Survival Guide for Traders How to Set Up and Organize Your Trading Business

by McDowell, Bennett A.; Turner, Toni

• ISBN13: 9780470436424
• ISBN10: 0470436425
• Edition: 1st
• Format: Hardcover
• Copyright: 2011-11-22
• Publisher: Wiley

Summary

Strategies for building a successful home trading businessIt's hard enough to make money as a trader. But, many times, it's the "back office" operations of a trading business that distract and destroy a trader. The complexities of buying and selling equities for a profit as well as the challenges of handling a home trading business are vast-and often overlooked.With the Survival Guide for Traders, you'll receive answers to all of your questions, and several questions you didn't think to ask, including how to create a trading business plan, set up an office, implement a trading system, use margin, deal with legal and financial issues, and keep appropriate records. Examines the opportunities and challenges of handling a home-based trading business Details the process of setting up and organizing your trading business Includes a comprehensive "Trading Business Plan Template" that you can customize Written by Bennett McDowell, a highly regarded trader and trainer of tradersFor individuals considering entering the exciting world of trading, the Survival Guide for Traders offers practical solutions that can help you build a trading business that will not only succeed, but also last.

Author Biography

BENNETT A. McDOWELL, founder of TradersCoach.com®, began his financial career on Wall Street in 1984 with J.J. Kenny, and later became a Registered Securities Broker and Financial Advisor for Prudential Securities and Morgan Stanley. He developed his own proprietary trading system, later known as the Applied Reality Trading® (ART®) system, which was released to the public in 2003 and today is used by traders in over fifty countries around the world. Considered an expert in technical analysis and complex trading platforms, McDowell lectures nationally and writes for many leading trading publications, including Technical Analysis of Stocks & Commodities magazine. He has also written two other bestselling books published by Wiley, The ART® of Trading and A Trader's Money Management System, both released in 2008. Internationally recognized as a leader in trading education, Bennett teaches trading to students around the world through his company TradersCoach.com®.

