NOEL KING, HOST:
All right. So during the pandemic, more people have been trading stocks online at home. This is a little bit like gambling. And some people are becoming addicted. NPR's Jim Zarroli has the story of a trader who lost tens of thousands of dollars and now is trying to stop other people from doing the same.
JIM ZARROLI, BYLINE: YouTube is filled with videos about how to make money day trading. The videos made by Matthew Jay are different.
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MATTHEW JAY: A hundred and twenty-seven thousand dollars. How did I do it? How did I lose it?
ZARROLI: In an interview, Matthew, who doesn't want his real last name used because it might affect his other businesses, says he discovered stock trading early on while he was still a business major in college in Ontario.
JAY: I like risk. I like to just know I have opportunity that's potentially there. So even, like, losing is, like, still like a high. Winning's a high.
ZARROLI: For the first six years or so Matthew did really well. He slowly turned a few thousand dollars into a nest egg worth more than 150,000. But he wanted to make money even faster.
JAY: I just want a more consistent income to be able to pull out money every week kind of thing. And that's why I got into day trading.
ZARROLI: As a day trader, Matthew would sit at his computer and make a dozen trades a day, trying to profit off of tiny fluctuations in prices. Thanks to the explosive growth of free online brokerage sites, millions of people have taken up trading. And they're doing so at a time when the stock market is going gangbusters. Ameriprise, Charles Schwab and Robinhood have seen dramatic increases in customer accounts.
BRETT STEENBARGER: People are stuck at home. They have nothing to do, you know? And so they ended up trading.
ZARROLI: Brett Steenbarger is a professor of psychiatry who coaches professional traders. He says studies have shown most day traders lose big.
STEENBARGER: On average, day traders do horribly. And the percentage that end up sustaining success are in the low single digits.
ZARROLI: At first, Matthew made money. But even when he came out ahead, it was somehow never enough.
JAY: And I found whenever I hit that new high point, I'm happy for a day or two. But then I'm upset that I'm not at the next level. So it was a constant battle of never being completely satisfied, really.
ZARROLI: And Matthew came to hate the isolation of day trading, sitting alone and staring into a computer screen for hours at a time. Several times he decided to quit only to get pulled back in. Keith Whyte of the National Council on Problem Gambling says day trading becomes an addiction for many people.
KEITH WHYTE: What became addictive was the high speed of play, you know, and they trade after trade after trade after trade. It's that same hypnotic effect that people report when they sit in front of a slot machine.
ZARROLI: Whyte says apps such as Robinhood encourage people to do risky trading. And he says these days he's hearing from more and more day traders who got in over their heads. That's what happened to Matthew.
JAY: So then it's like I try to jump in another stock quickly to make some money back. You take a loss there. And then you're just, you know, snowballing into another loss, another loss.
ZARROLI: His $150,000 nest egg fell to 50,000, then 40,000. He says his blood pressure rose. He stopped seeing friends.
JAY: There's two or three times, like, I, like, broke down, like, almost bawling my eyes out of, like, what am I doing? And like, this is, like, what I want so badly. Like, it's my dream to do this. And, like, how can I be, like, failing?
ZARROLI: That's when Matthew finally stopped day trading. Today, at 33, he's become a real estate agent, a job he says he's much better suited for. Matthew says there may be people who can make money day trading. The reality, he says, is that most people are going to lose.
Jim Zarroli, NPR News.
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