Gunslinger by trade
Sunday June 06, 1999By Liz Garone
STAFF WRITERMOUNTAIN VIEW -- Numbers surround David Fast. The Nasdaq ticker tape rolls across his TV screen. He has four flatpanel computer screens con stantly streaming stock prices.
But Fast is fixated on just one number.
"Don't turn green on me," he shouts, slamming down his hands as the line representing Dell Computers starts to turn up, a movement that could cost Fast hundreds of dollars.
He shakes his head, sips from a steaming mug of latte, and dives back in.
Fast is one of a growing le gion of day traders wooed by the bullish stock market. Unlike traditional investors, day traders don't think in terms of months or even weeks; they deal in minutes and seconds. For a seasoned day trader, holding the same stock for even an hour can seem an eternity -- overnight, unthinkable.
While it is impossible to de termine how many day traders there are, the number of people using their computers to trade -- from home, work, and com munal trading houses -- is esti mated at 7 million and is expected to grow to 23 million by 2003.
Many day traders say goodbye to their regular jobs, and some bet their life savings on a daily basis. But 57-year-old Fast, considered a "senior" in day trading years, has taken a more conservative approach to a business that is rarely that.
Fast has yet to quit his fulltime job as president of View point Engineering, despite having once experienced the rush of making $6,000 in eight minutes playing the market. Now he's more conservative. He'll get out of a stock if he loses $500 and he quits once he's made $500 for the day.
"For the 22-year-old gun slinger, David would be as fun to watch as a pot of water boiling," said Tim McAdams, president of Pacific Day Trading in San Jose. "Different person alities require different trading styles."
Fast wants to make day trading his only profession someday -- but not until he can average $1,000 to $2,000 a day. As he feels more confident, Fast said, he'll gradually increase the amount of trading he does each day.
"I'd be happy with $200,000 a year," he mused. "Trading three hours a day and playing golf, not too bad."
The dark side
Fast has seen the good and bad of the market. He had his day in the spotlight, which could have made him a millionaire had he averaged that amount, or something close to it, the whole year.
But he also has known the darker -- much more common -- side of day trading.
'"A lot of people think it's just like money lying in the streets," said Fast, shaking his head. "Trust me. It's not."
In his first six months at it, Fast lost $27,000, almost onefifth of it in only a couple of hours.
"I hope not to repeat a day like that," he said, his eyes still fixated on the main screen de spite a rare moment of down time. "But I'm sure someday that I will."
Despite such a risk, Fast is hooked on day trading. The lure, for him, comes from the opportunity to be his own boss but without the usual hassles and expenses.
"It's a business where you have no inventory, no em ployees, no customers, no nothing," he said. "But, at the end of the day, you have cash."
Last November, Fast took an investment guru's seminar at Pacific Day Trading, which, he is convinced, turned things around.
"He taught us that all that mattered was when we sold," Fast said.
Six months later, Fast is out of the red and up $12,000.
Initial investment
To get where he is, Fast chose the more expensive of two routes day traders usually go. He could invest through typical online brokers and pay smaller fees, but online trades can take minutes, a delay that could wipe out Fast's profit.
Instead, he pays Pacific Day Trading for a direct connection to the company's servers and the Nasdaq market. That allows him to make instantaneous trades.
When he started out a year ago, Fast took the company's boot camp: 65 hours of handson learning. Then, he practiced with simulated trades in the safety of Pacific's offices. For the next few months, he trained (with his own cash) on one of the company's 62 terminals. Eventually, he graduated to the comfort of his own home.
None of this came cheap. The 65 hours of class and two weeks of supervised training cost $1,500. There was also a set-up fee of $350 plus $350 a month for access to Pacific's servers. Plus, each sell or buy costs $22.95. (If a trader aver ages 10 trades a day, the $350 monthly fee is waived. But, Fast -- with a year of trading under his belt -- makes only two or three trades a day.) A minimum of $25,000 is required to open an account. Plus, there's the cost of his computer equipment, which Fast estimated at $4,500.
"If you want to succeed at trading, you have to treat it like a profession," Fast said. "You have to make the commitment."
A typical day
On an early morning in the bedroom-turned-office of Fast's condo, only a few blocks from Netscape headquarters, he sat glued to the four screens, as he does every weekday morning.
By 6:30 a.m. PST, when the market opened, he was ready, his pre-trading tasks out of the way: making a latte, turning on the computer, reading over notes from the night before, surfing investment sites, and chatting online with trading pals.
At 6:49 a.m., only 19 minutes into the trading day, Fast was doing a dance with Dell: First, he borrowed 1,000 shares of it from Pacific, then he turned around and sold them at 40.69 on a gamble that they would continue to fall -- and he could buy them back at an even lower price.
Then he waited. And waited.
"Come on, come on. Give it to me," he pleaded with the screen.
"When you're in this business, you talk to yourself a lot," said a desperate Fast, pressing his index finger to the screen, hoping to somehow coax the line back down. "There's a lot of pleading and praying go on around here."
At 7:38 a.m., he couldn't hold back any longer as the tip of the line wavered close to 40. He bought 1,000 shares at 40.13.
And made a $562 profit.
"That's it," he said, taking his hand off its precious posi tion on the mouse and swiveling his chair around away from the screens. "I'm out."
But behind him Dell continued to fall.
Had Fast waited only a couple more minutes, that $562 profit would have become $1, 700 as Dell dropped more than a full point.
"But you just don't know," he said. "You can't go back and say, 'What if?'. You just have to learn to live with the decisions you make. That's what it's all about."