By: Johnathon Fox
Many people come to Forex trading looking for the ultimate lifestyle of wealth and freedom. Whilst this level is by no means unattainable it is these exact thoughts that tend to bring the trader undone. Instead of treating their trading like a business the trader is too busy committing all the errors that will lead to money being lost rather than money being made consistently.
What does treating your trading like a business mean?
Trading like any other sort of business is designed to yield a profit at the end of the month and year. Setting up and treating your trading as a business is all about doing the things that will give you the best chance to make a profit.
Whilst most traders would like to think they treat trading as a business they are still committing critical errors such as outdated equipment, not following a business plan and continuing to search for a holy grail instead of perfecting just one method.
Have the correct equipment
To give yourself the best chance to succeed you must use the best equipment available to you at the time. This includes;
- A solid trading platform that has minimal slippage
- A broker with a long standing good record
- A good computer to carry out your trading
- A back up platform such as a Tablet, Ipad or Mobile Phone with the correct charting equipment
The great thing about Forex is you don’t have to spend a massive amount of money to purchase the equipment you’ll need - but skimping on the essentials will put you behind all the other traders trading the same markets.
Find a method that gives you an edge over the market
When traders have the basic equipment for their business set up they need to decide on the method they are going to use to trade with. Changing from strategy to strategy will only take attention away from becoming profitable at the method of choice.
Make a business plan
A business plan is essential to any viable business and this is no different to trading Forex. Most traders don’t use a business plan but it is also true that most traders do not treat their trading like a business and most traders don’t make money.
Just a few things your trading plan should have are;
What you look for to enter the market and take a trade:
- The money management technique you use. Ex – how much money or % of your account you risk per trade
- How you manage your trades
- How you exit your trade or trail your stop
- Ongoing Education
Like any other business once you become profitable the education does not stop there. The markets are changing and evolving all the time and like all good businesses you must move with the times. Continually seeking further education and market knowledge will help you stay abreast of any changes to the market.