Curriculum·R408 The Professional Operating System·about 32 min
When to stop
By the end of this lesson you can
- →State the three stopping criteria, each computed rather than felt
- →Compute your hourly rate, net of costs, tax and the alternative use of the capital
- →Read a published base rate as a prior on your own outcome
- →Distinguish stopping the activity from stopping a strategy
Senior · enrolled learners
This lesson opens with The ESMA product intervention findings, 2018.
- What happened
- Ahead of measures agreed by its Board of Supervisors on 23 March 2018, the European Securities and Markets Authority collected analyses from national regulators across EU jurisdictions on retail contract for difference accounts. Those analyses found that between 74 and 89 percent of retail accounts typically lost money, with average losses per client ranging from about EUR 1,600 to about EUR 29,000 depending on the jurisdiction and the period examined. ESMA cited excessive leverage, the disparity between expected return and risk of loss, complexity and marketing practices among its concerns. The resulting measures included leverage limits, a prohibition on certain incentives, mandatory negative balance protection and standardized risk warnings stating each firm's own client loss percentage.
- The decision point
- The measure that survives all of this is the disclosure requirement, which forced every firm to publish its own client loss percentage on its own marketing. That number is the base rate for the activity, computed by the venue on its own customers, and it is now available before anybody opens an account. Nothing in this course changes what it says. What this lesson does is set out the three numbers you would need to compute in order to establish that you are outside it.
What you will be able to answer
- →What are the three stopping criteria?
- →How do you compute the hourly rate?
- →What is the excess over the alternative?
- →What is the published base rate?
Orientation and Year One are open: anyone can read them without an account. From Year Two onward the lessons are for enrolled learners, because progress through the later years only means anything if it is tracked against a record.
It is free. We do not sell the list and there is nothing to buy at the end of it.
Sources and review
- https://www.esma.europa.eu/press-news/esma-news/esma-agrees-prohibit-binary-options-and-restrict-cfds-protect-retail-investors
- https://www.esma.europa.eu/sites/default/files/library/esma71-98-128_press_release_product_intervention.pdf
- https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3423101
- https://faculty.haas.berkeley.edu/odean/papers%20current%20versions/individual_investor_performance_final.pdf
Confidence high·Volatility low·Reviewed 2026-08-07·Owner unassigned
Contested
Contracts for difference are a specific leveraged retail product and the 74 to 89 percent range describes accounts at firms in scope of the EU measures during the period examined. It is not a measurement of every form of trading. Per P6 it is used here as the best-documented published base rate for leveraged retail activity, alongside the Brazilian day trading study in this course's autopsy, and neither is a statement about any individual.
The hourly rate arithmetic carries forward the cost stack from R404-05, being 40 round trips a year on a $100,000 account producing $24,000 gross, $14,200 after costs and $9,940 after an illustrative 30 percent tax. The alternative return of 8 percent is a stated placeholder rather than a forecast, and per P10 nothing here projects any return for anybody.
This lesson is about a decision concerning money and time. It is not advice about anybody's circumstances, and it does not address the situations in which trading has become compulsive rather than optional. Anybody in that position needs support rather than arithmetic, and this curriculum is not it.