A trading floor is an office or room where people analyze and execute trades with the goal of making a profit. A floor can be run by a large organization like a hedge fund or investment bank. Alternatively, it can be run and operated by an ordinary person.
At Day Trade the World (DTTW), we believe in the power of trading floors. Our company has been in the industry for over two decades and is one of the leading players in trading floor solutions. Our clients operate their private trading floors around the world.
In this article, we will look at the concept of opening a trading floor and whether any successful day trader can run one. First, let us look at some of the reasons why you may want to start one.
Why start a trading floor
In our experience, there are several reasons why people consider starting their trading floors, including;
- More profitable - Running a trading floor is more profitable than being a solo trader. For example, you can have a team that trades during the Asian market, another one in the European market and another one in the American market.
- Fun - Trading as part of a team is more fun than being a lone trader. This applies especially when you are trading on a full-time basis.
- Avoiding mistakes - At times, when you are trading in a floor, it is possible to avoid making some mistakes. For example, you can have an accountable partner who prevents you from making these mistakes.
- Learning process - As an individual trader, you have one way of learning about trading. Being part of a team can help you learn from the rest of the team members.
- Market opportunities - As part of a team, you will have a better chance of identifying market opportunities from your teammates.
But now let's go and see what you really need to have to be a winner in this business.
» Related: How To Start a Trading Office And Make It Profitable
The keys to your success as a manager
Being a successful trader is not a fundamental requirement to be able to start a profitable office, but it is definitely a plus because you already know the mechanics of financial markets and possible problems.
To be successful, you just need to understand that day trading is very intense for the average person. A successful manager will keep heads cool on good trading days, and keep spirits up in bad days.
In the trading business, you need to remember that stock markets are always changing and you need to make sure your traders are aware of the changes.
Making sure your traders have all of the tools and information they need is important. A very important tool is, of course, fast and reliable day trading software. Day Trade the World has you covered there, with software designed by traders for traders.
Another extremely important tool is a strong risk management system. You need a system that takes some of the high emotions out of trading. A trading system that uses simple mathematics to handle risk. Once again, Day Trade the World has you covered there.
A key aspect that will determine the success of your trading floor is empathy. Empathy refers to the ability to understand the feelings of other people. As a trading floor owner, it is always important for you to be both tough and empathetic.
This concept is applied in a number of ways. For example, as a floor operator, you are aware that not all trades will work out well.
Therefore, when a trader makes a loss, it is important for you to stay calm and be empathetic about them. This means asking them the reasons why their trades made a loss in a nice and friendly manner. Having a rough tone on them could lead to a high turnover among your traders.
At the same time, you should avoid being overjoyed about the performance of a trader. Doing so, will likely lead to higher losses in the future.
To run a successful trading floor you also need to remember a few simple things. You should be constantly looking to hire new traders. With constantly changing stock markets, you need new people with fresh eyes to see new opportunities.
You need to be constantly training people. Getting them access to any information they need. And you need to actively manage the traders.
A trading floor is very high energy, there is a lot of excitement and with that comes highs and lows. This is where your people management skills need to come in.
» Related: How to manage working relationships in your office
The edge of having trading experience
If you were (or are) a successful trader, the advantage you have is knowing what it is to be a trader. You understand all the emotions a trader goes through.
Also, you may be able to teach any successful techniques or tricks you learned as a trader. If you understand these things you will be able to run a successful trading floor.
Running a trading floor is a fun and highly profitable venture that most people can do. At DTTW, most of our customers started their floors with little experience in the industry.
Discipline and dedication to work are fundamental, and allow anyone to make up a possible gap that there may be against (former) traders who have become office managers.
Therefore, we believe that any person can run and operate a floor. But they need to have access to good traders and equipment. They also need to have interpersonal skills to ensure that the entire team performs well.
External Useful Resources
- Should You Quit Your Job to Trade Stocks? - Investopedia