- Professional traders do not consider trading as a hobby.
- When you take trading as a business, you develop a proper plan that becomes your stair to reach heights of success.
- Also, you prepare yourself for the uncertainty, risks, losses, and stress.
We often find professional traders advising us to treat “trading as a business.” Most of the amateur traders and investors consider this a meaningless phrase and continue to do it in their own way. Is this a good approach to neglect the advice of the best traders across the globe? No, it isn’t. Those who don’t pay attention to valuable pieces of advice, often find themselves on the wrong end.
Every new trader who set foot on the trading island wants to emulate George Soros and other successful traders who made their way to success against all odds. What most of those newbies forget that even the most successful traders had a roller coaster ride to success meeting small successes as well failures. It was their professional excellence and ability to learn from mistakes that kept them going. What is the top traders’ take on trading? They take trading as a business and deal with it accordingly.
Why it is important to take trading as a business?
Trading is a business that is why you invest money in it. No one can take it as a hobby and aspire to achieve success. Only those who take trading as a business can aspire to scale the heights of success. Why? Because they adopt a business’s approach in their trading and work for long-term success. Thus, you also need to have a similar stance to trading in order to remain within the 15% threshold of successful traders.
Why 85% of traders fail?
Stats illustrate that only 30% of companies remain in the market after 10 years of inception. 70% of companies fail to complete 10 years. Trading stats are even more bewildering. 85% of traders fail in the trading profession and only 15% taste the fruit of trading. The reason is, trading is a profession full of turns and twists. You always need a proper approach in trading to achieve success. That approach is taking trading as a business.
How you can take trading as a business and what are the requirements?
If you enter the world of trading to make crazy money, your chances of success are minimal. Passion is the driving force that drives people to succeed in any profession and trading is no exception. You have to be passionate about this profession to cope with the inevitable difficulties like losses, setbacks, and failures. If you think you are passionate about trading, then enter the world of trading but to take it as a business as trading is business itself. Let us see what do you have to do if you take trading as a business and what are its requirements.
Companies that fail during their first few years of inception fail because of a lack of profits and insufficient funds. On the other hand, all the successful companies have sufficient funds to replenish their resources to make profits. That is what trading requires. You need to have sufficient capital in order to cover expenses and compensate losses. Moreover, you cannot forget about living expenditures as well. Therefore, it is imperative to have sufficient funds to replenish your trading account. If you trade with money you can’t afford to lose, trading isn’t for you until you have sufficient capital to trade while meeting day-to-day expenses.
Knowledge, competence, and experience
According to an old adage, knowledge is power. If you have the knowledge, you have odds of success in your favor. The knowledge of trading and the world of stock markets is absolutely imperative. Then the skills aspect is a real issue in trading. You cannot expect to achieve success when you don’t the skill set required. Finally, experience is the key to success in trading. Therefore, learn, learn, and learn to develop skills and gain experience. Perhaps, a demo account will do the trick for you.
Dreams are elusive and have nothing to do with reality. If you set goals based on your dreams, you cannot achieve them and the result is stress and disappointment. In order to avoid it, you need to set realistic and achievable goals to keep your morale high.
If you start a business without a proper business plan, you are doomed right from the start. Not only do you need to have a proper plan but plan within a plan to objectively assess the efficiency of your plan. Similarly, trading isn’t trading without a proper trading plan. A trading plan with all the necessary parameters for making decisions is absolutely imperative for successfully trading. Moreover, an objective assessment of a trading plan is as important as the trading plan itself. A deep analysis and assessment enable you to find out your weaknesses and what went wrong in losing trades. You also find out your strengths and strategies that led to successful trades. That’s how you improve on your weaknesses and capitalize on your strengths.
Looking at the general picture
Businesses that ignore the general picture and don’t bother about knowing changes that can negatively affect business get hit. Those who keep a wide spectrum in front, know the changes taking place in the industry, rules and regulations, business environment, etc. take appropriate measures to tackle those issues. Conversely, those who never see it coming to fail to take necessary steps that prove costly. The same is for the traders. They should look at the wider context and see, even predict, what is coming and what is needed to cope with it.
The final words
Professional traders do not consider trading as a hobby. They pursue trading as a business because, for them, trading is a business. A number have traders have incurred huge losses for taking trading lightly. Trading is a difficult endeavor that requires a lot before letting you taste the fruit of success. When you take trading as a business, you develop a proper plan that becomes your stair to reach heights of success. Moreover, you prepare yourself for the uncertainty, risks, losses, and stress. That is why professional traders emphasize that trading is a business. Thus, take it as a business and act accordingly. Otherwise, prepare yourself for failure and regrets.