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Despite attending a three-week training class, day trader Aaron Newman lost several thousand dollars on his first day trading for EdgeTrade.com.

ACCORDING TO a recent survey by Momentum Securities, one of the largest day trading firms in the country, only a third of its day traders make a profit. CNBC talked to three people who make their living from day trading and, while one interviewee has found impressive returns from the practice, most people in the field say it’s a nerve-wracking, uncertain way to make a living.

YOUNG BUCK Chris Lorenzen fits the profile of the average day trader. At 26, he’s in the 25-to-35-year-old age group, he is college educated and he has had a previous profession. But unlike most day traders, Lorenzen makes much more than the $120,000 annual income of his successful counterparts. In 1998 he made close to $500,000 and he expects to make $1 million this year.

Four years ago Lorenzen earned about $12,000 a year as a clerk at the Chicago Board of Trade. Armed with a business degree, a day trading book and a $60,000 loan from his parents he started trading.

“I didn’t start making money right off the bat…It must have been a year and a half at least that I’d have a stomach ache every day,” said the Chicago resident.

That ache subsided as the profits piled up. Some of that money has gone into a $95,000 Porsche and regular meals at the Windy City’s fine restaurants.

On his first official day of trading for EdgeTrade in mid-May he got a taste of that fear. He quickly got in and out of Ascend Communications, Laser Vision Centers and Hauppauge Computerworks. At one point he was up $3,500 after being down $12,000. But by mid-day EdgeTrade CEO Joe Wald said Newman was trading too aggressively and advised him to scale-down his thousand-share trades to hundreds.

“Honestly, every time I go to lower amounts of shares, I can’t do as well, I bomb,” Newman told Wald.

Though Newman saw logic in his own strategy, he listened to Wald and cut back, but not enough; by the end of his first day Newman was down several thousand dollars.

While Newman may have been discouraged by his initial attempts at formal day trading, he has plenty of company. It’s estimated that most day traders will lose between $10,000 and $100,000 or more in their first six months of trading.

John Skiersch knows all about day trading’s dark side. The 33-year-old Chicago resident is working on repairing his physical and financial health after a disastrous experience in the world of day trading.

He was diagnosed with malignant melanoma in 1996, and he says his recovery has taken longer due to the stress he suffered from a year in day trading that began in 1997.

He went into the business because it had few barriers to entry. “It could be done on my own terms, when I wanted to do it. I didn’t have to do any school for it, no MBA was required, and no license was required. You could just go in and make your millions,” he said.

Skiersch, an entertainer whose stage name is “Johnny Vegas,” admits he wasn’t prepared for the high-stakes risks involved in day trading.

He says his brief stint as an insurance broker a decade ago was a “dismal” experience, and that he has never earned more than $30,000 a year.

He started trading with $125,000 he inherited and the knowledge learned from a book, and a day and a half of training. “You have absolutely no idea what you’re getting into. You’re one step into a thousand-mile forest and since you don’t know anything about what you’re not supposed to know you only know what they tell you,” he said.

Skiersch was so convinced that day trading would lead to lucrative returns he sold his $50,000 condo and maxed out his credit cards so he’d have more money to trade.

“It’s easy to see in retrospect, easy to look back and say you should have known, but it’s very difficult when you walk into that ‘casino’ and there’s endless opportunity,” he said.

SEC chairman Arthur Levitt is worried that there are more people like Skiersch out there. “I’m concerned that more and more people may be undertaking day trading strategies without a complete understanding of the risks involved. No one should have any illusions of what he’s getting involved in,” said Levitt.

The industry’s bad seeds have kept state securities regulators very busy. The officials have brought cases against several deceptive day trading firms, alleging deceptive marketing and lack of supervision.

“We’re concerned that not only are there people out there who have been the subject of some form of abuse or they are getting in over their heads, but that there are firms out there looking for new John Skierschs…We want to make sure they don’t get into the system without much better warnings and much better training,” said Phil Feigin of the North American Securities Administrators Association.

Skiersch says he wishes someone had explained to him how these trading systems really work and how long he’d have to pay his dues.

“I absolutely, 100 percent, know for a fact that if I had had more training or even if I had known more about the markets, there is no way I would have ever started in this business,” he said.