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How To Run Your Trading Like a Real Business
In my life I’ve always wanted to do only two things -- trade and run a food business. To this day whenever I find myself in a Walter Mittyesque reverie I imagine running a restaurant or a food store (Montreal bagels in New York is my favorite fantasy) -- but running a startup investment firm pretty much sucks up all my time so I put the idea aside for the time being.
Still, whenever I get a chance to talk to a store owner or a restaurateur I inevitably pump them for any information I can. Having spent most of my ill advised youth working front and back of the house I am well familiar with the arcana of the restaurant business.
Sometimes however I’ll strike up a conversation with a more modest establishment -- like the guy who sells me coffee from the cart every day. My coffee guy is one the nicest and hardest working businessmen I know. I don’t even have to say a word -- in a typical New York fashion he starts preparing my order when I am halfway down the block.
With Easter and Passover falling around the same time this year, New York has been a ghost town this week as almost everyone in my neighborhood has taken their kids to Florida or Colorado. So business was a bit slow and we had a chance to chat. Of course we got into a discussion of daily volume, peak flow and a million other things that would bore normal people to death.
However, the more I talked to my coffee guy the more I realized that what he and I do for a living is really not that different. Here was a businessman who worked hard every day, tried to execute as close to perfection as possible, but who also understood that his success was often dependent on forces outside of his control. He didn’t whine or cry when business was slow. He certainly didn’t throw temper tantrums and try to destroy his inventory and assets in a fit of rage, or suddenly decide to offer everything below cost in hopes of improving his business. He remained calm and disciplined in the face of adversity and was perfectly willing to accept the fact that some days, some weeks and even some months were not going to be profitable.
It always amazes me how disciplined most of us are when we run a physical business, yet how emotional and hysterical we become when we start trading a forex account. How many of us treat trading as a business? How many view each trade as a simple business transaction rather than as symbol of our intelligence, masculinity or self worth? Imagine if you were selling coffee -- would you really give a sh-t if you spilled a few cups? Yet we spent inordinate amount time obsessing over every trade. Its just a business transaction. Its not a reflection of our omnipotence or lack thereof.
Looking at trading as business really helps to put it in perspective. You understand that there are planned costs ( spread, stops ) and unplanned costs (slippage, wrong execution etc). After all, anyone who runs a restaurant business understands that spoilage is part of the game, so why do we get so pissed when our orders are executed imperfectly? Its just business. In fact talking to my coffee guy I realized that not only should we look at our trading as just another small business but we should consider each trading strategy as a separate storefront that sells a different product. If you owned multiple stores would you expect each one to work perfectly all the time? Of course not. By treating each algo as a retail “box” we can hopefully stop obsessing over every pip and focus on running our trading like a real business.
Like to trade the EUR/USD? So do we!
At BKForex, a large part of our trading is short term and the EUR/USD is one our favorite currency pairs to trade.
The EUR/USD is the world’s most actively traded currency pair and for many forex traders, this activity provides opportunity.
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