A lot of times, new traders look at trading as a way of spending their spare time much like a hobby. In other times they look at it as a golden goose, expecting it to provide them with extra cash much like a simple investment. The truth is, traders with this kind of mentality tend to end up losing money.
The best way to look at your trading is to look at it as a form of business. As with all businesses, the goal is always to make profits. As such for this trading business, you want to make profits through trading.
In the following steps, I show u how you can turn your trading into a business using a few steps.
To begin with, since this is a business we should always aim to take as little as possible from your business at the beginning.
Once you have decided on how much you will need to make and how much you will take out, we can start to build this into a process goal. This can be a weekly or monthly target.
Next you have to determine your fixed costs, such as your desk fee, computers etc. it’s exactly the same as running a business. Once you have these costs, you can factor them into your target goals. Other costs can include variable, brokerage and commissions etc. Trading losses can also be factored into this. As a trader, you should be focusing on these costs as you have control over them. Such as for losses, we are able to control them by working in our best emotional state or we can reduce the amount of leverage we are using on each trade and focus on managing the trades better.
So start thinking about trading like a business and think about what are the kinds of decisions that you will make.