One of the major mistakes many Forex traders make is not treating their Forex trading as it is a business. Instead, they view it as a casino ride, and many of them end up acting like intoxicated gambling addicts rather than soothing and rational traders. You need to think of it as a serious business if you want to survive as a Forex trader because it is.
As with any other company, there are costs to be a Forex trader. Your aim as a trader is to try to get more money from profits (winning trades) than you’ve got from your expenses. If you can do that, you’ll be making a profit. However, if you let your costs get out of reach (mainly losing trades), you’ll lose money, and your Forex company will go under (you’ll blow out your trading account).
The cost of doing business in the Forex market
As with any other business, you have cost, even as a Forex trader. As a broker, the expenses are the losing trades that you have, the fees and spread that you pay, computers and other office equipment, etc. No matter how hard you try to stop losing trades, you will still get them, and they’re the biggest losses you’ve got as a Forex trader. Unfortunately, many traders don’t think of trading like this. They act like trading is a trip to the casino, or they see it as something they will become “perfect” at and never lose.
The truth of being a trader is you’ll still lose trades, no matter how hard you try to stop them, you’re going to have them. So, that’s the cost of doing business in the Forex market at number 1. What you need to do is what every other company is doing; make sure your income covers your expenses enough to make a profit for you.
So, to clarify this situation, let’s list some of the main costs of having a Forex trading business:
* Losing trades
* Broker spreads or commissions
* Computer (hardware)
* Other office equipment
Those will be the primary costs of operating your Forex trading firm, there may be others now, but for most traders, these are the largest. Your aim is to make sure you’ve got sufficient money from your successful trades (revenue) to meet all your costs and then some to make a profit.