This post originally appeared in Money Stuff.
There are apparently a lot of people who really want to day-trade stocks or currencies or cryptocurrencies with enormous leverage, and a lot of unscrupulous (legal, semi-legal or illegal) online brokerages that will let them do it to their heart’s content. Those people will mostly lose all their money, though I guess they’ll have a good time doing it. But it seems a little wasteful, if you are one of those unscrupulous brokerages, to take those people’s money and lose it for them. Sure you’ll end up pocketing a lot of it, in the form of commissions and fees on all the trading they do, but a lot of it will just be frittered away into the market and end up in the hands of smarter traders. From your perspective, it is a leakage, an inefficiency. Your dumb client comes to you with money and asks you, in effect, to help him lose it. You can do that; that is your specialty. But why not just take it instead?