Originally published on Cascade Business News
Trading Forex has never been so popular ever before. This year, the global foreign exchange market has reached the highest level it has ever had before at $6.6 trillion traded every day, according to the Bank for International Settlements. It is, perhaps, the most popular way to make a living these days for over 43% of millennial Forex traders and 15% of over 45 traders. Moreover, the Forex market has also experienced a rise in the number of female traders.
However, many traders come to Forex trading looking for the ultimate lifestyle of wealth and freedom. And, despite the earning potential the market offers, such a relaxed attitude is exactly what makes the trades come undone.
Instead of treating their trading as a business, traders focus only on the flexibility offered by this investment option. Whereas, owning a business is a full-time job that you must take seriously 24/7. And, that is exactly why many traders fail to achieve the returns they are expecting.
But what exactly treating trading forex like owning a business means? Some would argue that comparing forex trading and running a business is like comparing apples to oranges. However, there are a number of similarities between the two. And, in fact, treating your trading practices as a business may be the key to increasing your revenue. Here’s why:
Your goal is to earn profit
Let’s face it, no matter if there are also selfless reasons for starting a business, everybody in the corporate landscape is here for the money. Earning profit is the top priority of any entrepreneur. And, obviously, it is also the top reason why traders join the Forex market.
So, let’s talk about money now! If earning a profit while running a business takes so much responsibility and hard work, why would trading forex shouldn’t be treated with the same seriousness?
Setting up and treating your trading as a business is all about taking all the necessary steps to ensure that, by the end of the month or the year, you will earn a profit. But what steps should a trader take to treat trading like doing business? It should all start with having the right trading equipment (a trading platform, a broker, a computer, etc.). Next, it is essential to follow a plan exactly like you would be following a business plan.
You need a plan
As mentioned before, a business plan is a key element for running a business efficiently. And, this is no different from trading in the Forex market. While a business plan should include aspects like capital, budget, goals, risks, marketing strategy, target audience, operations, and competitors, a winning trading plan should include trading strategies, skill assessments, goals, risks, market details, and exit and entry rules.
It gives you flexibility
One of the biggest advantages similar to both owning your business and trading forex is being your own “boss”. You are the key decision-making person in everything you must decide, be it as a business owner or as a Forex investor. And, being your own boss means that you also decide when and how much you work or trade. Not only that you have full control over every step of the way, but you also choose the time you invest in both activities.
However, when it comes to Forex trading compared to owning a business, there is a slight difference you must know. If something goes wrong with your business, stopping your investments is a difficult option. You have customers and employees that rely on your company. However, when trading Forex, if you realize that a trade isn’t working out the way you were expecting, you can immediately stop. Plus, there is no waiting to liquidate your assets and no complicated forms to fill in if you decide to stop.
You need to extend to other markets too
You may be tempted to believe that trading forex and owning a business are nothing alike when it comes to geographical independence, which is somehow true. However, both trading Forex and owning a business give you the opportunity to extend in other markets. The only difference is that joining new markets when trading forex is a lot easier than expanding a business to a new market.
There is very important aspect traders must understand, the Forex market is a 24/5 opened market and, despite the wrong beliefs, you can’t simply trade at all times. The global currency market isn’t opened at all times, as one market is closing, another is some other part of the world is opening. So, that being said, it is now easier to understand why you must join other trading markets as well.
Let’s take for example that you are a European forex trader, all you have to do is to look for international Forex brokers suited for Europeans that will give you the opportunity to trade on other markets from different parts of the world too and will offer you better trading conditions compared to those provided by brokers located and regulated in the EU.
You decide when it’s time to scale down or up
Scalability is another defining factor of a business and a trading practice too. When it comes to running a business, you have the control to decide when it is time to scale your business down or up depending on its needs. Similarly, when you are trading Forex, your profit potential is also limited only by your ability and willingness to handle a large trading account.
If you want to earn more, you have to invest more. However, if you lack investment capital, you can always lower your investments at any time.
Thinking like an entrepreneur when trading Forex can help you remain organized, invested, and efficient in your trading strategies. The Forex market is constantly growing and changing meaning tougher competition. So, treating trading like owning a business will help you make market projections and move with its changes all the time.