Hi guys, hi from Andrea Unger! Today, I want to discuss a bit about trading as a profession, focusing on the approach that those who want to go into the trader profession need to adopt.
Consider Trading As a Business
You might be willing to trade as a hobby, and that is absolutely fine. However, if for some reason you think trading can become your source of income and you want to be trading for a living, then you must definitely consider it as a business.
What do I mean? I mean that you must think about the direction you want to take, and then structure every single step in that direction, as if you were a company that is looking for expansion on a market, for example.
So, what do companies do? They have a business plan, and that is exactly what you have to do: you need to create your own business plan.
So, you should look inside yourself and see what kind of trader you are. Decide which trading style works best for you, and then structure yourself in that direction.
In order to structure yourself, you need proper training, so you must invest in education.
This is what companies do, they invest in training and education. If you want to go into the trader profession, you must look for a quality mentor and identify which of his products work best for you. Once you have identified them, you can invest in them.
Another crucial point is to build a proper software and hardware structure.
As for hardware, you need a good computer, of course, and possibly put every software and platform on a cloud server, VPS or a thing like that, in order to protect yourself in case of internet failures at your home, power supply issues and the like. Such problems do happen, believe me.
As for software, you need to choose programs and platforms that meet your requirements, depending on your trading style. If you are a discretionary trader or a scalper, you just need a good and fast platform and broker.
If you want to be a mechanical or systematic trader, you need a good software that allows you to build your models to get signals out.
The Trader Profession and Costs
If you trade automatically, you must take all the costs of your business into consideration.
There might be one-shot costs at the beginning, (for instance when you purchase software licences) and monthly or annual costs (such as those related to market data and real-time data).
These are all things you have to pay for and probably you have to pay for them on a monthly basis, because markets require fees to deliver data to you. All these things must be considered when you calculate the costs of your trading business.
Last but not least, and this is the bad part of it, you must consider all losses as costs. Because there are losses.
Many people don’t tell you this, but there are losses in trading. We look for medium-long term profits, whereas along the way, on the short-term, there are clearly some losing trades. This is perfectly normal.
To sum it up, these are the costs of your business: education, software and hardware, losing trades.
Don’t ever cheat when you calculate them. For instance, when a trade is a loser and it’s supposed to be stopped, just stop it. Don’t keep it open, pretending that if it’s open, you haven’t lost that money yet.
Don’t do that – it’s just a way to cheat. Stop it and consider it as one of the many costs of your business, thinking that there are costs in any business.
So, if you really want to go into the trader profession and do it seriously, consider all the possible costs and don’t ever forget to include losses and losing trades, as they are the costs of this type of business.
Stay tuned to get more info on this.
Good luck from Andrea Unger!