Even though every investing transaction is technically a business transaction, not everyone who becomes a full-time trader operates in a business-like manner. There are many reasons why individual traders fail to achieve success, and one of the most prominent reasons is because they do not treat their chosen financial activity as a business. If you want to make the most out of trading from home, here are some things you should keep in mind:
Establish a Trading Plan and a Business Plan
There is a very good chance that you have come across stories about entrepreneurs who bootstrapped their business idea and were able to generate considerable profits in a short amount of time; this is what is known as a combination of drive and luck. While personal drive is something you can foster and generate, luck is not. Instead of living things to chance, you should formulate a business plan on top of a trading plan. Sticking to a plan will allow you to bail out of some transactions and start over without having to completely give up.
Leave Trading to Professionals
Should you have access to large capital that can be put to work in the financial markets, you should strongly consider retaining professional services such as outsourced trading solutions. In essence, outsourced trading takes is a “buy side” solution that focuses on multiple asset classes. Instead of putting together a home workstation for trading, you can hire an entire trading desk that follows your portfolio strategy and investing philosophy.
Separate Trading and Personal Income
During the early months of the coronavirus pandemic of 2020, many news stories focused on young traders who installed mobile apps such as Robinhood on their smartphones. For the most part, these reports featured options traders who were able to generate a few hundred dollars each day, and this money went right into their pockets for personal and household expenses. This is a terrible way to run a business, particularly one which presents a high degree of risk and uncertainty.
Try Not to Become a Day Trader
The aforementioned Robinhood traders spent several hours glued to their smartphones each day. The more time they spent on active options trading, the more likely they were to end up with a losing trade. It is better to spend more time researching investments and the market than actually executing trades.
In the end, disciplined money management and a business mentality are crucial to your success as a trader working from home. Failure to treat trading as a business activity could result in regrettable losses.
Bio: Rachelle Wilber is a freelance writer living in the San Diego, California area. She graduated from San Diego State University with her Bachelor’s Degree in Journalism and Media Studies. She tries to find an interest in all topics and themes, which prompts her writing. When she isn’t on her porch writing in the sun, you can find her shopping, at the beach, or at the gym. Follow her on Twitter: @RachelleWilber