If making money from trading is your goal, you need to treat it like a business: you need to be business-like in your philosophy and work habits.
Professional traders who work for banks and hedge funds have all the business processes in place for them. Their trades are monitored and they have managers watching their every move.
So what are your chances of being successful as a trader working from home?
With no-one to watch over you, no professional support system, a lot of temptation and no boss to answer to, it’s easy to destroy your trading account. The odds are stacked hopelessly against home-based traders. How can they succeed? Follow the tips below and start treating trading as a business.
My top tips on how to treat trading as a business:
1. Create a business-like environment
In order to maintain a business frame of mind, you need to set up a work space. You need to ensure you have the space to treat your trading as a business without being interrupted by your family or other distractions such as the TV and phones. If you were working from home, you would try to work in an office-type space. Do the same with your trading.
2. Create a trading routine
Most of us aren’t lucky enough to be able to go to work whenever we feel like it. The same applies to a successful trader. Choose the times of day you intend to trade and let your family and friends know. Not only will this ensure you are trading regularly and consistently, but also that your family and friends understand when you are busy.
3. Be realistic in your expectations
You can make a lot of money from trading, but it’s not going to happen overnight. You need to be patient to be successful. Set realistic, achievable goals and targets.
4. Create a business plan
What exactly do you want to achieve? When do you want to achieve it? What are you going to invest to get there?
5. Create a simple accounts system
Include weekly and monthly profit targets and results. Keep track of everything.
6. Find and learn a strategy that suits your psychology, your pocket and your time
For example, if you are of a nervous disposition, then news trading may not be the best fit for you. Research strategies and choose one that you find interesting and achievable.
7. Work on your potential weaknesses
It’s all about strengthening your weaknesses and ensuring you have back-up plans to overcome any obstacles you may encounter.
8. Learn to control emotions
As hard as it may be, in order to be a successful trader you need to stay focussed on the facts and persevere even when you feel like you’ve hit a dead end.
9. Make a check list of all the system rules that need to be in place before you place a trade
There’s no point placing a trade if you’re not fully aware of all the system rules. Make sure you are continually building up your knowledge of trading.
10. Practise on a demo account, ensuring that you follow all your new found rules
Get to grips with the rules and systems. It’s best to test the waters and check that you’re doing it right before using a live account.
11. Use a trading journal to record all trades that you place, including a screen shot of the trades
This one thing alone was a major contributor to my joining the 5% club. Make notes on why you take a trade and any doubts you have. Record the result. If it works, think about what made it successful. If it fails, think about why it failed and what you could do differently next time.
12. Be accountable
“Buddy up” with another trader in a forum or a reliable friend and show them your results. myfxbook.com or mt4istats.com are ideal for this.
13. Invest time in your career and never stop learning
The trading journey is a long one and it can take a long time before you become successful. Invest the time to keep learning and improving the way you trade.
Most people are surprised when I say that the strategy is not the most important part of trading. Even with the best winning system out there, many fail because they don’t treat trading as a business in the way I have outlined above.