Trading Like a Pro:
Running your Trading as a Business
David Bowden, founder of Safety in the Market, often emphasized that ‘Trading MUST be run like a business.’ He believed the key to success lies in adopting a business-like mindset in your trading. What adjustments can you make to refine your approach and achieve better results?
Running your trading like a business involves treating your trading as a structured, professional endeavour rather than just a hobby with a series of random and emotional decisions.
Here are eight key steps to help you approach your trading with a business mindset:
Set Clear Goals
Define both short-term and long-term goals for your trading, just like you would for any business. These could include monthly profit targets, risk management goals, or skills development.
Understand Your Costs
Just like any business, trading has overheads, know your trading costs – such as commissions, fees, and any platform or data costs. Factor these into your decision-making process so you’re fully aware of the financial implications of each trade.
Create a Trading Plan
Develop a detailed business plan for your trading. This should include your trading strategy, risk management rules, and entry/exit criteria. Be clear about how you’ll measure success and adjust your plan over time based on performance.
Keep Track of Your Performance
Regularly review your trading results. Just like in business, it’s crucial to track your wins and losses, identify trends, and adjust accordingly. This will help you learn from your mistakes and reinforce successful strategies.
Risk Management
Protect your capital by using risk management strategies like setting stop-loss orders, trading with proper position sizing, and limiting the amount you risk on each trade. This is akin to managing business expenses and ensuring sustainability.
Emotional Discipline
Running a business requires staying calm under pressure and making decisions based on facts, not feelings. The same goes for trading. Keep your emotions in check – avoid impulsive decisions and focus on your strategy.
Invest in Education
Like any successful business owner, continually invest in your personal development. Stay updated on market trends, refine your strategy, and seek out educational resources to improve your trading skills.
Profit and Loss Management
Understand how to handle profits and losses, just like a business manages its income and expenses. Be prepared to take profits when necessary, but also know when to cut losses to protect your overall capital.
By viewing trading as a business, you’ll bring more structure, accountability, and discipline to your approach, improving your chances of long-term success.
Here’s some free resources we have that will help you on your way:
- Free Short Course. Trading Plan Tune Up (you’ll also get a copy of the exact Trading Plan our students use!). Access it here.
- Article. Keeping Track: Recording your Trading Results. Access it here.
- Book. The Investors Quotient by Jake Bernstein. The Psychology of Successful Investing in Commodities and Stocks. You can find it here on Amazon here.
If you’re looking for more guidance, this is exactly what we teach in our Active Trader Program. We’ll show you how to identify and execute high-probability, high-reward trades with minimal risk.
Ready to treat your trading like a business, not a hobby? Learn more about our Active Trader Program here.