October 11, 2012 - Forex, ETF Or Stock Trading . . . Is It A Business Or A Hobby? by Profits Run
How serious are you about your trading? To really be successful as a trader I believe that you must treat it just like it is a business. Like any business there needs to be specific guidelines that are followed, rules that are complied with and possibly more important than anything there must be a great amount of discipline. When running a business there are certain things that most business owners will do each day to prepare themselves for success. This could be reviewing a prospect or client list, mapping out the day to accomplish a specific set of tasks or making sure that each person in the organization knows exactly what is expected of them to have a great and successful day.
A trading business is not much different than any other business; we need to review the markets that we are trading in, we need to review currently open positions to determine if any adjustments are necessary and we need to look for new business or in this case new trade setups. Some companies provide specific products or services to their clients or to the general public buying products at the wholesale level and selling them at the retail level traders are simply acquiring financial assets at what they believe is the wholesale level and liquidating them at a later time at what they would consider the retail level.
Regardless of whether you are running a full time trading business trading for a living or you are running a part time trading business looking to supplement other income or looking to increase your net worth, the concept is the same. When you are at work you work and when you are off work you don't. This is partially where the discipline comes in. Since most trading is done over the internet it is very easy to get distracted reading email and going to different websites searching for different items but we really do need to stay focused when we are operating our trading business or it may turn into just a hobby.
I have noticed that some traders treat their trading business as a form of entertainment almost more like something to pass the time away like a hobby. This is fine of course if that's the level of participation they want to have or the amount of effort they are willing to put forth but I also notice that these are the traders that will typically lose on a regular basis and get discouraged and eventually leave the trading business. Experiencing losses while trading is just part of trading, it is the part that we do not like but it is still something that we all experience. If we don't pay attention to our business we may experience many losses which can get very discouraging so a trader that is not really engaged in their trading business will probably lead to a trader that is going to lose more than they will win. Of course this will not usually last too long and the trader will quit trading and eventually move on to some other form of entertainment.
If you are really serious about trading and look at it as a revenue source of some type do your best to keep your emotions out of your trading and be very dogmatic in your approach. Regardless of whether you win or lose on any given trade don't take it personal. If you win it doesn't mean that you're a great person any more than if you lose it means you're a bad person. Many traders get very emotional about the trades that they make almost acting like they are life and death decisions. Each trade is just a trade, it is a business decision, some work out well and some do not but regardless of the outcome if we follow our rules and are disciplined regardless of the outcome we must simply move on to the next trade.
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