We talk about this all the time, but some traders still don’t get it, others may have not heard it before and it’s worth hearing again even if you’re a CPDT.
If you want to be successful at trading, you must treat it like a business.
If you want to make a living by day trading, you better run your business like a well-oiled machine. Think $AAPL not $TSLA. You need actually turn a profit NOW.
Having this proper mindset is a key piece, if not THE key piece, to the consistently profitable puzzle that too many are missing.
But what does this really mean? How do you treat it like a business? Many get the general concept but have never run a business, so they don’t get how and/or what to do exactly.
There are many aspects of what “treating trading like a business means”, but we’re only diving into one of them today. The most important aspect of this is “Being Your Own Boss”. Since Mike does an amazing job covering that in our course, that’s not today’s topic.
Instead, here’s what I want to focus on today: TOOLS
You need the correct tools to get the job done.
If you’re a carpenter and you make a living by pounding in nails with a hammer, you’ll own the best damn hammer there is. Regardless of the cost, you’ll make sure you’re equipped with the best tool for the job. If it ever breaks you would never hesitate to run out and grab another one ASAP, if you don’t already own a back-up. The hammer is crucial to your job and you wouldn’t even think of going to work without it. In fact, you really can’t even do your job without it. And if a new and improved hammer comes out, you’ll spend the money to upgrade. After all, it’s something you use daily and it’s vital to your success. If the carpenter/hammer doesn't make sense to you, think: scalpel/surgeon, bat/batter, glove/outfielder, clubs/golfer, scissors/hairdresser, attitude/waiter...
Why is Day Trading any different? It's not!
For Day Traders, there are several tools that qualify as your hammer. Let’s talk about three of them:
Your internet connection.
Let’s walk through each one. Again, please keep in mind, I’m trying to get at the BIGGER picture (the mindset) here.
Computer: Good news. You don’t need to spend a fortune, especially in the beginning. Simply make sure the computer you have will meet your broker’s minimum requirements for running their platform. As you grow as a trader, you can upgrade to better specs including more screens. In the beginning, start small and grow into your setup. Less in more when you’re starting out imo.
I remember when I went a little overboard after finally making some money and went from 2 small screen to four BIG screens. I had made it! WRONG! Within 2 days I realized I was completely overwhelmed by all the additional things flashing at me. I was missing MORE by trying to watch more. I turned one of the monitors off for about 2 months. Again, let your setup grow with you. It took me ~3 years to go from laptop to the 6-screen setup I use today. There were many incremental steps along the way.
Internet connection: Get the fastest available in your area. PERIOD. It’s worth the price. Some will say, well “XX Mbps” is technically fast enough. I’m not arguing this point. If you’re saying “yes, but…” right now, maybe this is why I got filled on $PYX and $TLRY Friday and you didn’t? That and I’ve practiced swinging the bat on those Inflection Point Trades thousands of times. But seriously, why wouldn’t you want the fastest connection available? You’re competing for a limited amount of shares at a specific price with other traders who do have it and are faster than you.
Broker: On Friday, this is what inspired the blog you’re reading. You can’t become overly attached to your broker for the wrong reasons. Your broker is your lifeline. It’s what connects you to the markets. Your broker MUST be reliable and be reliable the majority of the time. Your broker MUST work for you. EVERY broker has technical issues from time-to-time, but some certainly have more issues than others. Go with the ones that are known for the least amount of issues and glitches. The broker you use should also give you everything you need to day trade or easily allow for add-ons to make it complete. Charts, watchlists, and FULL BOOK LEVEL2 with T&S, just to name a few. And the most important aspect of your broker? Speed and accuracy of execution. Basically, how good are your fills?
Another way to look at your broker is they are an employee of yours who get paid commissions for providing you data and executing your trade ideas. If they can't do those things consistently the exact way you want, fire that employee. There are plenty of other good ones out there who want the job.
Trading is hard enough, don’t let having the wrong tools make it even harder!
If you’re so attached to your old computer, your crappy broker and/or you're too cheap to fork over an extra $30 a month for better internet,
YOUR NOT TREATING TRADING LIKE A BUSINESS.
And that’s costing you $ even if you don’t realize it and/or want to admit it.
Worse yet, you don't have the proper mindset to become and stay a CPDT.
We often finally convince people to switch brokers and/or update their internet. NOT ONCE has someone said, well thanks guys that was a bad idea! Rather, they say OMG why didn’t I do this YEARS ago. We recently had a few traders switch from some POS broker (see what I did there?) to other brokers with full book and more features. ALL OF THEM were like OMG, this is SOOO much better. Why did I wait so long? Sure, change was hard for them and there was a learning curve with the new platform, but it’s not that bad and doesn't take that long. They all survived the change and are now thriving.
Now, if you notice, I’m not selling you on any computer, broker and/or internet service provider. I do NOT do recommendations without knowing you A LOT better. Do your homework. Ask other traders about the pros/cons of theirs. Pick up the phone and call customer service and ask questions. But my god people, if you’re not happy, MOVE your freakin’ account Monday. If your computer is freaking out on you constantly, order a new one. And if the photos on this blog were slow to load and/or you Netflix is constantly buffering, call your freakin’ internet provider NOW.
Seriously, go, I’ll wait…
Again, I hope everyone is getting the BIGGER picture here. TREAT TRADING LIKE A BUSINESS. This is a mindset, not about owning cool stuff. And there’s a lot more to this, including more tools (Standing desk anyone? Only if you care about your health). Give yourself the best tools available. Find what tools work for you. More importantly, find your edge and that’s in your head.
Before we go: Someone recently asked me about my computer and setup. I asked them a few questions back, the first being are you consistently profitable yet or even close? Their answer was “no, not really”, so I told them they don’t need my computer and setup yet. Instead, put a few bucks a month into faster internet and take the other couple of grand for the computer and use it for cushion in your trading account. Having a really cool looking setup is nice, but it’s not the solution you need.
If you’re not making $ in the market, it’s not any of these things (including your commissions), it’s your process. Once you start making a little money, having better and higher-end tools can help you make MORE money. But you have to be able to make some consistently first. In short, none of this matters without a process. YOUR PROCESS.
Thanks for reading! Questions? Comment? Reach out and/or leave a comment below.