of Mr. Kearns’s tragedy. He said the agency, along with Wall Street watchdog the Financial Industry Regulatory Authority, would closely examine how Robinhood and other self-directed brokerages grant access to more-sophisticated trading strategies, such as options.

“We need to make sure these kinds of things don’t happen,” he said at a House Financial Services Committee hearing late last month.

In a blog post on Robinhood’s website, co-founders Vlad Tenev and Baiju Bhatt wrote that they were “personally devastated by this tragedy.” Robinhood said it now provides investors with more educational resources and customer support.

Robinhood co-founders Vlad Tenev and Baiju Bhatt speak often about their effort to democratize investing. ‘It’s a significant transformative force in society if we have more people participating in the market,’ Mr. Tenev said recently.



Prior to Mr. Kearns’s death, Robinhood employees had raised concerns about the easy access to sophisticated options-trading strategies, several former employees said. Engineers, many of whom had little to no experience in the financial industry, were among those leveling questions about the ethics of providing easy-to-use tools rather than creating more investor guardrails, people familiar with the matter said. And Robinhood employees based at a facility outside Orlando, Fla., who worked in back-office brokerage roles, questioned higher-ups about how easy it was for inexperienced investors to trade options on the platform, other people said.

Often, Messrs. Tenev and Bhatt deflected those concerns at weekly all-hands meetings with passionate arguments about the company’s goal of democratizing investing and growing its customer base, people familiar said.

A Robinhood spokesman said the company disagreed with that characterization.

Mr. Tenev said in an interview that the company is conscious of the risks that result when inexperienced clients embrace options and other trading, but added that they are offset by the benefits of easy trading on the Robinhood platform.

“We think on balance it’s a net good,” Mr. Tenev said. “It’s a significant transformative force in society if we have more people participating in the market.”

A spokesman for Robinhood said the company follows Finra rules governing the approval of options trading. It also follows regulations related to requirements that brokerages know their customers, and requires its customers to answer an eligibility questionnaire.

Robinhood appears to have been successful in its mission of democratizing investing and pulling in younger users. Investors have opened up 13 million accounts at Robinhood since its founding. Their median age is 31, the company said. Robinhood doesn’t reveal how many of those accounts are active.

Other brokerages that have followed the app into free trading have seen a similar boost. Schwab is opening up more accounts than ever, with people under 40 driving over half of all new openings in the past year, said Erin Montgomery, a spokeswoman for the brokerage. The market’s gyrations and free trading underpinned the growth, she added. The brokerage opened more than one million new accounts through the first half of the year.

Isolation and Boredom

Isolation and extra time during lockdown have made day trading and its digital culture all the more appealing.

Trae Williams, a 26-year-old rental car-company employee in Cleveland, started using Robinhood about two years ago, but only began devoting significant time to it during the pandemic, he said.

“There’s not much to spend money on, but also I can pay attention to it more. I have more time to do it,” he said.

Matt Miller, a 66-year-old in Kernersville, N.C., had mostly pursued a buy-and-hold strategy for his first 30 or so years as an investor. But he’s traded more actively since the pandemic hit, he said, buying a number of stocks popular with day traders.

Matt Miller, shown here with his restored 1940 Ford Deluxe, says he was mostly a buy-and-hold investor until the pandemic hit. ‘It’s a perfect hobby for grandpa,’ he jokes.


Kate Stillwell

Those included entertainment company

Genius Brands International Inc.


Luckin Coffee Inc.,

which was delisted from the


Stock Market after disclosing that as much as $310 million of its sales last year were fabricated by some employees.

Mr. Miller, a former employee of chemical company Henkel, said he turned a profit from his investments most years, and has made money so far in 2020. But in part, he says, he trades for fun.

“I’m in the park right now and it’s 90 degrees in North Carolina, and it’s sunny, and I put in two trades this morning and walked away from it,” he said.

“But in the wintertime, when it gets to be 20 degrees Fahrenheit here or it’s snowing and raining, it’s a perfect hobby for grandpa,” he said.

‘I’m Going to Be a Millionaire’

Much of the rapid-fire day trading culture plays out on social media, which has helped usher in a new class of social-media influencers who hype stocks to followers eager for get-rich-quick stock tips. They swap trading ideas over Twitter, Discord and Reddit, an update from the boiler-room chat rooms of the ’90s that sent dot-com stocks into a frenzy.

Stanley Barsch, Ms. Viswasam’s boss who got her into investing, touts the stocks he trades to his more than 76,000 Twitter followers, who refer to him by his handle, StanTheTradingMan. He also hosts his own Discord channel, where a tighter-knit group of day traders circulate unconfirmed rumors as potential catalysts for big gains.

Mr. Barsch, 42, is a former police officer turned real-estate broker, who said he had been making a steady six figures since 2010. Now, he boasts of how he says he turned the $20,000 he put into the market in January and February into more than $450,000 as of mid-July without any prior trading experience.


Have you done more trading since commissions on many platforms dropped to zero? Join the conversation below.

He first dabbled in trading last year while he was recovering from a kidney transplant. When the market crashed and the coronavirus pandemic threatened to eat into his income from selling houses, Mr. Barsch saw an opportunity to maintain his lifestyle and continue supporting his wife and three children.

“The mortgage payment is due next month, I needed to put food on the table for my kids, and the electric bill is due the day after tomorrow,” Mr. Barsch said of his motivation to day trade, adding “we like the luxury side of life, too,” such as staying at five-star hotels—something he plans to do once it seems safe.

Mr. Barsch took his digital sessions to a new level last month.

He began live streaming interviews with penny-stock CEOs, in hopes of drumming up support from his followers. More than 65,000 people watched the first stream with Vislink Technologies Inc. Chief Executive Officer Carleton Miller in mid-June. The company’s shares climbed as high as 98 cents that day before closing at 79 cents, up 15%.

His second live stream backfired, underscoring the potential pitfalls of penny stocks. Mr. Barsch hosted a live stream on June 25 with Alfred Poor, the CEO of

Ideanomics Inc.,

a financial technology company that had shifted its focus to the electric vehicle market. Mr. Barsch said he bought shares soon after the interview aired because he expected the stock price to bounce.

The price bump never materialized though. Short-selling firm Hindenburg Research accused Ideanomics of being a fraud several hours after the interview, sending shares down 21%, followed by a further 40% retreat in the next day’s session.

Mr. Barsch said he lost $27,000 on the trade. Ms. Viswasam said she lost roughly $600. Ideanomics issued a statement several days later, rebutting the fraud allegations. Shares rose 43% on the day Ideanomics denied the allegations.

Some people took to social media, accusing Mr. Barsch of engaging in pump and dump, one of the oldest forms of market fraud and involving people usually circulating rumors or fake news to lift a stock’s price while leaving buyers with shares that will soon plummet in value. Mr. Barsch denied the claims.

“I’m dealing with drama all day long and trying to deflect the drama,” he said. “At the same time, I’m trying to make money.”

His real-estate business is picking up again as Maryland’s statewide lockdowns ease. He plans to keep day trading in case that changes. Plus, he said it’s fun.

“This gives me instant gratification and satisfaction,” said Mr. Barsch. “It’s also a moneymaker. I told my wife earlier this year that I’m going to be a millionaire.”

Write to Michael Wursthorn at [email protected], Mischa Frankl-Duval at [email protected] and Gregory Zuckerman at [email protected]

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