How To Start Trading: Trading As A Business

The idea of trading for a living is appealing to many people: you get to be your own boss, set your own schedule and work from home while enjoying virtually unlimited income potential. In addition to these factors, anyone with a computer, Internet connection and a small trading account can give it a try. Unlike many other jobs, no degrees, special training or experience is required.

Because of these factors, people often fail to acknowledge or realize the financial, emotional and time commitments that are required to build a successful trading business. Here are some quick facts about trading:

• About 90% of day traders fail within the first year
• There is no way to eliminate risk in trading
• There is no trading system that wins 100% of the time
• You will always have losing trades, even if you are a rock star trader
• You need money to make money – it will take a long time to get rich with a small trading account
• Successful independent traders can earn a comfortable income, but most do not become “filthy rich”

The ease with which you can start trading (just open a trading account and hit the “buy” button) in no way implies that becoming a successful and profitable trader is easy. Many of the 90% of traders who fail within the first year do so because they start trading without having developed any type of logical business or trading plan. Any business entered into with such a lack of planning is likely to fail.

There is also a lot of deception associated with learning the business of trading. Late night infomercials and hundreds of Web sites would have you believe that trading is easy and that anyone can generate a huge and consistent income from the financial markets. While there may be the rare case where a trader manages to make a huge amount of money in a short time, this is not the norm. For most people, trading involves a lot of hard work before becoming successful.

As a business, trading requires constant research, evaluation and discipline. There are no guarantees in the trading business, and you could work a 40-hour week and end up losing money. Anyone considering trading should make sure they have both the personality and financial means to take on this type of business activity.
You might ask yourself:
• Am I driven to succeed?
• How do I handle losing?
• Do I have time to dedicate to learning the business of trading?
• Can I stick to a plan?
• Do I have my family’s support?
• Do I have money that I can afford to lose?
• How do I deal with stress?
• Do I have realistic expectations?

If you want to become a part-time or full-time trader, it is important that you take the time to research and plan your trading business; these are essential steps in your overall success as a trader. This is not a profession at which you will become skilled overnight. Traders who start trading too soon or without a well-researched trading plan often find themselves back at the beginning, but with a lot less trading capital. Traders who have realistic expectations and who treat trading as a business – and not as a hobby or a get-rich-quick scheme – are more likely to beat the odds and become part of the group of traders who succeed.

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