Turning your forex trading into a successful business is a process that is no more difficult, or easy, than the process of guiding any other business, engaged in any other business segment, toward becoming a profitable venture. If you approach your forex trading activities as a business, and follow the same sound business practices and procedures as all other entrepreneurial, start-up enterprises, then you’ll be building a strong foundation upon which you can construct a framework to support your success. The methods, and the rules, are identical.
Your first task is to recognize that your forex trading is, indeed, as much of a legitimate business enterprise as is the butcher shop or bakery down the street. You must approach it precisely as such: a regular business with regular hours backed by regular capital and leveraged in a fashion similar to other businesses in the same industry sector, and not as a hobby to be dabbled in at whim. Decide which hours will be your trading hours, and sit down to trade every day at that time; decide from where you will be trading, and make sure that your pc or laptop is comfortably located somewhere quiet and free from distraction. This is your office.
As with all businesses, your forex trading will need to be based on a sound business plan. Understand and define your product and your market: in your business, your products are your trades, and your “market” is literally the market for your chosen currency pairs. Whether your product is of a more standard variety, because you choose to trade in any of the more common currency pairs, or whether your product is more exotic, you must understand it and its value at all times.
As is normally the case, your business plan should also address the subjects of financing and leverage. Your start-up capital will be the funds that you have available at your disposal for trading purposes. Regardless of the magnitude of your original capital stake, keep some of your funds in reserve, so that you can cover your margins—the equivalent of a company retaining cash for debt service—if necessary. Practice sound fiscal and cash management policy by never trading more than a minimal amount of your total cash on account at any one time, so that you remain in a positive cash flow position.
Although your forex trading business will not incur any marketing costs, your business plan should thoroughly provide for the sales function. Target your projected sales by deciding your “take profit” and “stop loss” points prior to the beginning of trading. As Chevy was forced to do with the Nova and Sony with the Betamax, learn from your sales blunders. If you plan and budget for your expenditures correctly, you should be able to take intermittent losses, which are a normal aspect of forex trading, in stride; in your industry, they are no more than a simple cost of doing business. Indeed, a provision for losses should be factored into your total cost analysis, together with such additional costs as account, brokerage and software fees, if any.
You can research your sales and risk management functions prior to finalizing your plan by opening a demo account with one of the many online brokers and trading virtually for a period of time to familiarize yourself with the rhythms of the “market” in which you will be “selling” your “product”. The expertise and finely-honed skills that you gain through this practice will help you to maximize profits and minimize your losses, and this R & D will allow you to constantly fine-tune your “brand”: you.
As with any business, the key to achieving forex trading success lies in crafting a well-researched and well thought-out plan, and sticking to it. Understand that your forex trading activity is a business like any other, and approach it in the same professional and measured way. Above all, be reasonable and patient in your expectations. Successful, profitable businesses need careful cultivation, rational, realistic goals and informed professional management if they are to reach and maintain their full potential.