Cashing in far away

Playing the markets in the wee small hours


Akihisa Fujita has always been a night owl. The 32-year-old former bartender spent much of his 20s serving drinks at high-end establishments in Tokyo’s Ginza and Yoyogi-Uehara districts, all the while dreaming of owning his own.

But after some thought, he realized it wouldn’t be much fun having to serve lots of people he didn’t necessarily like every night. It would be better to save enough money to open a bar and have someone else manage it, he reasoned. He knew he couldn’t earn that kind of money as a bartender, so a few years ago he swapped his job for another night-shift job, but in a completely different field.

While he still starts working late, around 11:30 p.m., he now works at home, and he works alone. And unlike his previous job, the stakes are extremely high — he could earn or lose a few thousand dollars in a matter of seconds.

He is a day trader. By definition, a day trader refers to someone who trades in an extremely short time span, such as hours, minutes or even seconds, and will typically pull all of his money out of the market at the end of the day. He is among a small, new breed of Japanese day traders who put their money in overseas financial markets to earn their daily bread.

Of course, he has a minuscule influence on the markets, compared with high-flying traders at Lehman Brothers or Merrill Lynch. After all, Fujita’s total investments are around 10 million yen, while each of the institutional traders would probably have millions of dollars at hand.

But Fujita’s passion for what he proudly calls his “profession” is just as intense. “It’s like I’ve finally met the girl of my dreams,” he said.

Fujita points to the short hours of work as the biggest attraction of trading.

“I only need to capture a market fluctuation of 10 to 20 cents and slice off $300 or so for myself,” he said. “If you manage to do that every day, you will rack up around 600,000 yen a month, which is more than what most people make.

“On some days, you reach that amount in 15 minutes. Then you have the remaining 23 hours and 45 minutes entirely for yourself. You can go read books at a library, or play saxophone in Yoyogi Park.”

Things are not always rosy, of course. He admits there are days when he gets burned pretty bad. One time, a power blackout in the United States caused his trading software to freeze up and trap his money in the market. He had to rush to the phone to ask his broker, through a KDDI interpreter, to cancel his order immediately.

As the U.S. stock markets have taken a dive recently, many of those who had quit their jobs to become full-time day traders during the day-trading boom of the late 1990s have dried up their savings and disappeared off the scene.

While Fujita refused to disclose how much he makes out of this high-risk, high-return business (he says his daily goal for profits is $1,000), he finds it relatively easy to make what he and his wife need to live comfortably in a 3DK apartment with a roomy roof balcony in Shibuya Ward.

“I don’t care about becoming a billionaire,” he said. “I just want to earn enough so I can admire flowers or spend time with my family. . . . It’s not that hard.”

However, on one recent Friday night, as he tackled his job with this trading-illiterate journalist watching over his shoulder, there certainly were moments of tension and anxiety.

He started up his two Dell flat-screen PCs and called up his trading software a little past midnight, which is about half an hour after Nasdaq opened in New York. The charts of various indices, ranging from the Nasdaq composite index and E-Mini 100 futures index to the Dow Jones industrial average and the semiconductor-sector index, immediately appeared on one screen, while on the other, a bigger chart of Intel Corp. stocks — the only shares he deals in — also popped up. They all showed real-time price movements in the markets.

The software he rents, developed by Japanese firm DayTrading Systems Inc., who also introduced him to a U.S. broker, allows every user to execute his orders immediately with a click of his mouse. This puts Fujita and hordes of other independent traders on a level playing field with Wall Street pros, at least in theory.

That night, the markets were sending mixed signals. Both Nasdaq and Dow were showing signs of a continued rally, following two straight days of gain. But Intel, a major player on Nasdaq, started the day with a “gap down,” which means the opening price of the stock was lower than the lowest price of the previous day, and it continued to fall in a zigzag.

“Intel wants it to go down, obviously,” he whispered after comparing charts. “But why? This is strange.”

At this point, worried traders would probably consult a financial TV news channel such as CNBC for breaking news. Fujita doesn’t. In the dead silence of the night, he tries to read the minds of market players and feel the momentum of the market solely through “technical analysis.”

To the eyes of the uneducated, this looks only as if he is randomly drawing diagonal lines on the screen with his cursor to connect previous highs and lows. To his eyes, it seems, this is all about divining “trendlines” and predictable patterns of price movement according to some fixed formulas and others that he’s developed himself.

“Aha!” he said after a while. “Today is the day for Nasdaq to go down after climing for two days.”

At 2:36 a.m., Intel hovered in the $20.12-13 range. Fujita somehow got the hunch that, at some point, Intel would rise to test the $20.25 level before coming back down. His plan was to buy 5,000 shares when it momentarily swings down to $20.07 and dump them at $20.23. If things went perfectly, he would cash in on the 16-cent gap and rake in $800. He would kiss the PCs goodnight and go drinking at Shimokitazawa or Shibuya, his favorite hangouts.

Following his master plan, he clicked on the “buy” button on the screen and typed in “5,000” and “$20.07.” Five minutes later, the price came down to $20.07.

“There you go!” he said in excitement.

The next moment, however, the price rose back to $20.08, and he was left with only 3,000 shares instead of 5,000. Now that he had a smaller volume than he had hoped for, he had to catch a really good margin, because every time he buys or sells it costs him $13.95, which he must pay his broker.

He clicked on the “sell” button right away, placing an order to sell the 3,000 shares at $20.23. It was 2:53 a.m.

We waited. Every minute felt like hours. At 2:58 a.m., Intel suddenly started tumbling down. It dipped to $20.17 . . . $20.14 . . $20.12. Now his scenario of selling at $20.23 was fading into the distance. Fujita looked worried.

“Should I sell now?” he said nervously.

But soon he got his confidence back. He changed his strategy, canceling the $20.23 sell order and throwing them instead at $20.10, gaining $90. Immediately afterward, he sensed a rebound, so he followed it up with a 5,000-share purchase at $20.12.

And soon enough, the huge currents came over, carrying Intel all the way up to $20.20, where he had made a timely offer to sell. He pocketed $400.

At this point, he had completed 10 trades and gained a total of $1009.73. His net profit after fees: $850.

Fujita called it a day.

The price continued to go up, with numbers dizzily flickering and changing to 20.23, 20.24, then 20.25. Fujita cast a quick glance, then walked away into the kitchen. It was 4:22 a.m.

“I told you it would go up, right?” he said, puffing away on a cigarette. “Am I not great? The market loves me.”