5 Ways that Being a Day Trader Beats Owning a Small Business

Meir Barak  |

meir_barak.JPGIn many ways, stock trading is a lot like owning a small, independent business.
For instance, when you trade in stocks, you're exposed to financial risk, as in any business. Salaried employees can sleep easy knowing that they’ll never be forced to return their salary to the employer, even if the employer incurred a loss. At the most, the salaried employee will be fired. A self-employed person will pay for every error with his or her own money. Conversely, a self-employed person who is successful will earn far more than the wildest dreams of the average salaried employee.

Do you have it in you to be self-employed? If so, you might also have the tenacity to become a day trader. Sometimes a new student will ask, “Meir, I understand I won't earn big money at the outset, but can I be sure that within the first few months I'll earn at least as much as an average salary?” Oops! An employee-based question. A day-trader would never ask such a thing. Being salaried is not bad, but to be independent, you need to be made of something tougher. A self-employed trader can work less, enjoy more, and profit ten times higher than a salaried employee, but must be willing to take the risk. Be warned: without the willingness to risk your money, you'll get nowhere in trading.

For the independently-minded, being an employee is rarely a sufficient lifestyle…so the two best options are operating a small business or trading stocks. While both methods have their advantages, there are some clear benefits to trading. For instance:

Not everyone is suited to being a stock trader, just as not everyone is suited to being self-employed. Setting up a business requires commitment, responsibility, investment, and risk. If I had to choose a field to be self-employed in, undoubtedly my top choice would be one with the lowest risk and highest possibilities.

From my experience, I've learned that the chances of success for a beginning trader who must earn a livelihood from trading are far lower than for those who simultaneously maintain their original source of income. I want you to start out small and at the same time, maintain another source of income. I want you to succeed slowly and safely, knowing you have a secure amount of money coming in, reducing the pressures to generate immediate income. If you’ve left your job or are between jobs, don’t rely on trading profits. If you don’t place all your hopes on trading profits, you'll profit. If you feel pressured to profit, you'll end up losing.

A successful trader needs three basic components:

The chain is only as strong as its weakest link. Each of the components below is important to your chain, which is your business. If you want your business to do well, invest in each of them, from the enrichment stage (learning) to the daily tools stage (trading system).



DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


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