A day trader looks back

Every workday, Todd Marcus leaves his wife and daughter and travels from Staten Island, N.Y., to Manhattan.

Passing by suit-clad bankers and traders who work for firms like Goldman Sachs and Merrill Lynch, he heads for the offices of Edgetrade.com, two blocks south of the concrete jungles of Wall Street, where he works for himself.

Marcus, 30, is a day trader.

Unbowed and still game--even after the shellacking absorbed by technology stocks in the past year--Marcus places at least 100 trades a day. He reckons that he has between $50,000 and $100,000 placed on stocks at any given time. And stock turbulence notwithstanding, he still prefers to trade technology stocks listed on the Nasdaq, choosing companies involved in the Internet, telecommunications and wireless industries, as well as biotech and genome companies.

Not long ago, a rocketing bull market made nearly anybody willing to put money down look like a veritable J.P. Morgan. But nowadays the day-trading game is far more challenging, with the Nasdaq off some 60 percent from its all-time high.

Marcus is a technical trader, analyzing charts of past stock behavior, looking for clues about future performance. He focuses on terms like breakout, support and resistance just as much as--if not more than--he does on fundamental analysis terms like earnings and revenue.

Marcus says day trading has worked for him, and he has performed ahead of the market despite the market's roller-coaster ride. CNET News.com recently spoke with him to learn what it's like to be a day trader in the post-irrational exuberance era.

Q: What are some of the things that stick out when you think back how the market was and how it is now? Did you see any surprises?
A: Trading is completely different. It's more conservative now. I don't look for those home runs that I was looking for towards the end of '99 and the beginning of 2000 when the market was reaching the 5,000 level on the Nasdaq. Stocks were soaring 20, 30 points a day. I'm not looking for that now...There really isn't much that'll surprise me anymore seeing what I've seen, seeing the tremendous bull run and then seeing the bear market come right in.

Was that a shock?
Yes, to me it was, but then I speak to some of the older gentlemen that have really been involved in the market for over 20 years. It was a shock to them to see it actually go that high and probably not as big a shock to see it come off as hard...They couldn't believe that it had run so hard and so fast.

Are you sticking with more name-type stocks?
Not necessarily. I've...sort of lowered my expectations a little bit as far as how much I'm looking to make or how much I expect to make...Instead of just looking to make, let's say, three of four thousand dollars every day, which was achievable back in '99 (and) 2000, I've just stepped that back and now maybe I'll look to make $500 a day and keep my same discipline and keep my same strategy.

Would it be accurate to describe it as doing a fighting retreat?
I still trade aggressively; (it's) just that those big moves aren't really there anymore. Also, with decimalization, the stocks trade a lot tighter than they used to trade. Stocks that were trading in sixteenth, eighth and quarter spreads (are) now trading in penny to at most nickel spreads.

When do you think the economy and the tech sector will rebound?
We have rebounded a little bit from the lows of early this year and last year. You're starting to see some of the "smart money" step back in over the last couple of months. The better-name companies (or) the household-name companies...for the most part have rebounded a little bit. You see a lot of institutions dabbling now and...positioning themselves again. There's always a possibility of us testing the lows again. My guess is probably as good as anyone else's, but I think we've probably found a bottom or a base in the Nasdaq.

Just as there are different ways to play a sport, is that comparable to how many different ways there are to trade?
There are so many different strategies as far as trading is concerned, and I think the key is to find the strategy that works for you and stick with it. But as far as the type of strategy, I mean, my strategy is to make money.

How much money at one time will you have invested in stocks?
My positions are usually thousand-share positions. And the stocks that I look at are usually between the $20 and $50 range, and I usually have no more than one or two positions at any given time (during the trading day)...So the equity that I tie up (is) probably no more than between $50,000 and $100,000 at any given time...It's not really as much (as) when I was trading stocks that were $200 or $300 (a share).

From what you've noticed, has the perception of day trading become less sexy over the last few months?
I would say it's definitely less sexy than it used to be, and that's only because it's become more difficult to make money in the market these days. The guys...in my office that have been around for a year and a half, two years, or even longer...are all doing well. They've learned how to make money in this type of market, and for that matter they could probably make money in any kind of trading market. But (some of) the guys that decide to give it a shot now for the first time don't last more than a month or two.

Are there any skills that you learned really young that were suitable for trading?
Probably playing a lot of sports and being competitive helps a lot in this field. You're out there competing with market makers (and) with other day traders. The competitiveness...helps a lot as far as the way you think about things and the way you do things.

You win, obviously, when you make money, but as far as beating other market makers and traders, how do you gauge that?
When you go into a trade, I think the original thought process is your perception on which direction that trade is going to go. But you have a lot of market makers that use their own strategies often to make you believe that it might not be going in the direction that you had originally perceived. The more experienced you get, the more you can recognize the strategies that they're using and put that to your benefit.

They could be offering out a little bit on one side and maybe scare people into selling stock. Maybe other traders might think that this market maker is a seller and start selling, and the (market maker) might be buying stock on some of the ECNs, where you can't see who they are.

Any advice to aspiring traders?
Don't use the money that you need to eat. It takes you a year, two years, three years to become a good trader. Take your time; you'll do it. It's the guys that want to hit that home run every time, those are the guys that end up, you know, they're in, they're out.

Can you give me a ballpark figure on how much you made in 2000?
I did well. I'm happy and my wife's happy, too.