Trading As A Business
Trading in the financial markets, whether it be the Stock Market; the crypto farming vs staking Commodities Market; the Futures Market; the Forex Market; or even the Options Market; is taking big risks on your hard-earned money.
You have to treat trading as a serious business whether you are trading full-time or part-time if you are ever going to succeed and hold on to your profits in the long run.
Yes, you heard me right. You have to plan and manage it like a brick and mortar business.
There is no other way to succeed in trading or speculations if you are not going to give the due respect that Mr. Market deserves. If you don't respect the Market, the market will not give you the reciprocal respect, in terms of taking money out of the markets and hold on to them.
Once you have this proper mindset, we can move on to other important components that make up your trading business.
Trading Plan
The first thing you need to do before you start a business is to have a Business Plan. In this case, it is called a Trading Plan.
Now, this is the place to set your Goals that you want to achieve. Be as specific as possible while being not to easily or impossible to achieve. Set yourself a goal that is challenging to you without it being too big a goal.
Now, with your goal set, you have to break down this goal into smaller components of actions that will lead to achieving your goal eventually.
This is your action plan. Be detail and realistic. If you are working full-time and you can't always look at the market every minute, don't put an action that requires you to monitor your trading positions every moment. You get the idea.
OK, you have set your plans, what next?
Trading System
In order to survive and prosper in the long run trading in the markets, you need to be consistent in your actions in the buying or selling of your market products, stocks as an example.
You will also need a measure of what actions are right and which are mistakes. Believe me, without such a standardized and formalized measure, you will always think all your actions are right, even when you are losing money! That's the default optimistic human nature in control.
What you need can actually be found in a System. It is normally called a Trading System. A Trading System consists of Setup, Entry, Exit and Money Management strategies.
A Setup is a definitive set of patterns, ratios or conditions that you are looking out for when trading.
An Entry is the actual point where you are to "enter" into the markets, be it a "Buy" or a "Short Sell".
An Exit is as the label implies, the actually point or conditions when you should square-off/close your open trading positions. It could either be a profit-taking exit or a loss cutting exit.
Money Management or more specifically called the Position Sizing strategies defines and answers the question of "how much" to buy or sell in entries or exits. Contrary to common beliefs, this is actually the most important component of a Trading System. It can determine whether you can make it your trading career.
The importance of a Trading System cannot be emphasized more. You need a Trading System to perform consistently according to the changing markets as well as a guidance to tell you when your actions are right and when you are in great risk and danger.
There are two ways that you can have a Trading System. You can either design it yourself if you have the vast amount of knowledge in the trading field required in designing your very own trading system which takes enormous effort and a long and tedious total commitment of your time, or you can order one such Professional Trading System that has been proven to have a win-rate of 71.9%, as tested by an internationally renowned third-party vendor as well as my own experience using it.
