Bennett McDowell has written a very useful and insightful book for traders who want to get serious about their trading. . He takes the trader through every step they will need to consider when turning a favorite hobby into a money making business.
Like any business you will need to write a defined business plan that lists sources of expected revenue based on past revenue, your expenses, overhead, and how much to pay yourself. The author suggest examining trading methods in 25 trade blocks to get an understanding of expected returns. You will have to compare business expenses with profits and ask yourself if each expense is worth it. Also living within your means will help you focus on your actual trading and not cause you to instead focus on the money you will need to pay your bills by stretching yourself to make money beyond what is reasonable. If you focus on correct trading methods the profits will come.
The books suggests having an accountability partner to keep yourself on track. Since you will be working like an entrepreneur and not an employee, you will not have a boss and will be free to succeed or fail on your own. Feedback is important for success. If you can’t talk about your specific trades with a mentor, that is a sign that you are doing something wrong.
The author also warns of the reality of working very hard at trading and only making minimum wage for all your efforts or even worse losing money at the end of your trading month. You must be able to deal with this fact when it happens. It is very possible to lose for weeks or months on end, it is also possible to trade in the right market environment for your style and have enough to pay your house off in a year. Much of successful trading is psychological and the author touches on many aspects of this dynamic for the trader throughout the book.
The author gives many guidelines for aspiring traders like:
- Always define your risk.
- Never risk more than 2% of capital per trade.
- Set your stop at a place to give your trade room to breath.
- Plan on only trading with no more than 10% of your total net worth.
- Understand your tolerance of risk and trade accordingly.
- The author explains how different market environments can change and effect your profitability.
- When setting stops always consider where support is in the chart
- The author explains the principles behind his ART® trading software.
- Above all learn to want what the market wants.
The book does an outstanding job taking a trader through step by step what it really takes to win in the markets by covering the fundamentals of trading rules, scanning for opportunities, money management and financial psychology. This book is the complete package for traders looking to “put it all together” and get serious about their trading business. I highly recommend Survival Guide For Traders by Bennett A. McDowell.
