He Never Saw The Sun - day traders who became addicted to buying and selling stock

Kiplinger's Personal Finance Magazine, August, 2001 by Steven T. Goldberg

The broker's role

GOVERNMENT regulators and brokers have done little to keep gamblers from trading heavily, charge Connecticut's Steinberg and other compulsive-gambling specialists. It's said that 90% of a brokerage's profits come from 10% of its clients. That makes it hard to close the spigot on a compulsive gambler. The problem is particularly acute with online brokers, because they have less responsibility for and less ability to monitor client trading. Full-service brokers risk civil damages if they let clients make unsuitable or inappropriate trades, although the court awards are seldom big enough to hurt. The case law on online brokers' accountability to clients is still evolving.

Phillip Behnen, a financial planner at A.G. Edwards, says his firm tries to at least persuade such clients to limit their speculative trades to no more than 10% of their portfolios. If a client won't abide by that rule, Behnen says, the firm tells the trader to go elsewhere. But compulsive gamblers can always find a broker willing to take their trades.

Even the best efforts of brokers and regulators, however, can never eradicate a problem as intractable as stock-market gambling. Gambling is a deeply personal problem with many root causes. Ultimately, compulsive gamblers must admit their problem and rely on their own resolve--with the assistance of professional counselors and such organizations as Gamblers Anonymous--to escape from their living nightmares. -- Reporter: KATHY JONES

RELATED ARTICLE: DO YOU TRADE TOO MUCH?

WARNING SIGNS | How to spot and help stock-market gamblers

How can you tell if you have a stock-market gambling problem? Psychologist Marvin Steinberg lists these warning signs:

You trade stocks to ease worries.

You become irritable when unable to trade.

Your investments become increasingly speculative.

You borrow from your broker, friends or other sources to try to boost your winnings.

You experience extreme highs when your picks pan out and extreme lows when they fail.

You keep increasing the size of your bets to maintain a high excitement level.

If you feel that you or your spouse is crossing the line from investing into gambling, there are places to turn for help. Check your local phone book for Gamblers Anonymous, which has chapters throughout the country. The national headquarters can be reached at 213-386-8789, or www.gamblersanonymous.org. For more information on problem gambling, visit these Web sites: www.800gambler.org, www.ncpgambling.org or www.ccpg.org.

A combination of professional therapy and Gamblers Anonymous support works for many compulsive investors. Look for mental-health practitioners who are certified as gambling counselors. For referrals, call 800-522-4700 or visit www.ncpgambling.org.

RELATED ARTICLE: MY YEAR OF TRADING DANGEROUSLY

STOCK-MARKET ROULETTE | A painful relapse adds to one man's resolve to kick a costly habit

The past year has been a painful journey for me, staggering from margin-call humiliation to active-trading relapse to margin-call disgrace and finally--dare I hope--redemption. The price for kicking the active-trader habit: untold stress and thousands of dollars in losses. Now, as bid-and-ask prices flash across my computer screen, I no longer feel the impulse to buy and sell stocks.