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[T1215]Trading Is A Business

by Mark Crisp, Mar

Are you bamboozled by all the hype and get rich quick schemes in Forex Trading? Surfing on the Net. I see hundreds if not thousands of them each day. Amazing claims. Make $2 million by next year from my $100 program. Make 30%+ every month. It's amazing. Talk about appealing to people's greed. But I guess it must work or they wouldn't be doing it. Forex trading isn't like that though. Real forex trading that is. I am talknig about building a real business in forex trading. Small, steady gains. Not stomach churning losses and roller coaster gains from week to week.

Forex trading is a business. You must treat it like one. You can make good profits but it is not all plain sailing. You will have losing periods to put up with. And this is what determines whether you will be in the game for the long run or out on the first losing period.

I am horrified when vendors tell people they can effortlessly make 30%+ per month. Yes you might be able to do it the odd month but EVERY method will have losing months. That I can guarantee and if you are making 30%+ on your good months then the only way you are doing this is to take huge bets. You are using leverage way in excess of that you can withstand.

I always tell people ask your-self this. What do you want to make each month? Let's say they say 20%. (cough, cough) I say ok. So if you lose 20% in one month you are fine with this? They usually squirm a bit and say ok. So I then ask if you have three successive losing month at 20% you are still ok with this? That means losing 60% of your account in order to chase those massive 20% per month gains. Are you ok with this?

Now the gambler will say Yes. I'll take a chance. That's why they are gamblers. It's like running red lights. You might get away with it for a while until wham.

The professional will not stomach those kind of losses. If he is managing his own money it's simply not tolerable. If he's managing other people money then there's no way people are going to invest with a trader who will have 60%+ draw downs.

So before you get all excited about winnings ask you-self what you are willing to lose in order to chase those returns? It's all about risk/reward. If you want the big gains you better be able to take the large losses.

That's why I am happy with 4-9% monthly returns. I do not want to lose more than 15% of my account and I know I can make a great living with these kind of returns. It takes time. If you make say 70% per annum then after a few years you have a six figure account and growing. It's like a snowball. So can you if you treat it like the business it really is.

There's a huge myth out there that stock trading isn't a business. Some even go as far as to call day trading no different than gambling. While this can be true in some instances, stock trading done well is just like any other business. The reverse is true as well: To be successful in stock trading, one must follow sound business principles.

Just like any other business, to succeed in stock trading, you must approach your business as a business. This is not some fly-by-night get rich scheme; this is a potential career for you to invest time, money, and education into. In other words, to succeed in stock trading, you have to treat it seriously and professionally.

Just like any other business, before you invest a single dollar you should have a plan of how you plan to invest. In business, this plan is called a business plan. In investing, this is called a trading system. Without a trading system, a stock trader who trades on blind emotion really is no different than a gambler at the racetracks. Basically you need a system or amethod to adhere to. This is where most go wrong. Even the ones who realize this buy into the "emotional" methods. What do I mean by this? Methods that appeal to what we want not what we really need. Most losing methods I see do the wrong things at the wrong time. They overtrade. Take profits too fast and do not cut losees fast enough. so do the opposite.

Finally, to be successful in your stock trading business, you must have superb management. Management in stock trading involves managing yourself ? Having the discipline you need to take yourself to success. It does no good to have the perfect trading system if you can't follow the system. Oftentimes new investors shoot far past their trading limits, hoping that a stock will ?come back up.? This is an example where poor management cost the investor hundreds or thousands of dollars.

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Mark Crisp has sinced written about articles on various topics from Investing and Trading, Finances and Hot Stocks Pick. . Mark Crisp's top article generates over 18100 views. to your Favourites.