Stock Trading As A Business

Posted by Nick Niesen on November 8th, 2010

There?s a huge myth out there that stock trading isn?t a business. Some even go as far as to call day trading no different than gambling. While this can be true in some instances, stock trading done well is just like any other business. The reverse is true as well: To be successful in stock trading, one must follow sound business principles.

Just like any other business, to succeed in stock trading, you must approach your business as a business. This is not some fly-by-night get rich scheme; this is a potential career for you to invest time, money, and education into. In other words, to succeed in stock trading, you have to treat it seriously and professionally.

Just like any other business, before you invest a single dollar you should have a plan of how you plan to invest. In business, this plan is called a business plan. In investing, this is called a trading system. Without a trading system, a stock trader who trades on blind emotion really is no different than a gambler at the racetracks. Basically you need a system or amethod to adhere to. This is where most go wrong. Even the ones who realize this buy into the "emotional" methods. What do I mean by this? Methods that appeal to what we want not what we really need. Most losing methods I see do the wrong things at the wrong time. They overtrade. Take profits too fast and do not cut losees fast enough. so do the opposite.

Finally, to be successful in your stock trading business, you must have superb management. Management in stock trading involves managing yourself ? Having the discipline you need to take yourself to success. It does no good to have the perfect trading system if you can?t follow the system. Oftentimes new investors shoot far past their trading limits, hoping that a stock will ?come back up.? This is an example where poor management cost the investor hundreds or thousands of dollars.