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TRADING #101 COURSE – PART THREE: SETTING UP YOUR BUSINESS – WWW.TRADERSCOACH.COM

This profile will be the cornerstone to your business plan, which you will be developing
when you read Chapter 17 of this course.

Next, look at Table 13.2, which shows six different profiles that are for example only.
These six samples can be used for reference to get a sense of what the spectrum of
possibility is. Remember, where you start today is just the beginning. The plan is to
grow your net worth and trading business by setting up a solid foundation in the
beginning.

Table 13.2 Financial Profile Samples
Net Worth Age Risk Tolerance Trading Account Size
Profile A $1,000,000 60 Low $100,000
Profile B $ 500,000 50 Medium $ 50,000
Profile C $ 100,000 40 High $ 10,000
Profile D $ 50,000 30 Low $ 5,000
Profile E $ 10,000 30 High $ 1,000
Profile F $ (50,000) 20 Medium $ 250

Here is a quick take on each of the sample profiles so that you can get an idea of
how each of these traders could structure their plan:

• Profile A - for a trader with a $1,000,000 net worth at age 60 with a low risk
tolerance and a trading account size of $100,000. This person is close to
retirement, so it is crucial not to jeopardize net worth. The trader will have a
diminishing opportunity to recoup any large losses. For that reason, even though
he can afford to have a $100,000 trading account, it may be useful to be
especially conservative when it comes to risk control. For example, if the payoff
ratio and win ratio warrant a 2 percent trade risk amount, this individual may elect
to reduce that to 1.5 percent. Refer to Chapter 11 for more information on how to
calculate the percentage of money to risk on each trade based on your trading
performance results.
• Profile B - for a trader with a $500,000 net worth at age 50 with a medium risk
tolerance and a trading account size of $50,000. This person is not as close to
retirement as the trader in Profile A, so he is able to design a business plan that
can absorb drawdowns and have enough time to recoup prior to retirement. This
person’s trading account is half the size of the one in Profile A, and will
potentially generate one-half the annual revenue of the account in Profile A.
• Profile C - for a trader with a $100,000 net worth at age 40 with a high-risk
tolerance and a trading account size of $10,000. The individual has funds to
allocate toward trading and is not close to retirement age. This trader has two
options when setting up a trading business. If he works with a $10,000 trading
account, he will need to maintain another source of income, such as a day job,
during the start-up phase of the business to cover living expenses and overhead.

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