Another idea by cm69
- Thread starter cashmoney69
- Start date
You're doing nothing other than describing a contract for difference (CFD) as someone else picked up on. These are as old as the hills but only been available to Joe Schmo from Cocomo in the last couple of years.
You'd never be able to replicate the service offered by a full broker on this (unless everyone on planet earth signed up... making you a broker!) and the only people you'd attract would be halfwits who have no credit anywhere else- for good rason. You'd be simply picking up bad debts.
Your head is in the right place though- keep thinking about angles and understand where value gets added and you might well come up with something. Just remember, there are guys who are trying to do the same thing who know the business and have made money from it day in day out for years. Keep plugging away.
You'd never be able to replicate the service offered by a full broker on this (unless everyone on planet earth signed up... making you a broker!) and the only people you'd attract would be halfwits who have no credit anywhere else- for good rason. You'd be simply picking up bad debts.
Your head is in the right place though- keep thinking about angles and understand where value gets added and you might well come up with something. Just remember, there are guys who are trying to do the same thing who know the business and have made money from it day in day out for years. Keep plugging away.
How bout an insurance company that reimburses people on bad trades? .
No offence but I think you need to learn a bit more about investment instruments a bit more in order to develop some kind of product that fills a gap.
If you are thinking about insuring people against adverse moves in the physical instruments they are holding, this is exactly what derivatives (options, futures, credit default swaps etc.) were developed for. It just so happens that the leverage involved in these products also make them far more economic to trade, in terms of capital required, than holding physical instruments like stocks and a bond with a face value of $1million!
If only more people actually understood why derivatives exist, they'd probably learn a bit more about how/why they move the way they do.
Think about it- if you are a bank or someone with a significant portfolio in S&P 500 stocks, you don't want to be completely at risk of wiping out 50% of your value if another 1987 comes along. Therefore, you pay a PREMIUM, for an option(s) which mirrors the index as a whole and give up a few hundred basis points of potential return to sit safe in the knowledge that there's no way you will wake up one day with an account which is worth less than the email telling you that you're fired. This is nothing more than insurance. This is also why it is possible for structured products like capital guaranteed funds to exist.
Again, your head is in the right space but products exist to fill this gap. If you are a fund (hedge, index or even a big trader) you need to have risk control and be able to protect value in almost all circumstances. Without this, stories like Amaranth's would be in the paper every day.
They been doing this. Its call prop shop. 
True, however many people go to casinos for the atmosphere, not just to play the games and lose money. It's a full 'experience' vs. online trading.
Ok, I get that... but exactly who are you going to target to allow the end user who does not have access to cash on their own the ability to trade with leverage thru you?
I'm still trying to figure out who exactly you are targeting with this. You mentioned earlier someone that does not have access to cash immediately... OK, if you go after those people, how are they going to pay you in the case of losses? If you target those with cash, why bother paying you 20%?
This is not meant to be negative post CM, I'm just trying to see where you would go with this in terms of marketing if you did do this.
Ok, devil's advocate - if I am successful at trading on my own, why engage a new 'risky' biz like your idea here? There's going to be A LOT of paperwork involved to make a simple stock purchase that I can do in 30 seconds on my own. Again, what advantage are you providing here and to whom (other than yourself)?
And as I mentioned, IF you pursue this, you need to consult top notch securities lawyers, accountants AND the SEC.