Trading Is A Business!
Trading Is A Business!
I have been trading forex for 9 years & teaching & mentoring students for 4 years. Most traders fail due to the fact that they dive in to a live account very quickly and lose most or all of their initial money even quicker. They have no real concept of what is going on, no plan, no strategy but they have cash or a credit card.
The majority of new retail forex traders are gamblers not traders. I was. Why? because they treat forex like some kind of online game. If that sounds like you then either change your ways or take up poker.
A much smaller percentage of people do well in this early stage. That is usually not a good thing either. I have seen some potentially great traders who arrived, started to do well, sometimes very quickly and just as suddenly they blow up their account, decide forex is not for them and leave.
Often winning early on can be an equally bad thing, its usually luck. It leads to over confidence and people then think they have cracked it & yet they have no rules, procedures nor discipline. Over confidence kills as many accounts as lack of knowledge in my experience.
The solution is to approach trading from a completely different angle. If I was starting again I wouldn’t even go near a metatrader or any trading platform for the first month. Imagine if you had never flown a plane before and you wanted to fly F16 fighters. Would the military just throw you the keys? No way, firstly they would check your physical & psychological fitness. They would teach you all the theory, followed by many years of study & practise on smaller craft and simulators.
It would be many years before you even were allowed to touch one and yet with forex trading those nice friendly brokers give you this free piece of reasonably sophisticated software and guess what you can’t wait to try it. Its like the latest arcade game for grown ups.
One of my students wrote an article entitled “Treat forex trading like a hobby and it will pay you like a hobby. Treat it like a business and it will pay you like a business.” Adopting this mentality is crucial to your success or failure as a trader. If making money from trading is your goal then you will need to do just that. You need to be businesslike in your philosophy & work habits.
The majority come into forex with dreams of “getting rich quick” & to escape the day job in a matter of weeks. Trading is a profession. The first thing that you need to do is change your expectations. You can get rich at forex and relatively quickly but not overnight.
If you have a $1000 account how much can you realistically expect to earn in a week? $50 sounds like peanuts, but that is 5% account growth in a week which is a phenomenal return and will shatter most other forms of investment returns
If you can produce those type of results on a regular basis then you have a number of options. The ideal scenario is to put more money in your account to kick start it but if that is not possible then allow compounding to grow your account.
The secret to becoming a successful trader is learning to make consistent gains. When you add to that what Albert Einstein referred to as the “greatest force on earth” – compounding, and you can make more money than many top professionals.
Trading Is A Business!
Doctors & Lawyers for example study hard for many years and also work dreadfully long hours for low pay to qualify. On top of that they and most students now leave university or college with student loan debts of ten of thousands of dollars. One of my students is currently unemployed and yet has almost $100.000 of student loans to repay. His father had signed as guarantor and is having to make payments!
So 4 years at University and a $100.000 in debt to learn a profession, with no guarantee of employment in the current economic climate, so why do novice forex traders believe they can buy a few $99 forex products, throw $1000 in an account & expect to make big money in a matter of weeks?
Alternatively you may be considering opening some kind of business. Even something simple like a coffee shop will cost you many, many $1000′s in start up costs. Then there will be all the ongoing expenses such as rent, employees, insurances, local taxes, refuse collection, sales tax etc.
Forex on the other hand only requires an internet connection & your computer. In my previous business with over 20 employees the overheads were well over $100.000 a month before I made a penny for myself. As a forex trader my costs are less than a few $100!
Thankfully, the learning curve can be much shorter in trading but you need to think of it in terms of learning a new profession. It will take time and effort and persistence from you. There will be times when nothing seems to be going right. Plan in advance and learn to steer around, over, or through these obstacles.
The main hurdles we all need to overcome to succeed at trading are as follows in my experience:
– Create a businesslike environment, ie a desk & space where you will not be interrupted by family, television or telephone.
– Create a trading routine. Times of day you intend to trade and let your partner/family or friends know that you will be working then and not available to play.
– Be realistic in your expectations.
– To overcome this you need to set realistic, achievable goals & targets.
– Treat trading as a business and create a business plan.
– Create a simple accounts system with weekly & monthly profit targets & results.
– Learn a strategy that suits your psychology, your pocket & your available time, for example, if you are of a nervous disposition then news trading will not be a good fit for your mentality.
– Realise your potential weaknesses and create a plan to overcome them.
– Learn to control emotions and lack of discipline.
– Make a check list of ALL the system rules that need to be in place before you place a trade.
– Practise on a demo account, ensuring that you follow all your new found rules.
– Record all trades that you place in a trading journal, including a screen shot of the trades. This one thing alone was a major contributor in my joining the 5% club. Make notes as to why you took the trade. What doubts you had. What was the result & why did it work or fail?
– Be accountable: “Buddy up” with another trader in the forum or reliable friend and show them your results.
– Invest in your career in terms of time and additional knowledge.
– Never stop learning.
Most people are surprised when I say that the strategy is not the most important part of trading in my experience. I can give the best winning system in the world to 100 people and most will fail because they haven’t addressed the issues above.
Others will start to “tweak” the strategy and make adjustments. In other words, human emotions, unprofessional behaviour & weaknesses will destroy even the best methods. Professional traders who work for a company automatically have all the above and more provided for them. Those working for banks and hedge funds where traders are monitored and have managers watching their every move, so what chance does the person working from home have.
The trader with nobody to watch over him, with no professional support system. The person with lots of temptation and no boss to answer to, until the account has been destroyed. The odds are stacked hopelessly against home based traders IF they do not treat trading as a business.
I personally recommend this system, which I use and has given me excellent results … Forex Mentor Pro
Trading Is A Business!