Expert Advice: Treat Forex Trading Like a Business

Posted by Fitz Villafuerte under Guest Posts on March 23, 2016

So you’re considering forex trading as an investment? Before you take the leap, it might be a good idea to compare it to a starting a business.

If you’re like most people, you’ve probably thought about being an entrepreneur at one point. Most likely, you’ve also done a bit of research regarding what it takes to set up your own business.

As you might probably have discovered by now, being an entrepreneur is tough. If you’re starting out, you’ll need to be your own boss AND your own staff. The outcome of the business will depend on how you handle it.

In many ways, being a forex trader is like being an entrepreneur. It takes more than just knowledge and a killer idea: it also takes hard work, discipline and mental preparation. In fact, it’s a good idea to treat forex trading like a business, because as a forex trader, your account is your own personal business.

So whether you’re an aspiring entrepreneur or a newbie forex trader, here are a few helpful things to remember before embarking on your journey.

forex-trading

Neither forex trading nor entrepreneurship is “easy money”
A big mistake that many inexperienced forex traders make is in treating forex trading like a gambling game, aiming for quick rewards over steady profits. The likely outcome of these types of traders: big losses.

Don’t make the mistake of thinking that forex trading is easy money. Rather, treat it like a business where you grow your profits slowly and steadily. The money might not come rolling in right away, but with enough knowledge and experience, you’ll soon start to see winning trades.

You need to create an effective plan of action…
Most entrepreneurs start off with a business plan. It doesn’t need to be long or complicated, but it does need to lay out what you want to accomplish and how you plan to accomplish it.

When you start building your trading plan, consider your trading system, your risk management rules, your end goals, and everything else that you plan on doing as a forex trader. It’s basically your very own business plan to managing your forex trading startup.

…And you need to stick with it
We’ve all been through it before: the sinking feeling that comes when you lose money. It doesn’t matter whether it’s an unprofitable month with your newly opened retail store, a string of heavy losses in the forex market or a few bad rolls in the casino. It’s a terrible feeling either way.

When the inevitable happens, don’t let your emotions dictate what you do next. Resist the temptation to make haphazard trades and stick with your trading plan.

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Be aware of the risks involved and take steps to minimize them
Starting a business is a risky venture. That’s why you need to know the details of the things you’re up against such as your competitors, the nature of the market, and the location of your business.

Similarly, the forex market also has its own risks. Not only do you need to be aware of the risks of each trade you make, you also have to ensure that these risks are minimized through proper risk management strategies.

Make sure that your income is greater than your expenses
When you start a business, you’ll need capital to turn your plan into a reality. But aside from the starting cost, there are also other operating costs involved like inventory, rental, utility bills and all other expenses that are a by-product of keeping your business running.

In forex trading, aside from the starting investment you make with your forex broker, there is also the “cost” of doing business through the commissions and spreads you pay and more importantly, the losing trades you will inevitably experience.

Like any good entrepreneur, you have to ensure that your winning trades (your “income”) outweigh your losing trades either by having a great number of winners OR by having your winning trades be far greater in value than your losing ones.

When you make mistakes, learn from them
This is more common sense than anything. Failure is the best teacher when it comes to both business and trading. But that only holds true when you actually learn from it.

Whenever you experience losses, make it a point to physically write down the circumstances of the trade and the main causes of your mistake. This will help you look back on where you went wrong so that you can avoid similar mistakes in the future.

In the end, the process of creating a successful business or investment can be described as a series of right decisions based on wrong ones.

So next time you open your trading platform, take a deep breath and remember that forex trading is essentially a business. Your goal as a trader/entrepreneur is to take all the necessary steps to make sure that it succeeds.

This article is written by Bwayan Jordison, a forex trader at Metisetrade Inc.. He often writes articles to help and educate everyone about the foreign exchange market.

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2 Responses to “Expert Advice: Treat Forex Trading Like a Business”


  1. If you can establish that your Forex trading activity is a business versus just a hobby, I think you can count 40% of your profits at the lower 15% capital gains tax rate. If you make a lot of money, this can be a huge deal!

  2. Howell says:

    is Metisetrade Inc. legitimate broker? SEC issued COD to them but they still on their operation. Are they given license to operate this present day?

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