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There has got to be some market research firm out there that has studied this market. It is probably better to use their data than to generate you own since it will be more believable to potential investors.
I Goggled ["trading platforms" "market share"] and got 19000 hits. Maybe something there.
In any case, I suspect that the total market is small, hard to support, subject to litigation if people lose money because of software glitches, etc.
A good business model depends upon having happy customers and in this business, customers who lose money will be unhappy even if the trading platform is great...
Bob Fulks
At 12:56 AM 3/1/2010, alex@xxxxxxxxxxxxxx wrote:
>I'm looking for suggestions on how to determine the number of people who use platforms such like TradeStation for their trading. How would I determine what platforms have the biggest market share, and what is the size of the userbase for each platform?
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>I'm trying to develop a business plan for a start-up I'm working on. The plan must contain a market analysis; that is (from large to small):
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>1. How large is the SERVICEABLE market? (Say, speculators and possibly hedgers, but not fundamentals traders or passive investors who let an account manager do their trading)
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>2. How large is the ADDRESSIBLE market? (e.g. technical traders)
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>3. How large is the PENETRABLE market? (This is the most important question - this market would be, I think, the user base of traders who use platforms that we can support, such as TradeStation, NinjaTrader, eSignal, etc.)
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>I thought I could find out the TradeStation user base from their annual report, but I couldn't. They report $7.75 million in subscription fees in 2008, which would imply anywhere from 25,800 to 77,500 customers depending on the mix of brokerage ($100/month) vs subscription ($250-$300/month).
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>Even so, the high end of that range doesn't seem big to me - if we gain 0.1% of those customers to subscribe to our services, that's only 25 to 77 people. Maybe triple that for supporting other platforms like eSignal and NinjaTrader. It's tough to run a business that earns a living with so few customers.
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>Suggestions? Market analysis is always the most difficult part of any business plan. And not doing it is one reason why many new business fail or never get off the ground.
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>-Alex
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