Treating Trading as a Real ‘Business’
Most people think the markets are too risky and their approach is hit or miss, pure speculation or worse, gambling.
I don’t consider myself to be an ‘investor’ or ‘speculator’ or ‘trader’ in the traditional sense.
The truth is, and this is exactly how I see myself: I am an entrepreneur.
As an entrepreneur I seek opportunities in the market as well as engage in buying and selling activities to generate the highest return on my investment and then simply manage my risk.
In this case, my product is options and stocks. I buy and sell them to make money.
All businesses buy and sell to make money – I just do it with stocks and options.
All good businesses manage based on numbers and ratios – I do the same thing – I manage by the numbers.
All businesses plan for profits and create opportunities for the largest return on investment (ROI) possible – I do too, except I create opportunities for the largest return on margin (ROM).
I know exactly what my maximum profit potential is before I ever place a trade. I don’t guess or speculate – I have a plan.
Then I simply manage the position and, if necessary, adjust my positions to remain profitable – or cut my losses through smart risk management techniques.
This is an Evergreen Business
This business will never change…
The principles, once you learn them are yours forever.
You could learn these and hand them down to your children and grandchildren… the principles will never change because the markets never change.
New products may come on the market – but the basics of this business will never change.
That’s why I call it an ‘evergreen’ business.
Unlike franchises or other types of consumer or business-to-business markets, the stock and option markets haven’t changed in 200+ years or more.
How Did I Discover How To Start a
Stock and Options Trading Business?
One day I woke to find a little extra cash sitting in a money market earning 1.5% a year. The next year it was earning 3%…
Wow – 3% a year.
I felt my money should be put to better and more productive use so I started looking into all kinds of franchise opportunities and other businesses to invest in… but they all had one drawback – the investment was large but so was the investment of time… something I really didn’t have as a father.
So after years of ‘hit or miss’ trading, I started thinking about trading as a real business – buying and selling stocks and options as a ‘business’.
I didn’t know if it could be done, but the idea intrigued me. I knew somebody, somewhere was making a killing in the markets and I was determined to find them, learn everything they knew and make a killing of my own.
I was determined to run my trading as a business, not as a gambler, and that meant looking at opportunities, supply and demand, marketplace dynamics and managing my business based on solid business fundamentals: profit, loss, expenses, overhead and return on investment.
Like any business, my only concern was to buy something that could be sold at a profit – and with enough of a profit margin so that the expenses (although small) were covered – leaving a consistent and reliable income.
The business of trading has all of these advantages.
The best part is…
This Business Can Be Managed
in 15 Minutes a Day
It has all the makings of the ‘perfect’ business!
The problem with creating a business based on the markets is that it seems like they are consistently changing and there was a lot of risk!
The markets go up one day and down the next! I was really confused which way the market would turn and since I hated the idea of losing money I tried to “predict market direction” because that’s how I thought money was made.
I got really, really good at ‘technical analysis’… I thought that held the key to profits… if I could tell where the market was headed it would be easy to make money!
I learned all about waves and candlesticks, MACD, ADX, CCI, Bollinger Bands and Fibonacci and hundreds of chart ‘patterns’… and I thought I ‘knew’ something about the future of the market!
Frankly, technical indicators are like crutches – they only help to support and validate your trading ideas already formed in your mind. They do not help you become a better trader or see the reality of the market.
There are only 3 technical indicators you need to run this business: support, resistance and trend lines.
That’s it. Keep it simple. Simple makes money.
I also discovered the Top 1% of all traders do the EXACT opposite of what I tried to do when I first got started…predict the market.