Crazy New Business Model

So many trading services are focused on enabling trades. I don’t know of any stock services that are wholly focused on keeping you from losing money. So, how ’bout this hypothetical service? The genius of it is, people pay for it with a fraction of the money that they would have lost if they didn’t have the service. So, from a certain perspective, it’s better than free for them while still making me truckloads of cash.

This is not real but a thought experiment! I’ll set up a service, where I’ll send out alerts on days when conditions are especially bad for small account daytrading. When the alert goes out:

1. The client goes out and enjoys life that day.
2. The client’s account is automatically drafted for 0.25 * their average loss
3. The client’s trading platform will only start in demo mode, unless the user manually dismisses a warning pop-up.
4. Dismissing the warning drafts another 0.25 * avg loss from their account

I think, this way, everybody wins. I help them enjoy some free time, and keep them from losing their shirts. They pay me far less than they probably would have lost if they had traded. If they are so sure the markets are right for them, they can opt to trade anyway with the burden of starting in the red by half of one normal trading loss.

The sad thing is, I could probably make a lot of money even if I dropped item #2, since so many traders can’t seem to stand the thought of not trading on a given day.

Of course, this idea isn’t very practical, because (1) studies show that nobody wants services for anything but trade entry ideas. Even risk management seminars have relatively poor attendance, compared to seminars on indicators and patterns. (2) without hooks into all the major trading platforms, it would be impractical to implement the locking and account drafting features, and keep people honest about what their average loss is.

A Twist
But, here’s a twist on that idea, which unfortunately doesn’t make me, personally, truckloads of cash. I think, deep down, most traders know when a day is not right for their trading style, at least some of the time. On those days, why not take 0.25 R out of your account, and go out and spend it on something fun rather than trading that day? Maybe whatever that activity is would be enticing enough to keep you from putting on bad trades just to fill your time. Think about it. What would you rather do… lose $800 in a long, frustrating trading day, or spend $200 on yourself (or your kids, or your spouses)? From a certain perspective, on top of the fun you had, you actually made $600 by not losing it on forced trades.

And of course I wouldn’t complain if you always donate to Move the Markets every time you stop yourself from making bad trades due to reading my articles… :-)