One morning, in lagos, I was going through a program I purchased a few days ago. The content of this program was quite interesting and challenged my beliefs about forex trading.
However, the thing that really got stuck in my mind is this: “Forex Trading has to be treated as a business”.
After reading those few words for the first time, I couldn’t entirely get it. What does a business have to do with a trader making money on his own in a coffee shop or at home? Well, after a bit of reflection, I got the answer. It made sense. The key to trading success is to treat trading like a business.
But wait for a second …
What does that mean? Does it mean you need to rent an office and hire 4 employees starting today?
Nope. That won’t be needed (relax feeling!).
But, it does mean that you must put in place things that you see in the business environment.
A business has some level of structure and processes concerning how things are done. In trading, the same applies, from the moment you open your computer to the moment you go away, you are running a business.
Below are 4 aspects I learned while working for big companies. Those will allow you to treat trading like a business:
- Write A Trading Plan
In business, several people stress the advantages of having a business plan. The main purpose behind it is to get clearer on what the business will be doing and how it will compete against rivals. Trading is no different and a good plan will go a long way.
If you are serious about trading but never took the time to build a trading plan, then you have a new task on your to-do list.
A well-thought trading plan is what separates amateurs from professional traders. It is also what changed my trading overall return. At a time where my trading didn’t bring any profit, I got serious and made a trading plan. It was the most rewarding task I ever performed.
At a time where my trading didn’t bring any profit, I got serious and made a trading plan. It was the most rewarding task I ever performed.
If you want to get more details on how to write a good trading plan, check out my Guide to the Ultimate Trading Plan. Remember that a trading plan doesn’t have to be hyper-long (or boring & using useless words).
This plan, however, will be your key trading document.
It will include all the information needed for you to perform at your best from the moment you wake up to the moment you complete your trading day.
If you have a trading plan written down, congrats! You’ve performed the first step to treat trading like a business!
- Have Routine Meetings
I used to work in an aerospace company. Every morning at 8:00 a.m., we had what we called a morning meeting. It was a way for us to share with others what was going on. By laughing a little bit and talking about our last evening, we could start the day on a positive note.
By laughing a little bit and talking about our last evening, we could start the day on a positive note.
Sometimes, we could even get tips from others!
Similarly, as a trader, you must set a specific time before starting your trading day to get encouragement and enter in a good mood. This is a crucial step, especially if you have traded at times during which you don’t necessarily feel on the top.
For instance, I used to trade right after coming back from work. I was working full-time and would run at my trading desk as soon as passed through the office door.
I quickly realized, though, that this schedule wasn’t optimal. I would sometimes have trouble focusing on a chart or I would make mistakes when entering a trade. I fixed this situation by taking a quick walk outdoor just before trading.
I fixed this situation with ONE SIMPLE THING… by taking a quick walk outdoor just before trading.
It allowed me to relieve my mind and to refocus my attention on something else.
This is why, in trading, you have to schedule regular moments or meetings with yourself such as a walk in nature or whatever will get you in a good focused mood.
Unlike at the office, you can do that meeting alone.
Isn’t that wonderful? We call that reviewing
The goal of those meetings is to get ready to trade. You can also schedule yourself a meeting to review your trades (but more on that later…).
- Use Careful Planning
Some businesses are recognized for their meticulous planning phase. In this process, they look at how things will be executed in the future. That is great as long as the planning has an end.
In trading, it absolutely crucial that you take some time to plan your trading strategy. This means researching, defining, and backtesting your strategy.
To know more about this process take a look at The 3-Step Process To Plan Your Trading Strategy. It explains how professional traders plan before implementing a new trading strategy in order to make profits right away.
Skip a step and you may be surprised at how hard it will be to implement your strategy profitably.
However, one thing must be mentioned. You must be very careful. Not enough planning and you set yourself to failure. Too much planning and you’ll never reach your goal. Make it a habit in trading and in your like to plan only for a limited time period specified in advance.
- Perform Periodic Reviews
Think about those yearly evaluations at work where employee achievements and the company success are reviewed. This is a how businesses find ways to improve for the next year.
For a trader, reviewing means looking over past trades and making sense of what has been recorded in his trading journal. You would be amazed to know what a trading journal can reveal.
Following the review of your journal, you can tweak your strategy to make it even better. I recommend traders to review their journal at minimum every month, ideally every week simply to get a glimpse of what occurred during the last few weeks.
As my boss kept saying, “What gets measured gets improved”. In other words, maintaining a proper trading journal and reviewing it is the second key to trading success.
Here are questions you might want to answer while reviewing your trading journal:
What did I do good this week?
How did I improve compared to last week/month?
What can I do next week to get even better results?
As you answer these questions, keep a positive attitude in mind. The goal is not to find your faults but to find what you can do to finally become the best trader you can be or at least improve in the coming week.
How To Truly Treat Trading Like A Business…
Although you can make your trading more like a business in several other ways, having a trading plan, scheduling meetings, planning carefully, and reviewing your trades are things you can do to progress effectively.
By implementing these aspects in your trading, you are almost certain to see improvements over a short period of time.
Remember that nothing here has to be as fancy as business stuff. Often, I noticed that companies are more concerned with the amount of paperwork as opposed to the quality and meaning of the content. Try to do the opposite and keep it simple!
If you do any other things businesses do in your trading activities, leave a comment below and we can talk about it.
At the same time, I challenge you to pick one thing in this article and to implement it from now in your trading. Let me know if that works