Day Trading and Direct Access: Taking Center Stage

Day Trading Keeps on Growing

Day trading market continues to grow, despite brutal downturn in retail brokerage

A new report from Celent entitled shows that not everyone in the brokerage industry is ruing the year 2000. Direct access providers, catering to very active day trading segments, have consistently reported rising volumes, which are expected to continue to grow. While the occasional or recreational day trading community has quickly dropped in numbers, those professional, experienced traders are still driving volumes in the market. The direct access firms, largely unfazed by recent downward market activity (in fact using it to increase volume) have begun to branch out past its traditional customer base.

Many brokerages are beginning to develop both retail and institutional services out of their core offerings. Some direct access firms, such as CyberTrader and Tradecast have been bought by larger retail brokerages (Charles Schwab and Ameritrade, respectively). Others are developing new services on their own or are partnering to provide these offerings.

The providers of day trading or direct access technologies reviewed in this report include:

• A.B. Watley
• Blackwood Trading
• CyberTrader
• ProTrader Group
• Spear, Leeds, and Kellogg
• Townsend Analytics
• TradeCast
• Tradescape
• Watcher Technologies

According to Fritz McCormick of Celent Communications, Direct Access technologies represent the next big step for brokerage firms. The impact will be substantial, as both discount and full service firms adopt the technology to some degree in order to differentiate themselves from competitors. It will also allow them to court more active trading segments, hopefully lifting currently low trading volumes.

A Table of Contents is available online.

of Celent Communication's Retail Securities & Investments and Institutional Securities & Investments research services can download the report electronically by clicking on the icon to the left.