Excerpt
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Who's afraid of a bear market?
Almost everyone, but don't expect a crash to scare off day traders. In fact, it might turn you into one.

Editor's note: Though this tale is told in the voice of a single person, it is the product of the experiences and reporting of both authors.

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By Joey Anuff and Gary Wolf

May 30, 2000 | Recently people have been asking me if the recent NASDAQ hiccup has reduced the number of day traders. My answer? Probably not. Terror is the day trader's best friend. Day traders say you become an investor when your trade goes very wrong. You buy 1,000 shares, the price plummets and suddenly you start telling yourself that UBID is a "great value" that is sure to rise significantly "over time." But the opposite is also true. An investor can become a day trader when his or her trade goes unexpectedly right.

You buy some obscure stock that your cousin told you about, it quadruples and you can't stand to hang on to it any more, so you take your profits. Now what are you going to do with all that cash? It's already sitting in your trading account. Scores of "bargains" are flashing before your eyes every day. Come on. Just make one trade. One little purchase, just for the heck of it. There you go. Now how do you feel? Not so good, right? A little nervous? In fact, kind of panicky? Look, your stock is already up a quarter point. Little beads of sweat are breaking out on your upper lip. You are mouthing words, but no sound is coming out. That's OK, because now it's time to sell. Go ahead, sell it. Sell! SELL!

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Very long-term investors, those who plan to hold their stocks for 20 years or more, can afford to ignore the movement of the market. But for people who might need their money in the next decade, the threat of a sudden collapse is terrifying. Given how much you are going to resent it if half your money suddenly disappears, perhaps you would actually be safer not holding any of those stocks you own overnight. When things head south, you don't want to be the last one out the door. On the other hand, you don't want to get left out when the market bounces. So you buy a few promising candidates and keep one nervous eye on the exits.

Congratulations, you're halfway there.

The following excerpt was adapted from "Dumb Money: Adventures of a Day Trader," by Joey Anuff and Gary Wolf

I started trading during the glory days of the Internet bull market. I quickly doubled my account size due to an extremely fortunate speculation on EBAY, and I entertained myself with visions of growing my low six-figure trading account into a mid-six-figure trading account. Since I was trading the sum total of all the money I'd ever earned, borrowed, swindled or inherited, this felt like quite an accomplishment. I gave myself extra points for having made a small fortune while the business page of the newspaper (which for the first time in my life I read religiously) was warning every day about the dangerous and unsupportable run-up in the prices of Internet stocks.

Sometimes I wondered if it was easier for me than for most people. I had a lot of tolerance for risk and seemed to have an uncanny knack for being at the right place at the right time. There's no denying that I had benefited from luck; but, on the other hand, perhaps luck is a talent like any other. You have to make the best of what you are given, I mused, and I seemed to have been given a gift for brilliant speculation.

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