People often ask me if it is really possible to make an income out of trading shares. I will tell them that I don’t trade shares for an income. I trade shares as a business.
What’s the difference? Well for a start, I can think of a lot easier ways to obtain an income. Just get a job that will get you an income. As for a business, I think there is none better than trading shares. Low overheads, no wages, insurances, or shop fittings. In what other area of business can you handle decisions worth hundreds of thousands of dollars, and be the only one responsible for the outcome.
Treat your trading as a business, and never think of it as being a source of income. If you can, organise other sources of income. If you are going to pay yourself out of your business then do it as a lump sum at the end of your financial year. You do not the weekly bills riding on the outcome of a trade. This distracts you from your business principles and will place fear and uncertainty into your trade.
Fear and uncertainty are the main enemy in running your business and cloud your ability to see the trade for what it is. A trade should be looked at as one transaction out of a possible hundred that you will make this financial year. The trade will be based on objective and subjective analysis of information you have made available to yourself. Your skill as a trader is based on your ability to gather the right information.
A favourite saying of mine that I constantly remind myself of is that “the only competition I have is myself”. When preparing your information to enter into a trade, ask yourself if you have done the best you could have. Should you check the charts again, go visit the trading forums, read the latest news articles on the stock, talk to your broker about his thoughts, and found every possible resource to base your decision on. If you haven’t, you’re just gambling and the outcome will most likely be the wrong one.
A businessman who is thinking about purchasing industrial land to develop and resell does not buy the land just because he sees the advertisement in the paper over the weekend. He puts a team of workers on to it and explores every detail he can find.
You should treat your trading business the same way. The investment amounts can be similar, so treat the trading business with the same value.
Trading as a business has many aspects that the beginner should learn. Every aspect from record keeping to taxation matters. You are a one man office, based in headquarters that will grow significantly. Do you know about running your office efficiently? Do you have a set of rules and guidelines? Who are you going to outsource your mundane tasks to? Are you working to a budgeted outcome this financial year? What sort of trades will you enter into. What is the best return on your money for the minimum risk? Learn to trade shares and you will certainly be able to provide yourself with an annual income. Learn the business of trading shares and you will be able to provide yourself not only with an income but a lifestyle to be enjoyed.
Knowledge is power, and the knowledge can be fund in investment courses and seminars. Follow other who have done the hard work and are willing to share their information. Some of this information may cost, but that can be relatively low cost to start a business that will provide you with a lifestyle to be envied. Good luck with your business and if you need to follow-up visit me at my site I�TRADE�OPTIONS
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