“Day trading, one of the hallmarks of the stock-market bubble, is back, prompting online brokerage firms to slash rates to woo quick-fingered stock investors,” writes Jonh Hechinger in today’s Wall Street Journal.

“Firms such as Fidelity Investments are reporting that trading volumes are rising sharply, though they are still well below levels seen before the stock market peaked three years ago. The higher volumes, and competition among brokerage firms to attract this business, demonstrate just how strongly the market’s recent recovery has affected the behavior of individual investors and the companies that court them.”

“Day trading, the frenzied exchange of shares online by individual investors, by the day, hour or minute, acquired a poor reputation in the speculative bubble that popped in the year 2000. Indeed, this time around, brokers like to call it ‘active trading.’ The new breed of fast traders generally aren’t trading quite as rapidly as did the stock junkies of the late-1990s.”

“But whether brokers call them day traders or not, energetic online investing ‘is back in vogue and brokerage firms are all competitively trying to capture these traders because they are the most active base of customers,’ says Matt Snowling, senior analyst at Friedman, Billings, Ramsey, an Arlington, Va., brokerage firm.”

“Fidelity — one of the nation’s biggest discount brokers as well as the largest mutual-fund company — reported 59,976 average daily trades in August, up 16% from the same month the year before. Two big rivals, Ameritrade Holding Corp. and E*Trade Group Inc., have both announced recently that trading activity in September is up 30% or more from August.”

“Fidelity said Monday it would cut the commissions on stock and options trades almost in half for those who trade at least 120 times a year. Those customers will pay only $8 a trade. Fidelity’s best commission rate was previously $14 and available only to customers that traded 240 times a year or more.”

“Other brokerage firms, including marquee names such as Charles Schwab Corp. and smaller players including Track Data Corp. of Brooklyn, N.Y., are slashing commissions in the hope of capitalizing on the market’s recovery.”

“Analysts say that day trading correlates strongly with the technology-focused Nasdaq Composite Index, which is up 64% since hitting bottom last October. Charles Biderman, chief executive officer at TrimTabs.com Investment Research, says much of the quick buying and selling is focusing on the same sorts of technology and Internet stocks that populated accounts during the late 1990s. Starting in 2000, many of those investors lost fortunes, and many of the firms that egged them on have now shut their doors.”

” ‘There’s no indication investors have learned,’ Mr. Biderman says. ‘This is just another version of online gambling.’ “