There are a few signs you can look for when trying to figure out if trading is more than just a hobby and investment for you. Nowadays, there are multiple people who consider trading as a business. For example, if you are interested in Forex trading, it is quite possible that you are already doing all the research and preparing to become a professional trader.
In this article, we will look at the top 5 signs that prove trading is becoming a part-time or full-time business for you.
Things like a standard routine and a comprehensive business plan are some of the best ways to understand that you see trading as your profession. But our list is not limited to just those two factors.
Have you created a standard daily routine for trading? If so, chances are you already consider trading your primary business. If you wake up in the morning and start your day by conducting research and preparing your daily trades, this is an indication that you have created your own routine.
All professional traders have a unique daily preparation process and adjust their trading routine accordingly. This is one of the easiest ways to tell if you are maturing as a trader or not.
Another sign that definitely proves that you consider trading as your main profession is a long-term business plan. What we mean by this is that most professional traders have worked out a long-term plan for growing and dealing with their trading vision.
To explain with an example: You have created a business plan when you already know what you will be trading in a few weeks. Of course, this also means that you will adapt your strategy to different parameters (economic, social, etc.) during this period.
At the same time, a well-developed business plan contains the trading strategies that a trader will use in the future, the key performance indicators, the day-to-day research, and much more.
Finally, a long-term business plan contains a set of steps that a trader will follow depending on the outcome of a particular trading process. If you have already created such a plan for your trading activities, you already consider trading as your business.
There is no denying that the trading world is a world of opportunities. Every person who considers trading as a business is on the lookout for new investment opportunities every day. If your daily routine involves reaction (and not speculation), it automatically means that you are not just listening to what others have to say about the market.
In other words, you are now in a position where you are mature enough as a trader and you are able to explore new opportunities on your own. This is an important step in identifying whether or not you consider trading as a business.
The more time you devote to the trading world, the more likely you are to consider day trading a business. At the same time, it feels like a blow to your business when you lose part of your investment. But, that's reasonable and happens to every trader. It's the reaction that matters the most.
If this leads to a balanced and calm trading reaction, you have definitely matured as a trader. All professional traders know that losses are inevitable and that panic is not a good advisor.
At the same time, it is important to understand whether reading the latest news will immediately affect the way you act. If you view the news as a form of information, you are one step closer to becoming a trading businessperson.
For example, let us say you just read Howard Marks' latest interview in which he claims that the business climate is still at a high level. If you view this interview as a source of information rather than an authority, it's probably because you view trading as a business.
Last but not least, if you react calmly when the market opens every day, you already treat trading like a business. This means that you stop rushing your trading activities. If you have already created your strategy before the market opens, you are no longer in this position.
The same goes for your activity during the time when the market is open. If you no longer look at the P&L every once in a while, it means that you trust your investments and have matured as a trader.
It becomes clear that there are several ways to understand whether or not you consider trading your primary business. In short, it depends on your daily routine and the long-term business plan you have created.
After all, professional trading is about avoiding the mistakes you made as a beginner and planning for the future of your trading activities. So, if your trading activities are 100% based on information, facts, and a well-developed strategy, it is safe to say that your hobby has turned into an organized business.