The Art of Trading Business

He means that properly managing your income producing assets is your business, and you should treat them as a business. It doesn’t matter if you have a trading account, mutual funds, real estate or CD’s. That’s your business. It’s called the business of trading for a reason.

Most people don’t come to the markets with the idea that trading is their business. They come with a dream of phenomenally high returns on their money, that it’s easy and that they’ll be on their way to riches in no time at all. Many new traders are sold on the idea that trading is easy.

Unfortunately for most, that is true. It is easy to trade. And money is being made in the markets every single day by a significant number of people Buying or selling a contract is as easy picking up the phone or clicking a mouse. There are nice long trends that quite a few people got in on, and market turns that many people timed just right and pocketed some tidy profits. Every day in the markets, lots of people make money. On virtually every trade, somebody makes money. (Of course, the market makers and brokers always make their money.) And though a few trades wind up with both seller and buyer breaking even, or losing just a bit in commissions and spread, generally speaking, on every trade either the buyer or seller makes money. This is a very encouraging thought. Now for the reality-check.

On every single trade somebody also loses money. Generally the loser is determined solely by the traders. No one is forced into a trade. And protecting your trading business is an action that you must take. If you’re on the losing end of a trade, it’s up to you to keep the loss small. And your winners require you to enter the trade at the right time and circumstances to take a profit.

In many respects, trading is similar to competition sports. There’s you and the person on the other end of the trade. A buyer and a seller. You bet against each other as to what the markets will do. The probabilities will be against you or the other trader. Related markets will move in favor of you or your opponent. Weather,unexpected events, related markets, governments, innovations, the crowd mentality with its reaction to news, etc, are factors that can change those probabilities in a matter of minutes.

Many factors involved in the market price can work against you, and you need to know what to do when they influence the market and change the probabilities. In order to be the on the winning end of a trade, you must first understand where it starts, where it may go, and what to do as events unfold. In other words, the trading business can be complex and confusing. It can also be simple taken one bite at a time, and be made understandable and profitable.

To start a trade business which is consistently profitable presents a somewhat formidable, but reasonable and very worthwhile challenge. First you must decide that you are going to invest your time to learn the things you need to know, to train and develop the skills necessary to stay in the game, and most importantly, that you’ll treat this endeavor with respect and not as simply an entertaining hobby.

It is, after-all, your trading business. Treat it that way.