Article Trading As A Business

T2W Bot

Staff member
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You’re a trader, right, not a shopkeeper and there can’t possibly be any common ground between the two can there?  Just a minute, though, both are trying to make a profit from the transactions they undertake and both are concerned about their bottom line and their overall and continued  profitability. In short, both are in business.
As a trader it is quite likely that your Trading Plan will concentrate its focus on how you will approach individual trades. It will probably have quite a lot about how and when you will enter a trade, rather less about how you will guard against excessive loss and less again about how and when you will take your gains. Your bottom line probably won’t rate much of a mention at all. A Business Plan, however, will concentrate its focus on the bottom line and recognise that individual transactions are important only in respect of the contribution they must make to keep that bottom line healthy.
This article asks you to think of your trading as an...


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Experienced Article

The article is clear and very experienced written. Also 'the way a trader looks at a potential trade' is made very realistic. In experience, this is the way it works. Hiranjgarbh K K Missier
 

foroom lluzers

Veteren member
3,611 135
It is a well written theoretical scenario , if only traders could be disciplined and follow it .

I would also agree and disagree with the following"<span>Failure to properly control your losses is the main reason why so many are unsuccessful at their trading and why so much is written about its importance".While failure to control losses is the outcome , the underlying drivers to losses , it is the enemy within that leads traders to failure , the enemy is the 12 inches between the ears.It is the psyche and how our ancestral brain is wired to misbehave in the markets.If it was that easy to follow your article ,trading is simple and easy ,why are so many unable to do it?
</span>
 

barjon

Legendary member
10,332 1,570
It is a well written theoretical scenario , if only traders could be disciplined and follow it .

I would also agree and disagree with the following"<span>Failure to properly control your losses is the main reason why so many are unsuccessful at their trading and why so much is written about its importance".While failure to control losses is the outcome , the underlying drivers to losses , it is the enemy within that leads traders to failure , the enemy is the 12 inches between the ears.It is the psyche and how our ancestral brain is wired to misbehave in the markets.If it was that easy to follow your article ,trading is simple and easy ,why are so many unable to do it?
</span>
Because, as you say, the enemy is between the ears which causes people to ignore or bend their rules. Particularly letting small losses become big ones and undoing the gains of many earlier trades.

You often advocate a set and forget type approach and I'd go along with that and setting orders if one does not have the discipline. You do lose every "discretionary" type consideration in your approach of course.
 

foroom lluzers

Veteren member
3,611 135
Because, as you say, the enemy is between the ears which causes people to ignore or bend their rules. Particularly letting small losses become big ones and undoing the gains of many earlier trades.

You often advocate a set and forget type approach and I'd go along with that and setting orders if one does not have the discipline. You do lose every "discretionary" type consideration in your approach of course.
This type of trading ,as suggested in your article , is playing into the hands of all psychological demons within us .These are stress responses and reactive patterns,emotions (revenge trades ,frustration over trading ,fear ,greed), need to be right , automatic subconscious trading mind ,confidence , state of mind , beliefs , cognitive biases , loss aversion (trading your bottom line) and others.

Your beliefs in the article ,as to how to think about trading , should really be defensive , it would lead to blocking all the loopholes to failure.As an example prepare for
1)what if t/a set up fails (it is easy to say take a loss but hard for a trader to do).
2)Failure of market timing
3)failure of trend breakouts
4)failure of self discipline

Most traders are not prepared for the above failures .This is where IMHO it goes wrong for most.

If you can now give a set and forget version of your trading beliefs , it will block the arousal of most psychological demons .I am having a constructive view on it.I would love to apply your beliefs in the article , to set and forget strategies.

A simple example of such strategy is :buy a weekly call option on the Dax every Monday at 9 a m , after a lower close in previous week.Do nothing for the rest of the week. It can be profitable , easy trading and it can block the demons.
 

barjon

Legendary member
10,332 1,570
".....
If you can now give a set and forget version of your trading beliefs , it will block the arousal of most psychological demons .I am having a constructive view on it.I would love to apply your beliefs in the article , to set and forget strategies........
The main problem is taking the stoploss. If you haven't got the discipline it's not easy to take a loss if the trade goes against you if you "just have it in mind" where to take it. Easy enough, just set the stoploss order before you enter the trade. If you haven't the discipline not to tinker with it as price gets near then do the "walk away and forget" bit.

You would, of course, sacrifice any chance of lesser loss (or gain before target is reached if you've put in an order for that) with discretionary action.
 

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