Should forex trading be viewed as a business? There are probably a few people out there who would dispute that assertion. They might argue that in any kind of financial trading there are no guarantees that you’ll actually make money. After all, if you could just as easily lose all of your investment, and even end up in debt, then trading should not be treated as a business in the sense that you come to rely on it for your main income.
The case against
According to this argument, forex trading should be enjoyed as a hobby. Take the rough with the smooth, and don’t invest more than you can afford to lose. Do it because you enjoy it and if you make a profit then treat that as a welcome bonus. This is basically treating forex trading as gambling and is the kind of advice given to those who want to gamble responsibly. According to this viewpoint, forex trading isn’t a reliable way to make money and so should be treated as an interesting diversion — or at best as an occasional side hustle.
A business-like attitude
To some degree, however, your attitude to any activity will determine your results. If you treat trading as mere gambling, and don’t mind whether it pays off or not, then it will indeed become a risky and unreliable gamble. If you go into it with an irresponsible attitude, taking big risks in the hope of a result that will make you a fortune overnight then you may succeed — but it’s more than likely you’ll crash spectacularly.
The alternative to these two extremes is to take a business-like attitude and to treat forex trading as a business. It’s true that there are no guarantees of success, but that is the case with any business venture. But approaching your business with self-discipline, hard work, solid research and dedication will always improve your chances immeasurably, and this is also the case with forex trading.
Do the groundwork
First of all, do your research. Learn all you can about forex trading and how it works before you invest a single cent. There are plenty of resources out there, both online and in books and periodicals. Next, make a business plan. This should involve both studying market movements, including levels of supply and demand, and your own financial goals. Where do you want to be in six months or a year’s time? Set realistic targets, based on how much you can afford to invest and how much profit you hope to make at set points down the line.
Your research should also include taking the time to find the best forex broker. Online reviews can help you in the process. Find a broker that’s right for you, and that offers you the tools and charting capabilities that you’ll need. Go for one that offers a free demo account. This will be invaluable to you in developing a working trading strategy before you start risking your own money on the open market.
In treating forex trading as a business, you shouldn’t expect to make big money overnight. After all, that’s not generally how businesses work. Start out small and build up to bigger trades. Don’t invest more than 10% of your capital at any given time. Treat your trading losses as business costs while still looking to come out ahead over time. But as with any business, be mindful that if your expenses continue to outweigh your profits then you’ll go bust. A gambler never knows when to quit, but a good businessman does.
One of the most valuable sayings in business is that every day is a school day. You should stay informed about the markets and aim to always be learning and improving your education. That is what will give you the edge over your competitors, which is how you should think of your fellow traders. The markets are always changing, and you need to be prepared to change with them, ideally by staying one step ahead of coming trends.
By approaching forex trading as a business you’ll greatly increase your chances of making a steady profit. Gradually increase the amount of time you spend trading. As with any business, you’ll need to put the hours in. Forex trading is not a get-rich-quick scheme, but it can be a profitable venture for those with the right attitude.
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