Pardon for the long thread but thought of writing one where in I have tried to compare how you can look at Trading as a business and not something as a side income, if you intend to be a full time trader.
Trading v/s Business

Many people always say that if you are a full time trader then it should be treated as a business. And its very true. Being a businessman, I have tried below to mention some similarities between a business and Trading as a business.
1. GOAL:Before you start any business, you need to intern in that industry before you gain skills, salary is always meagre, enough to survive. If you are lucky you get a mentor in first job or you switch jobs till the industry excites you or you have a fabulous mentor.
In Trading, U need to identify the same. Internship is tuition fee which you have to pay to the market to understand ur strengths and weaknesses. This process will lead you to ur core strength and eventually zero down on a mentor.
Having said that, there are many great traders who are self taught themselves. Its just that the learning curve reduces with a good mentor.
2.Beginning: When you start a new business, you always start small. You need a back up to take care of initial expenses. May be savings, may be spouse is earning, something for sure.
The goal at the time is not to make huge profits, but make sure that you make enough to put food on the table for family and at the same time be your boss and have time for yourself. Same goes for trading. You have to, just have to start small.
You need a back up income or saving to maintain your lifestyle for at least 2 years or through proper market cycle. This is time, you make sure that you give back little to the market and take as much as possible within your capital and risk management.
3.Business: When you start a new business, you go to office every day. Do you get orders or payments everyday? No. You start making cold calls, find new prospects, pitch them your ideas, hoping they will give you the order.
You go to meetings, incur expenses with no guarantee that you will get that order and make profit. But, you gotta do it. Out of 10 prospects, 3-4 will give you the business and out of that may be 50% will give you the profit and rest cost to cost.
But, as a businessman you make sure that those 2 will give you the max profit. How? You go into backward integration and reduce your input costs.
In Trading you have to do just that. Every day on your desk at 9. Look for prospects based on your homework the previous day. Initiate the trades and place your Stop loss and ride your profits.
Here comes the most important part. In Trading, ur loss is in your face right there. But if you look closely, in your business if you treat each prospect, each cold call as an expense head individually, u will see that the business you lost to a competitor is effectively a loss
Its just not in your face at that time. Just like in business, we focus that we should be profitable at the end of the year, same goes for business. Just like we let go the prospects which we think will not give business, we should cut our losses.
And just like we make sure that we keep our clients happy, we should run our wining profits. Treat this as a business. Be fully aware of only one thing which is most important. How much can I afford to lose in a particular move and still be emotionally and financially stable?
Write down your goals, set a realistic timeframe to achieve them and then work hard towards it.
Good Luck!

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