Consider Your Trading to Be a Business

As you work toward developing the mindset of a successful trader, you will want to become aware of the difference between business and trading risks and how each of them can affect your long-term profitability as a trader. This article will provide examples of each type of risk that you might encounter in your trading activities, so that you can be aware of these potential trading pitfalls in advance in order to better avoid them. 대여계좌

Business Risk:

The first primary type of risk you need to be aware of when developing an optimal trading mindset is business risk. This is the risk that your trading business will not have adequate funds to meet its expenses. Business risk is often ignored by novice traders who are sometimes more focused on making pips than on the bigger picture of what it takes to stay in business as a trader over the long term.

For traders, business risk commonly arises from financial risk, which is linked to the size and stability of any outstanding debt you might be servicing in order to remain in business as a trader. Business risk can also derive from economic risk, which is based on how the overall economic and regulatory climate affects your trading business. Examples of specific business risks that traders sometimes face that fall into in each of these two basic categories appear below.

A. Financial Risks:

Business risks to your trading enterprise might include the following financial risks:

(1) You lose more money trading than you can afford to which then forces you to stop trading.

(2) Having an unhappy boss, spouse or business partner who withdraws their support due to trading taking up too much of your time and attention without providing good financial results.

(3) Insufficient trading returns resulting in the withdrawal of funding from an investor in your trading business.

(4) Margin calls due to adverse market moves that exceed your ability to pay them.

(5) Interest charges on your trading loans that exceed what you can comfortably continue to service.

B. Economic Risks:

Business risk can also cover the following economic risks:

(1) The market becomes unavailable due to new regulation that excludes you.

(2) Market sizes, spreads or commissions become too unattractive for you to continue to participate in trading economically.