Trading for a living involves more than getting in and out of the market at the right time, and more than thinking about moving averages and indicators. Trading is a business, not just a job, and every business in the world has to be managed. Every business involves the managerial functions of organizing, planning, delegating, directing, and controlling. If you, the trader, are to perform these functions well, you must learn to practice self-discipline and self-control.
It is actually painful to see traders who are highly successful in their present occupations, yet who come into the business of trading for a living using few, if any, of the managerial skills that make them winners in their own area of specialization. They have entered into a high-stakes venture, but are acting as if there were no way to lose. By omitting the functions of management, they often lose a considerable amount of money. They blindly throw themselves, their time, and their capital resources at the markets.
There is much more to the business of trading for a living than just trade, trade, trade, with no regard for the managerial aspects of trading. Traders are generally defeated by their own bad habits.
If you have any bad habits, expect the market to discover them and destroy you with them. In the business of trading, you have to take every step possible to save yourself the pain of having the markets discover your weaknesses. You need to find those weaknesses yourself, before you are hurt, and learn how to deal with them. Do you stay in too long? Do you expect too much from a trade? Are you greedy? Do you find yourself ending up "the greater fool?" Are you overtrading? Are you selfish? Are you fearful? If you have any of those bad habits, they are problems; and for problems, there are solutions.
If you think trading for a living is the same as investing, you are way off base. You need to realize there is a vast difference between the business of investing and the business of trading. You need a wake-up call if you are trading from desperation or the opinion of others — even your own opinion is worthless! You cannot change the market with your opinion. The only thing you can do if you want to win is to get in step with the market.
If you are looking for the holy grail of trading, or if you are trading because you’re bored, then you need to stop, think, and take a good look at yourself.
Until you establish your trading as a business, you will find that you don’t know what it means to let your profits run — you won’t have any consistent profits! Until you discover your real personal risk tolerance, you won’t really understand the meaning of risk. True risk management involves matching your risk tolerance with the risk in the marketplace.
If you are losing money, it’s because you don’t actually understand losing! Believe it or not, there’s an art to losing in the market. You have to learn how to control your losses; when you do, the wins will take care of themselves!
Are you a trader who tries to reinvent the wheel? Are you a trader who shoots his mouth off? Do you lie to yourself? Do you change your trading plan in mid-stream? You need to fix these bad habits.
Are you getting out of a trade too soon? Are you afraid to be wrong? What are your character faults? Do you see them?
Do you suffer from lack of humility? Are you throwing good money after bad? Just what is your sad but true story?
If you’re a losing trader, you need to be taken apart at the seams, put back together, and placed on the path to success.
The business of trading for a living involves making and taking profits. In addition to finding the solutions to your problems, you have to learn the chart patterns for success, as well as how to manage trades and manage yourself.
Over fifty-five years ago, I (Joe Ross) went through the very same problems you face today. I had to deal with those problems, and believe me, I had many of the bad habits discussed in this article.
Partly to help myself, and partly to help others, I wrote down the problems and solutions in what has become a classic manual for traders. It’s called Trading Is a Business, and it’s about making money in the markets. The manual deals with solving the problems most traders have. Since I wrote the manual, I have discovered that there are numerous traders who are successfully trading for a living through using what they learned in Trading Is a Business.
Trading Is a Business caused one trader to write, "I have been trading for six years with limited success. Joe’s techniques have really brought my trading into focus. Joe’s trade and money management techniques in particular, have helped me to become more consistent in my trading. Learning to take some profits early on has made a huge difference." Simon H.
I knew I had succeeded at getting my message across when I received this letter: "Learning that trading is a serious business has changed my life. I was about to give up, when I began to fully realize just how serious this business really is. However, now that I finally woke up, I am a winning trader making money for myself and my clients." Mark C.
My manual has helped thousands of traders. You, too, might consider studying your own copy of Trading Is a Business.