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Day Trading as a Business
Daytrading should not be done lightly, but rather should be undertaken with the seriousness, commitment, planning and time that one would devote to any ordinary day job. In that sense, every day trader - whether he’s trading to grow his own assets or whether he professionally manages the funds of investors - should write a business plan and stick to it as loyally as he sticks to his trading guidelines.
Although the details of business plan presentation will of course vary according to individual circumstances, there are a few important points that definitely merit inclusion. These include an statement of purpose, along with business goals and objectives, including specific monetary goals (often stated in terms of dollars per hour). They also include details about how goals are to be reached. (This is the place for time lines and deadlines, and criteria for measuring success.) A description of available and required resources, as well as complete guidelines on how money is to be managed, should follow. Other features include a list of business expenses, from brokerage fees and software right down to the details of telephone access and office supplies, and a list of contingencies, or worst- and best-case scenarios and your plan to handle them. Finally, no day or swing trading business plan is complete without details about the system on which you make your trades.
Your trading system, the backbone of the work you do, should be detailed in its entirety as part of your business plan. A total analysis of your system, with the results of extensive testing and the statistics that underlie your faith, should be included. It is to these statistics that you will return when your confidence wavers, or when you feel tempted to move on a hunch. Your business plan should support, and reinforce, your dedication to discipline as you weather the unpredictability of the futures or stock market.
A thorough description of your business, and what differentiates it from the competition, can be a nice addition to the trader’s business plan. This is where your personal flair fits in - anyone with the time and the motivation can pick indicators, crunch numbers, and develop a day trading system, but your system ought to be something special. Here’s where you can tell about it.
If your system performs as well in the market as it does in tests, and if your persistence and dedication are stronger than the greed and fear that sometimes motivate us, your day trading business should flourish. With a plan, it has an even greater chance at success.
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The copyright for this content entitled "Day Trading as a Business" has been specified by the contributor as:
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The copyright for this content has been relinquished by the author. The content may be used freely by anyone.
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This intel was contributed by Howard
Howard
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May, 2012
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