For most people, day trading is a nostalgic concept, an idea that burned so bright in the late 1990s only to fizzle out amid lots of anger and disgust among ordinary citizens who were convinced the stock market was their calling. To remember the excitement the likes of Block Trading once generated, check out this cover story in Inc. The good times couldn't last, unfortunately. The firm imploded two years later. 

The "day trading industry" as we knew it then has passed on. But there are some die-hard believers in this industry and in the right of all people to at least try to trade like professionals. And they have found a way to resurrect the industry by offshoring it to China. That's right, firms are setting up shop in China, allowing retail investors to day trade U.S. stocks. 

"As many as 10,000 people in China are doing speculative day trading of American stocks--mostly aggressive young men working the wee hours here, from 9:30 p.m. to 4 a.m., often trading tens of thousands of shares a day," the New York Times reports. These firms, mainly U.S.- and Canadian-backed, exist in a "legal grey area." China "prohibits its citizens from using Chinese currency to buy or sell shares of companies listed on foreign stock exchanges, though there appears to be no prohibition against trading stocks for an account owned by a foreign entity," notes the Times.

For these start-ups, China offers a vast new frontier. But you have to wonder if the fate of day trading in China may end up being all too similar. The dirty little secret of the industry was that it depended on recruiting lots of eager, naïve would-be traders, who were convinced they had some kind of Midas touch. There were two types in the U.S. Some were financially backed by big investors and recruited traders who were allowed to trade the firm's capital. But  more common were firms that recruited traders to put up their own hard-earned money and then promised to train them to trade like the pros. Yeah right. 

Most of these people lost everything as the industry matured beyond the SOES bandits phase. They may have been able to ride a bull market for a while, but only a while. 

I'm not sure how the offshore model works specifically. But it, too, depends on recruiting as many novices as possible, stoking their dreams of hitting it big. Tellingly, one person said he prepared for the job by playing video games.

No one would be surprised if the deal called for them to capitalize themselves or at least post some capital. One firm, however, seems to be paying small salaries in addition to a cut of the profit. But troubling signs are already emerging. One company manager told the Times that turnover is high and most workers only last four or five months. 

Another troubling sign is that "the trading firms say they have unique trading strategies that give them an advantage," according to the Times. "Some say they use sophisticated risk management software that can, for example, interrupt trades after a series of losses to prevent large losses in a single day." We can only hope that's true. But in the end, most people on Wall Street, fairly or not, would consider these guys the dumb money. 

In this era of high-frequency trading, do they have a chance? We'll see. - Jim