Powered trading as a business

Trading is completely different than the other företagtyper but it is still a business and you have to think about it as a business. Most traders start out on the wrong path right at the beginning by treating their trading like a trip to the casino instead of a business that requires structure, planning and that has real costs.

Just as with other companies it is a way to make money by getting more income than outgoing expenses. However, if you lose money and finally go bankrupt will be your expenses greater than your income.

Your costs to do business on the market

Lost business
The main costs of running a trading company is losing trade. Yes, you heard right, to lose business is, and should be seen as a cost to operating a trading company. It is important that you see it this way because it helps you to become less emotionally affected by your losses. Consider this instead; a restaurant owner will not be sad or angry when he has to order food or pay their employees because he knows that those things are just the cost of doing further business.

So your biggest expenses for your business are your losses. Every trader on earth, no matter how profitable he is, has any time been lost in the trade. You can’t avoid it, so just accept that you have to deal with the cost of all the lost business and instead of trying to avoid them, learn to manage them properly, but you must first accept them as a current expense (more on how to manage this fee, I will write later).

Another, less cost associated with the trade is ”mäklarspridning” or commissions. This will be an ongoing cost to you and you should remember that every time you enter a trade you pay a spread or commission to your broker. This is a real cost and you should think of it as such. Of course, day traders are often much higher costs associated with the spreads or commissions than swing traders like me (and you, I hope).

Create a handelskontor
The next major expense you will have as a trader is your handelskontor. Now this cost can vary greatly from dealer to dealer, but you need a good laptop, a desk and a chair. Some traders can choose a multiskärmar with the computer, which obviously can be very expensive. However, it is not necessary to trade profitably.

The good and bad news on the trading costs
Now that we have discussed the primary cost of doing business as traders, let us first discuss the good news about them. The good news is that you know what your costs are and there are not so many of them. Also, you can easily and effectively contain your costs as a trader. This containment is done by managing your risk when you are trading. It means that you do not risk more than you can really afford to lose, which is done by using the stoppförluster of course. To know how to properly place stoppförluster will also be a big factor to manage the risks and to maximize the reward. A proper placement can be the difference between loss or gain in many cases.

Now the bad news on trade costs. If you don’t manage and control them properly, they can grow, very much and very quickly. The fact is that if you don’t manage your risk correctly when you shop so you can lose all your handelspengar very quickly, quicker than in other companies.

So now you know the primary costs of running your trading company, although there can be others so it is them largest costs for most traders. Your goal is to make sure that you make enough money from your winning trades (revenue) to cover all the costs.

How to make your trade profitable
Now is the time to learn how to push your commerce business with profit.
As previously mentioned, runs a trading company with a profit when the revenue (money from winning trades) compensates the costs (losses, kontorsinstallation, etc).

The question then becomes, what can you do in order to your trade revenue should exceed your trade costs? Here is an overview:

Focus on the risk of belöningsförhållanden – At each and every trade you take, you must decide if the risk potential is sufficient to make the trade worthy. You need to be sure that at least a 2R or higher reward is possible at the same time as you see to it that you have your stoppförlust positioned correctly.
Don’t trade a lot – You do not need to trade with high frequency in order to make money. You must instead focus on teaching you to trade properly, with high quality / high probability.

Focus more on the ‘management of its finances – With the’ management of its finances I mean that you manage and control your risk per trade and look to a 2R or greater reward is possible even in the handelsutgångar. Most traders focus too much on the waste of things that handelsindikatorer, when in reality they should be much more focused on the pengahanteringen.

Make sure you know how you read Price Action properly – the Foundation for every successful commerce business is to understand prisdynamik and how to read and act from the pure PA.

Conclusion
What I want you to do now is to create a trading plan. A comprehensive but thorough trading plan is necessary for running a successful trading company. You can’t just float on and hope for the best. This is what most traders do and it usually ends with, a lot of lost money.

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