To position the firm as the industry leader in a responsible approach to active trading, On-Site Trading wanted to emphasize the importance of knowledge. With Spector & Associates, the firm created an online examination for prospective traders and a game show to make that point in an entertaining way at trade shows.
When Mark Barton went berserk and killed eight people in two Atlanta brokerages in the summer of 1999, a firestorm of press and regulatory criticism descended on day-trading. Brokerages established to allow their clients to trade actively came under severe criticism for enticing the unwary with promises of easy money and virtually instant wealth. The practice of day-trading, a particularly vigorous form of stock trading, became almost a pejorative term, as critics pointed out that almost three quarters of day-traders lost their money, even in the strongest bull market in history. All forms of active trading were tarred with the “day-trading” brush and all electronic brokerages with the questionable practices of a few.
On-Site Trading, Inc., a firm for professional traders headquartered in Great Neck, New York, set out to counter this impression head-on. The company caters to professional traders, who make their living trading stocks for themselves. Most of its traders had come from Wall Street and held the appropriate securities licenses, so they knew the stock market ropes. However, the bull market of the late 1990s inspired a new wave of traders from other professions. On-Site Trading was interested in getting their business, too, but only as part of a long-term relationship that presumed a certain level of competence on their part.
Spector & Associates recommended that the company set a new industry standard by creating the first examination for prospective traders. Without passing the exam, posted on its web site, traders would not be accepted to trade with On-Site Trading (applicants with securities licenses were exempted). The examination demonstrated the company’s commitment to the importance of knowledge in trading successfully. Posting the exam on the website also exploited the interactivity of the Internet in a novel way. The firm’s advertisements on Bloomberg Radio encouraged people to take the test. Slightly more than half the people who take the exam fail it the first time, so it is not a perfunctory exercise.
On-Site and Spector then adapted the examination for one of the company’s key marketing tools: industry trade shows. The examination formed the basis of a game show called “Who Wants to be a Trader,” that underscores the importance of knowledge in trading. Contestants were asked some of the questions from the examination, plus others based on Wall Street lore, by a Regis Philbin impersonator. Those who answered ten questions correctly won a $50 gift certificate and became eligible for a drawing whose top prize was a fully equipped trading station worth $5,000.
The introduction of the examination at the end of 1999 and the game show early in 2000 produced favorable comment in both industry and general interest media. Several reporters, including one from Newsday, took the exam and built stories around it. Business Week reported on the game show and published several of the questions. The game itself was a big hit at shows countrywide, drawing large numbers of players and even larger numbers of spectators.
- Build awareness of On-Site Trading
- Position On-Site Trading as a sound corporate citizen.
- Raise awareness of the importance of knowledge in active trading.
- Rebuild the image of an industry damaged by reports of sharp practices by some firms.
- Break the perception that all active traders are day-traders.
- Regulatory authorities
- Use emphasis on knowledge to build On-Site Trading’s corporate identity
- Position On-Site Trading as a good corporate citizen, taking steps beyond the regulatory mandates for the securities industry.
- Build credibility by setting high standards for prospective customers, ensuring traders are qualified and understand the risks inherent in trading.
Online Examination: To answer the criticism that the online brokerage industry had been too quick to accept the commissions of people who knew little about the markets, a direct response was created. On-Site Trading became the first brokerage to require prospective traders to pass an examination.
High Standards: Beyond the examination, On-Site Trading also set high standards for itself. All of the company’s advertising is vetted by the NASD (National Association of Securities Dealers) prior to being aired. Many industry ads were criticized for promising easy money in a business that is, in fact, very difficult. On-Site Trading has also adopted the financial standards for active traders suggested, but not yet required, by the NASD and SEC.
“Who Wants to be a Trader?”: To communicate the company’s emphasis on the importance of knowledge in an entertaining way, questions from the examination, plus general Wall Street lore, were adapted into a game show, hosted by a Regis Philbin impersonator, and held at trade shows around the country. The crowds that gathered to watch the game were so large, the game drew prospects to both the On-Site Trading booth and those immediately adjacent to it as well.
- On-Site Trading enjoyed continued growth, doubling the number of offices in 2000 and experiencing a rapid increase in both traders and inquiries from prospects, both in person and online.
- Media coverage of On-Site Trading, which had been almost non-existent, increased exponentially, ranging from local publication like Newsday, the Oakland Tribune, and The New York Observer, to business media like Business Week and ZD-TV, and industry publications like Technology Investor.
- “Who Wants to be a Trader?” was played by several thousand people and observed by many thousands more at trade shows throughout the United States.