I treat trading as a real business.
In fact, I don't even consider myself to be an 'investor' or 'speculator' or 'trader' in the traditional sense.
The truth is, and this is exactly how I see myself: I am an entrepreneur. As an entrepreneur I seek opportunities in the market as well as engage in buying and selling activities to generate the highest return on my investment and then simply manage my risk.
My product is options and stocks. I buy and sell them to make money.
All businesses buy and sell to make money - I just do it with stocks and options.
All good businesses manage based on numbers and ratios - I do the same thing - I manage my trades by the numbers!
All businesses plan for profits and create opportunities for the largest return on investment (ROI) possible - I do too, except I create opportunities for the largest return on margin (ROM).
I know exactly what my maximum profits are going to be before I place a trade. I don't guess or speculate - I have a plan. Then I simply manage the position and, if necessary, adjust my positions to remain profitable or cut my losses through smart risk management technics and collect my profits at the end of the trading cycle (monthly).
This is an "Evergreen" business. Even as the
markets shift, and the economy changes...
my system will always work!
This business will never change... the principles, once you learn them, are yours forever. You could learn these and hand them down to your children and grandchildren.
The basics of this business will never change because the underlying the principles will never change.
That's why I call it an 'evergreen' business.
Unlike franchises or other types of consumer or business-to-business markets, the stock and option markets have been around for hundreds of years. And even though the markets move and change in some ways, the principles have been the same for the past 200+ years.
How did I discover how to start a stock and option business?
One day I woke up one day to find a little extra cash sitting in a money market earning 1.5% a year. The next year it was earning 3%... wow - 3% a year.
I felt my money should be put to better and more productive use and I started looking into all kinds of franchise opportunities and other businesses to invest in... but they all had one drawback - the financial investment was large but so was the investment of time... something I really didn't have as a father of four.
So after years of 'hit or miss' trading I started thinking about trading as a real business about 2 1/2 years ago - buying and selling stocks and options as a 'business'. I didn't know if it could be done, but the idea intrigued me. I knew somebody, somewhere was making a killing in the markets and I was determined to find them, learn everything they know and make a killing of my own.
I was determined to run my trading as a business, not as a gambler, and that meant looking at opportunities, supply and demand, marketplace dynamics and managing my business based on solid business fundamentals: profit, loss, expenses, overhead and return on investment.
Like any business my only concern was to buy something that I could sell at a profit - and with enough of a profit margin so that my expenses (although small) were covered leaving me with a consistent and reliable income.
The business of trading has all of these advantages.
Once you know the system, this business
can be managed in 15 minutes a day.
It has all the makings of the 'perfect' business!
The problem with creating a business based on the markets is that it seems like they are consistently changing and there is a lot of risk!
As you know, the markets go up one day and down the next!
I was really confused which way the market would turn, and since I hated the idea of losing money I tried to "predict" the market's direction because that's how I THOUGHT money was made.
I got really, really good at 'technical analysis'... I THOUGHT that it held the key to profits... if I could tell where the market was headed it would be easy to make money, right?
I learned all about waves and candle sticks, MACD, ADX, CCI, Bollinger Bands and Fibonacci and hundreds of chart 'patterns'... and I thought I 'knew' something' about the future of the market!
Frankly, technical indicators are like crutches - they only help to support and validate your trading ideas already formed in your mind. They do not help you become a better trader or see the reality of the market. There are only 3 technical indicators you need to run this business: support, resistance and trend lines. That's' it. We keep it simple. Simple makes me money.
I also discovered the TOP 1% of all traders do the EXACT opposite of what I tried to do when I first got started (predict the market)... The fact is...
Top traders NEVER try to predict the
market they only manage risk.
Most of the elite traders don't care if the market goes up or down - they make money either way. They use charts sparingly.
All top traders do is manage their risk and take advantage of the only truths of the market - the ONLY absolute truths of the market.
For stocks that ONE Absolute Truth is this:
1) All stocks fluctuate in price.
For options there are two Absolute Truths:
1) All options fluctuate in price and
2) All options expire.
The top traders learn to respect these rules because they are the ONLY truths of the market.
You might think there are other truths but there aren't--
Everything you hear about the market outside these 2 rules is hearsay, opinion, commentary and even complete fantasy.
Of course you will never hear anyone on CNBC even mention these 2 rules because they would have nothing to report!
Can you imagine Maria Bartiromo saying, "Prices fluctuated today. Have a nice evening everyone! I'm outta here!"
I don't think so!
So the top traders respect these rules because they are so powerful and it helps them cut through the 'market noise'.
Then they design their trading business around these rules to TAKE ADVANTAGE of them.
Once they see an opportunity they jump on it and simply manage their business 'by the numbers' and, for me it takes 15 minutes - sometimes less - a day.
How much can you make? Frankly, it depends on your capital, ability to learn, and your ability to maintain your discipline in this business.
Don't be concerned about how much you have to start your investment business (even though I had a considerable amount of money I could invest, I started mine with a small amount so I could learn this business). Just learn the skills and reinvest your profits - they will grow quickly.