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

Or he could take a more aggressive, high-risk approach and put more than 10
percent of net worth toward the trading business. These decisions should be
carefully worked out in the planning phase that is outlined in Chapter 17.
• Profile D - for a trader with a $50,000 net worth at age 30 with a low risk
tolerance and a trading account size of $5,000. This person has a similar
scenario to the one in Profile C, they both are young and have funds that are
available to put toward a business. However, they differ as to risk tolerance. It is
a matter of considering all factors and preparing a plan prior to launching any
approach.
• Profile E - for a trader with a $10,000 net worth at age 30 with a high-risk
tolerance and a trading account size of $1,000. This person’s limited resources
will make it challenging to launch a trading business. The likely path that this
individual will take is to work a full-time day job and focus all energies on nights
and weekends to developing a profitable paper trading approach. This person will
have greater stress than those in the previous profiles, but sometimes when
resources are limited people are more motivated and effective with their
approach. Sometimes the hungrier traders and investors are, the more dedicated
they are and the more they care about the outcome.
• Profile F - for a trader with a negative net worth of minus $50,000 at age 20 with
a medium risk tolerance and a mini trading account of $250. Much like Profile E,
this person has minimal resources. If his net worth is negative $50,000, he is
carrying that debt by paying interest. This increases one’s monthly overhead.
Depending on what kind of day job the person has, allocating resources to a
trading business will be difficult. The first goal for this individual is to reduce the
debt by cutting back any expenses that are not essential. Just go with the bare-
bones essentials and every day chip away at the debt. Then, with the trading
business, it is important to be lean and mean and get education and services
without overspending. You would be surprised at how many brokers are looking
for your business and will offer you services for little or no money down. Focus
on paper trading and developing a winning strategy while reducing debt.

These six profiles are by no means the only ones that exist, and yours will be unique
and will fall somewhere between them. Try to play out in your mind how you see your
financial profile and how you will structure your plan. Then, go to Chapter 9 when you’re
ready to set up your formal business plan.

Are You Moving Forward, Falling Backward, or

Standing in Place?

If you plotted a graph from when you were age 15 to when you were age 75 and you
drew in what your net worth was on that chart over the years, what would it look like?

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