Wednesday, September 16, 2009

Day trading is back

If you buy a stock, sell it, and earn money on the trade, you might mistakenly infer that you have above-average stock-picking ability. So you try it again.  And as long as the market keeps rising, you will be successful, more often than not.  This is the kind of feedback loop that leads to bubbles:
Trading volume surged 14% or more last month from July at online brokerage firms Charles Schwab Corp., TD Ameritrade Holding Corp. and E*Trade Financial Corp. Electronic trader Knight Capital Group Inc. also posted a 7.7% increase.

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