A little over 10 years ago I was travelling by train from London to Manchester. The memory of it remains vivid because on my lap was a snapshot of my portfolio of shares and a six-digit valuation summary. I never literally saw that amount: the market eviscerated the swag within a month, along with the modest sum I had used to build it.

I was among a new breed of investor – the amateur trader – spawned by a potent alignment of catalysts. The sudden market appetite for technology stocks had catapulted valuations to stratospheric levels and seemed to make trading in hi-tech shares a one-way bet to riches. The internet had also brought the stock exchange in real time to anyone's desk, and the proliferation of online-dealing facilities had made dealing in shares a cheap piece of cake.

Today, online trading by retail investors is a huge industry. In the UK, many thousands of amateur traders log on each day in an effort to beat the market – that restless sum of countless, competing bets on the value of stuff. In the main, they fail. And fail quickly.

Trading losses can be as toxic in their effects as drugs and alcohol. They destroy livelihoods and relationships, and excite a loathing of others as visceral as any warped ideology. That's why many private traders' lives are private tragedies, or tragedies waiting to happen. And like the worst effects of drugs and alcohol, this dismal, daily architect of misery is a public spectacle.

For among the array of sophisticated services that mushroomed to tap the market in amateur trading was the formation of web-based forums such those at ADVFN and Interactive Investor, vast online communities that engage in the exchange of information, opinion and – inevitably – abuse.

When they work well, these message boards can be useful. Price-sensitive news is disseminated at a ferocious pace, and some of the research is as good as any from the big brokerages. But most online comment is not productive. It competes with, for example, hugely sophisticated software that instantly "reads" newswire announcements, whereby keywords trigger programmed buying or selling of shares. Meanwhile, message board posters are usually pursuing their personal vendettas – a mix of pathetic, misinformed and malevolent bile, valuable alone for the market myths they propagate and the light they shine on the shabby state to which thwarted greed, loss and self-inflicted hardship invariably condemns us.

The busiest boards cluster around volatile stocks for the obvious reason that punters have more to say when they are losing or winning money. Rising stocks reflect well on the perspicacity of the trader, while falling shares are the fault of directors, "shorters" or market makers – any reason, in short, external to the amateur trader. As miniature studies in cognitive dissonance, the comments on market message boards cannot be bettered.

The sickening, undiluted pain of losing money brings out the worst in most. The levels of invective and belligerence are often astonishing – the bigger the loss, the more concentrated the anguish. The witnessing of it only adds to the distress: capital well nigh evaporates before the wretches' eyes – nothing destroys wealth so mercilessly as crashing shares. And given that the vast majority of traders lose money, eventually losing everything, the online community of private investors is primarily one at war with itself.

Indeed, the war metaphor is perhaps more apt than it might first appear. For the loss-makers see themselves as casualties, and fellow sufferers as comrades. And because a shared distress is much easier to bear, they unite in weaving the usual tapestry of sophistry, some philosophical, most downright delusional: "It's only money", "One for the bottom drawer", "I'm in for the long term". It's the online equivalent of the Titanic's string quartet.

This state of affairs is fuelled by market myths, loosely based on ludicrous conspiracy theories or illiterate economics. "The market makers are holding the price down." Not true. Most stocks are traded automatically, avoiding the market maker. "It's a question of supply and demand; attract a few more buyers, and the share price will go back up." Not true. Buying and selling are a consequence, not a cause, of rising or falling value. And what of this hardy perennial? "What we need are a few director buys." Not true. There is no correlation between isolated director purchases and the performance of a share, even if they might briefly lift sentiment.

Meanwhile, consequences of the angst and the myths are very real. Optimists reckon that 80% of amateur traders lose money, which many have borrowed. The figure is probably closer to 90%. Nobody knows for sure. The stress of loss, of debt, of ignominy is certainly self inflicted. But it is also the gesture of once dreaming, now drowning wannabes.

• This article was commissioned after the author contacted us via the You tell us page