Trading Business – Introduction
I often interact with many traders in my line of work. We meet in conferences and in online forums. I have also been fortunate to interact with some of the best traders and investors in the world. One thing that has made me realize profitable and consistent profits over the years is the fact that I take my trading as a business. This is also something I have learnt from the people I interact with. This article highlights some of the key reasons why you should start your trading business.
#1 – Trading is a Business
When you are a full-time trader, the fact is that you are actually an entrepreneur. You have possibly seen the high-flying hedge fund managers like Dan Loeb. They run their billion-dollar hedge funds as businesses. This is the only difference between you and them. Possibly, your account has less than one million dollars. However, you need to realize that these fund managers don’t trade their own money. They invest for the big pension funds and sovereign funds. To some extent, you are better than them because you are not under pressure to perform. To start a succesful trading business, they had to create their business plan and present it to their client. They also do everything that ordinary entrepreneurs do.
#2 – More Discipline
To become a successful trader, you need to have the highest level of discipline. This means that you should have a set of principles that you follow on a daily basis. Research has shown that successful entrepreneurs rank discipline as the most important thing in their business. For instance, they open their businesses every day early in the morning without anyone telling them. They fire employees who are not productive. They also keep their earnings safe without spending it. They also record their income and balance sheet consistently. This discipline enables them to remain in business for a long period of time. As a trader, this is what you need to do. If you are not disciplined, you will not be a trader for a long period of time.
#3 – Records Will Give you More Details
One success factor in trading business is record-keeping. Entrepreneurs constantly record their sales, expenses, cashflow, and their financial position. Doing this enables them to measure their performance over years. For instance, they compare their first quarter profits this year with their performance in the previous year. Doing this enables them to see whether their business is growing, stagnant, or declining. If it is declining, they take measures to improve. As a trader, taking records will help you evaluate your performance over time. Many traders assume that they can remember the details without recording them. However, as you trade more years, you will see that you can’t always remember the information. It will also give you more details about your income so that you can take care of the taxes in the best way.
#4 – A Better Trader
When you take trading as a business, chances are high that you will become a better trader. This is because having the entrepreneur’s mindset will help you take trading more seriously. It will remove the perception that trading is a hobby. When you are running a business, you take it so seriously because it is your bread and butter. Making a small mistake can take your business south. This is how you should take your trading. You should take it so seriously so that you can avoid making mistakes. Remember that a simple mistake can cost you your entire funds.