Page 24 - Trading #101 Course – Part THREE: SETTING UP YOUR BUSINESS – www.traderscoach.com

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

Traders Are the Ultimate Entrepreneurs and Must

Be Held Accountable

I’ve always said that trading is the perfect business. That is because all traders are in
fact entrepreneurs, whether they realize it or not. A trader has no boss; they call all the
shots, and they benefit from all the winnings. The price they pay for that freedom is that
they take on all the risk and the headaches when things go wrong. Yes, they are on
their own.

And that is a good thing.

The way to make that a good thing is to run your business with a profitable balance
sheet and as few headaches as possible. With any business, accountability and
honesty are key components in achieving this.

So how do you hold yourself accountable and keep yourself honest?

Simply put, through daily record keeping and analysis, you will always be accountable
and will always be forced to be honest. When you have daily numbers, there is no
guessing as to what the day is doing in terms of revenue. The numbers are your reality.

You need to be just like the manager of a local restaurant or clothing store. The
manager will know exactly to the penny how much money came in every day since
opening the doors for business. The manager compares these numbers and looks for
trends in revenue from month to month, quarter to quarter, and year to year.

Depending on whether the revenue trend is up or down, the manager will need to adjust
the business model. This might involve unpleasant choices such as laying off
employees when the revenue trend is down. Or it may mean more pleasant choices
such as expanding the square footage of the retail space to accommodate the hordes of
customers during a revenue trend that is up.

Trading is similar, and the choices are the same, but the vocabulary is different.

So, when the revenue trend is down, a trader may reduce the risk percentage and the
trade size; and when the revenue trend is up, the trader might increase the risk
percentage and the trade size.

These are the same concepts with a different vocabulary. Your survival will depend on
whether you can make the difficult choices and whether you can make those choices in
time for them to make a difference.

If you look at some infamous corporate debacles such as the Enron collapse, you can
see that dishonest accounting just delays the inevitable. Facing bad news and solving
problems rather than covering them up is the best way to succeed.

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