Forex as a Business: 10 Things to Keep in Mind

Setting out a business or an entrepreneurial venture may require over five years time before profitability is even reached. In fact, according to several statistics, 50% of businesses fail in the first year while 90% tend to fail within the first five. This is where determination and hard work play a crucial role in success. Truthfully, passion to me… is the most important ingredient. No matter what type of endeavor you are to accomplish, the devotion to reach ones goal is what will set you apart from the rest of the crowd.

Same needs to be taken into account when starting out in the Forex market. Yet, Forex provides many advantages over most other businesses.

Acquiring Experience

Where else can you try a business at no cost. Aspiring traders can acquire knowledge and experience with out ever risking one cent. By downloading a Forex demo account, a trader can undergo a real life environment  and experience how the market works. Only your personal time will be spent, very valuable indeed, but remember… that’s where passion and devotion come into play. Although the pressure of having real money on the line is a big change, being able to try and accurately accomplish strategies with no risk is quite helpful.

Time
Even with a full time job, a Forex trader can get its groove on with the market. When the Asia market is about to close… the European market starts, followed by the U.S. session which continues again by the Asian session. 24 hours a day – 5 days a week.

Resources
Unlike many other businesses there is an unlimited source of free information out in the web. Free educational webinars, instant news releases, and just about anything you can imagine. Even profitable traders are displaying their performance and showing traders exactly what they are doing. Once profitability is reached, you know there is enough for everybody. Therefore, competition and hiding ones trading skills are not as important as in other business ventures.

So you have decided to try something new. After many years at your day job you’ve realized its not giving you what you want, you’ve heard the success stories, and you know you have the desire and passion to do the same. Think you are ready?

Well, you definitely could… and the resources are out there for everybody. But before you start your Forex trading career, here are TEN things to keep in mind.

1. Don’t Quit Your Day Job

It would be irresponsible to put everything on the line. Make sure you have gone through all the training required, and experience that needs to be achieved before you can sustain your living expenses. Don’t quit your job in a hurry! Being smart and responsible, while taking calculated risks, will put you on the right path to reach your goal.

2. Manage Your Time

Time management and knowing when the best times to trade is indispensable. This is one of the most common problems traders face. Each trading day has very distinct moments with their own particular characteristics. Scheduling your time, trading the same hours, and getting to know your time frame will help you distinguish the different patterns and characteristics. (check Trading the 24/5 Forex Waves column for more details).

With this in mind…Focus! If deciding to work from home, distractions are everywhere. Again schedule your time and keep distractions at a minimum. Remember you are the only one that controls your time.

While scheduling your time, make sure to keep your family and friends in your decision making process. One needs to start a business… think about making money, but also keep those close to you, closer. Money isn’t everything.

3. Be Prepared For hard and continuous work

Experienced Forex traders can probably give you a mouth-full of all the work they have put in. Long nights, back testing, forward testing, fundamental/technical research, this are just a few things that need your attention day in and day out. They know its no easy ride but hard work does pay off!

4. Explore & Research!

Become involved, join a community, join us!, ask questions as stupid as they may sound. You are trying to achieve your goal and there is no stopping you. Building relationships, making friends, sharing tradings strategies, attending seminars…all these will only make you better.

5. Acquire Knowledge

This one is a tricky one… Whether you are technically or fundamentally inclined, you should become familiar with both types of analysis. If you have seen professional traders interviewed on TV they not only know the next resistance level or support level but they sure know what the last employment figure was or what news is coming next. Knowing technical indicators/levels or fundamental factors by themselves is not recommended.

Of course, its always good to sharpen your own skills. But why stop there? keep learning new strategies and techniques. Knowledge is everything.

6. Avoid Procrastination

Keep the word tomorrow out of your vocabulary. Self discipline, when becoming your own boss, can be challenging. That’s why step number 2 is important for all traders. Learn now, read now, and research now. Remember, this is or it’s becoming your main source of income.

7. Adapt!

As your trading career unravels, you’ll find out many of the things you assumed were correct or key things you looked at, may not be as important as you once thought. Forex trading, or any type of trading, requires constant adaptation. Be quick to unlearn old habits that tend to get you in trouble. Learn to Unlearn. Markets and economic scenarios are under constant change. Being able to recognize this and adapting accordingly can go a long way.

8. Be Prudent

As with any business, you need to learn how to become prudent. Just because a trade went the correct way does not mean your next trade will. Learning how to save and reinvest is key for the business. A simple method to control this, is to do your own excel sheet and appoint different percentages of your monthly income to different things. (e.g. payroll, expenses, entertainment, investment, education, charity)

Make sure you hard wire the word “business”. Don’t over trade or loose control when things go wrong.

9. Control your Stress

Health comes first. Under no circumstance should you compromise your well being. Please organize and manage your business adequately. Learn the ins and outs of money management and trading psychology. If a loss hurts more than it should – you are doing something WRONG. Cutting down on leverage and managing your risk percentage is a good way to reduce the level of stress.

A loss, is by no means something you should lose sleep over. Don’t get overboard trying to recover any loss, if you have done things correctly and know what you are doing. Then, for a FACT, you know it will be a nice profitable month. Please read the following column which goes deeper into the ways to recover losses.

It is easier said than done, but managing stress is important to our mental and physical wealth. Follow the steps accordingly and always enjoy what you do. With hard work and dedication comes great reap of returns (mentally and monetary)

10. Things to avoid

Impatience, overconfidence, fear, ego, frustration… Not only should you avoid these behaviors but you should always decide things for yourself. Hence, Forex scams, if it sounds to good to be true – it probably is. Do your due diligence and things will work out, don’t let emotions decide for you.

Moreover, avoid the lure of high rewards. Of course, their are high rewards in this business but you need to be aware that is hard work just like any other business venture you may take.

Juan P. Bejarano