If a new trader wants to be a successful, they will need to treat their trading like they would operate a profitable business. Many traders lose a lot of money by approaching trading like it is a hobby. In trading, making money is the goal, and must be kept at the forefront of a trader’s mind if they are to be successful. Fun and excitement in trading can be expensive entertainment. The reality is that most of the time, trading is boring. A trader must treat the market like they would any other business, utilizing discipline and great care to grow their capital and be successful.
- You can’t open your trading business until you have a full business plan.
- Your inventory is your current positions; you have to buy them for less than you intend to sell them.
- Your customers are who you sell to; they have to be willing to pay more than you bought your positions for.
- Your mind is the manager of your business; you can’t let pride, fear, or greed lead to an unprofitable mistake.
- Your business must have insurance to manage risk. Stop losses and hedges are your insurance against big losses.
- Location is everything. You must conduct your business where there are ample buyers and sellers so you don’t get stuck with positions that no one wants.
- Your current positions are your employees. You have to keep the ones that produce gains, and fire the ones that lose.
- Expansion of your business can only happen after your first location is successful. Once you have mastered a system of entries and exits you can add new markets and systems.
- Your trading capital and your positions are your inventory. Lose that and you are out of business.
- The only reason to be in business is to make money. If you don’t make money, you need a new business plan.