Hello again fellow traders and welcome to the Coaches Corner! I’d like to chat briefly about an important element that will contribute to any trader’s success… treating your trading like a business. Yeah I know, you’ve heard that a dozen times before. Are you actually doing so?
Treating your trading like a business involves two things in my humble opinion: First, having the MINDSET that your trading is a business. Trading shouldn’t be too personal or a hobby or just something to do to stay entertained. Why do you trade? The answer should be the same as every other trader out there…to make money!
If you are looking at your trading as a way to feed your family or pay a bill it can become personal, emotional and dangerous! (See my September column for more info on dealing with fear and emotions)
Run your trading business like any other business and your mindset shifts to where it needs to be. Look for ways to cut costs—commissions, fees, margin interest; increase revenue—more winning trades than losing trades; and increase profitability—don’t cut your winners short and ride the losing trades…In the words of Jon Najarian, “Don’t eat like a bird and defecate like an elephant.”
The second component of treating your trading like a business is literally structuring it as a business. With almost every single student I have worked with over the many years, the conversation always comes up about how I structure my trading business. The immediate follow-up question to that is how in the world do you handle taxes!
Any of you who’ve traded in the past know this can be a bit of a pain. Well, let’s be honest, it can be a BIG pain. I need to first state that I am not a tax attorney, CPA or anything even close to either, but being around the world of trading for the last decade I have picked up a few things. Another disclaimer, I don’t do my own taxes and would never even attempt to try—I just don’t have the patience nor do I have the desire!
I personally place all of my trades through a business entity and most of my brokerage accounts have been setup under that business name. Treating my trading literally like a business can help in several ways. It helps provide some asset protection when I have business accounts that hold assets. A trading business also enables me to write-off a bunch of expenses that I would most likely be paying for anyway—not a bad deal in my opinion!
That’s really just the start… We recently had a webinar with a small-business advisor who knows a lot more about this stuff then I do. The webinar was packed with a bunch of information and recorded for anyone that missed it. You can view the entire recording here:
If you want to get more information about trading, taxes, asset protection, etc., I would carve out a few minutes of your day and dive into that webinar. I know I learned a few new things from it.
I hope you find the information helpful and I hope all of you have a very Happy Holiday season and a Merry Christmas!
Mike Curtis has been an active trader in the derivatives markets for 8 years. He has mastered the world of equity and index options along with spread trades, futures and foreign currency. He loves teaching and has personally coached over 500 individual investors needing help learning to apply a consistent trading method. Through his mentoring, he has helped hundreds of people change their financial situation through trading in the financial markets. He is a husband and father of 4 young children and currently lives in Salt Lake City, Utah.
You can contact Mike at 801-717-3993 to learn more about the Traders Edge Coaching Program.