Youll have to excuse me if i am redundant in anything i said here as i just skipped to the end after reading the initial post. Van Tharp said it best when he said you have to treat trading like a business. No one that is very sucessful at trading does it without some sort of plan at some level. "trading without a plan is a lot like someone trying to do brain surgury on weekends to make some extra cash". As amusing as that sounds its very true. I have began my trading and business plan/model for trading but I came to a stymied halt. One of the biggest problems with planning is that some things you just cant do without experience. If you are not already paper trading then you should be, and paying careful attention to the details for your plan. I have 2 rough templates for a business and trading plan. Personally I am trying to take the more corporate route as I already have 3 years of college behind me. I need some sort of steady paycheck while i learn to trade so Im looking at the traders assistant approach, working at a firm will force you to be more disciplined but if you are working mroe on your own a business and trader plan is essential!
LOL, I think most people follow this line of thinking versus my line of thinking. But I thought it was ironic that the business I own is doing brain surgery cases. And to make it even better I started out doing weekend cases for extra money. Maybe that is I have a successful business and trading profitably with such a plan. Good trading to all Gary
It looks like the general drift that came of this thread focuses mostly on trading plans. Many points are made about how difficult it is to do something involving the future if how the trading is going to go isn't available, presently. To some extent this is true of all businesses as they go into the future. I recommended just looking up the SOP for writing conventional business plans and I did address to some extent the issues dealing with the trading part. I did this as a way of heading off some concerns that do appear in some of the parts of a conventiional business plan. A typical example for a family might involve the wife coming home from one of her professional or networking meetings and saying she wanted to get cracking on the family's investment plan and soup it up with some trading. Say putting 100,000 into a trading account and rolling out some trading during the day as she did her usual thing. The family would gather around and cheer a little and thank her for getting on with a really neat idea she got from some of her women friends. Especially the 13 and 14 year old who were worried about having cars while they were away at college. Dad loved the idea cause he could trade his glider in for an improved one with a glide ratio of 50:1. Right on. So nobody has a business plan at this point either. It is too difficult to do even though the investment of capital may be an important issue for every family that has a trader in it, especially a new one. What did happen when Liz took the 100,000 and did the trading the first month and she didn't have a business plan. What happened when her step son (out of college and single) took his wad of capital and did the same. For both these people it was easy to settle down and get under way. And that is uncommon, though. Money was made; both persons grew accounts and Liz had her picture taken on the hood of the new Corvette her step son added to his driveway. Neither was trading as the main event, nor with money that mattered for the future. What if a person wants to be a trader and he has responsibilities and even obligations? This picture is like being in the place of a person who has to go to the bank to start a business. Usually no bank is going to handle the trader business of a person. thank God, now there is no need for a business plan. It would have been difficult anyway. What if at the top of the page there was a green thing wedged in called "business plan". Well, that is not in the cards for most any site. The first half of a business plan for a business can be lifted from a conventional plan sectionby section: Indtroduction, funding requested, Orgnaization (chart), History of the Business, Assets and Liabilities, and Pro Forma. Then things need some adjusting for the next sections. Products and Services would become "trading paradigms". Next you wiggle into Applications of Capital as a way of showing how building the trading occurs and how you take capital out of the accounts for ancillary applications. Part IX is where Meeting the Competition usually shows up but there is no competition in trading so you make the adjustment and articulate the plan for iteratively refining what you are doing in the trading paradigms. The section on down side risks is usually what closes the deal for getting loans at banks or other places like entrepreneurial capital (an almost mythical place). I have for a long time incubated companies, done M and A stuff and spun off a few here and there. Down side risks have to be covered before the downside Q's are asked by lenders. repeating the intro as a Summary wraps it all up. All deals are made by reading I, II and VI primarily. For individual traders who are amateurs, I is the scope and bounds of it all. II is what the family is denied temporarily from its lifestyle so that more (VIII) is available later. It is called moving money into the future. VI, the proforma is how it all happens money making wise. I use 8 basic breakpoint topics which are each partially applied in stages. I got these assembled from about 50 years experience in a business that has not changed over that period except for some conveniences supplied by technology. One of the nice things about a business plan is that it proves that the initial capital is not important. another thing that is there to see is when the family gets that initial capital back. These are two things, from my example above, that it are good for the husband to be able to see in black and white for his emotional and mental well being. He also gets to see how soon his income to the family is surpassed by the trading plan's income creation. Aside from the intial captal retrun, there are about 19 items to withdraw capital for with respect to the family. These can be popped in quite nicely as time goes by. The business plan is a record of how a person can plan to excell; it is not a plan that explains competing in any way. Suggest to your wife that she may want to take up trading; she will very quickly come up with a business plan for doing it. She knows professionally she has to have a plan for any business she is running. Thats why you check with her on what you are allowed to be spending very month. If your wife is letting you get away with trading and she hasn't seen and approved the associated business plan, you are screwing up everyone's future.
' Trading as a Business:' Trading as a Business By Charlie Wright http://www.elitetrader.com/tr/index.cfm?s=17&t=80