Table of Contents

Foreword	p. xiii
Preface	p. xvii
Acknowledgments	p. xix
Disclaimer	p. xvi
Introduction: Survival of the Fittest	p. xxiii
Survival Basics	p. 1
It's a Jungle Out There!	p. 3
Brawn, Brains, and Technology	p. 4
Technological and Innovation Time Line	p. 5
Don't Bring a Knife to a Gunfight	p. 7
Right in My Own Backyard	p. 7
Managing Your Money Is Serious Business	p. 9
Trust and Financial Advisers	p. 10
Tips on Selecting a Qualified Financial Adviser	p. 11
So, Who Are You Going to Trust?	p. 12
Creating Your Own Business Plan Will Strengthen Your Ability to Prosper	p. 13
Trade, Invest, and Live within Your Means	p. 14
Accountability, Setting Stops, and the Rogue Factor	p. 15
Traders Are the Ultimate Entrepreneurs and Must Be Held Accountable	p. 16
Setting Stop-Loss Exits Is Essential	p. 17
The Infamous Rogue Trader Named Nick Leeson	p. 17
Watch the Rogue Trader Movie	p. 18
Insurmountable, Large Losses Usually Start As Small Losses	p. 19
Winn's Your Net Worth?	p. 21
Net Worth Statement	p. 21
Creating Your Financial Profile	p. 22
Are You Moving Forward, Falling Backward, or Standing in Place?	p. 28
The Life of an Entrepreneur	p. 31
New Start-Up Businesses Have High Failure Rates	p. 31
What Does It Take for a New Business to Succeed?	p. 32
Small Businesses Are the Backbone of the Economy	p. 34
Reduce Your Expenses and Increase Your Revenue	p. 35
How to Reduce Expenses	p. 36
A Penny Saved Is Really One and a Half Pennies Earned	p. 38
It's All About the Revenue	p. 39
Understanding Financial Markets	p. 41
Buyer and Seller Agree on Price, but They Disagree on Value	p. 42
Buyers and Sellers and the Financial Order Flow Process	p. 42
Types of Orders	p. 49
Using Margin and Leverage	p. 52
The Importance of Liquidity and Volume	p. 53
Zero Liquidity	p. 56
Volatility and Market Caps	p. 58
How Can the Bid and Ask, Spreads, Fills, and Slippage Affect Your Profits?	p. 61
You Can Parallel Test Your Broker and Data Feeds	p. 62
"I Feel the Need for Speed"	p. 63
So Many Markets to Choose From	p. 64
Ticker Symbols at a Glance	p. 65
How to Choose the Best Data Feed for Your Needs	p. 66
How to Choose the Best Broker for Your Needs	p. 70
How to Choose the Best Front-End Platform for Your Needs	p. 72
Manias, Panics, and Crashes	p. 73
Adapting to Changing Market Cycles	p. 75
Four Major Market Cycles	p. 75
It's All in a Name	p. 78
Using Trend Lines to Identify Market Cycles	p. 79
Using Elliott Wave Analysis to Identify Market Cycles	p. 80
Pitfalls of Not Identifying Market Cycles Correctly	p. 81
Education and Support	p. 83
A Few Classic Trading Books	p. 83
Learning Styles	p. 84
Repetition, Repetition, Repetition	p. 85
Paper Trading Is an Essential Learning Tool	p. 85
Do it Your Way	p. 86
You Can Learn from Your Mistakes and Failures	p. 87
Life Mentors, Professional Mentors, and Trading Coaches	p. 88
Writing a Business Plan	p. 91
Business Plan: Blank Template	p. 91
Front Matter: Title Page, Table of Contents, and Mission Statement	p. 93
Summary	p. 94
Strategy	p. 108
Operations	p. 118
Financials	p. 124
Business Plan Tips	p. 128
The Financial Pie	p. 129
The First Slice: Trading and Investing Rules	p. 131
Develop and Test Your System	p. 132
Perseverance Is the Holy Grail	p. 132
Failure Is Not an Option	p. 133
Creating Your Trading Rules Profile	p. 134
A Note about Day Trading versus Position Trading	p. 138
Holding Trades Overnight and Assuming Overnight Risk	p. 140
My Definition of Scalping	p. 141
Sample Trading Rules to Start With	p. 141
Combining Fundamental and Technical Signals in Your Trading Rules	p. 142
Technical Analysis Signals	p. 143
Fundamental Analysis Signals	p. 146
Value Investing in a Bear Market	p. 148
The Importance of Paper Trading	p. 148
Set Up Multiple Brokerage Accounts to Monitor Your Trading Results	p. 152
The Second Slice: Scanning for Opportunities	p. 155
Technical Scanning Techniques	p. 156
Fundamental Scanning Techniques	p. 157
Opportunity Is Always Abundant in the Markets	p. 165
Stocks	p. 165
Options	p. 169
Futures	p. 170
Forex	p. 174
Exchange-Traded Funds	p. 177
The Third Slice: Money Management	p. 179
What Can Money Management Do for You?	p. 179
Three Ways to Control Risk	p. 180
Risk Factors to Develop Your Plan Around	p. 180
Stop-Loss Exits Can Save the Day	p. 182
Your Survival Depends on Having a Healthy Respect for the Risk of Ruin	p. 184
Optimal f Formula: Information Similar to the Risk of Ruin Tables	p. 186
Comparing Optimal f Equation Results to the Risk of Ruin Tables	p. 187
The 2 Percent Risk Amount Formula	p. 188
Using the Trade Size Formula	p. 188
Trade Size Formula Using Leverage	p. 189
Using the Trade Size Calculator	p. 190
Good Record Keeping and Performance Analysis Are Essential	p. 191
Without Risk, There Is No Opportunity …	p. 192
The Fourth Slice: Financial Psychology	p. 193
The Trader's Mind-Set	p. 194
Even Good Change Can Be Stressful and Emotionally Challenging	p. 195
Looking at 15 Destructive Psychological Trading Issues and Their Causes	p. 196
Optical Illusions Show How Our Minds Can Mislead Us	p. 198
Epilogue	p. 201
Online Bonus-Survival Guide Central	p. 203
ART Basics	p. 209
Resources: Front-End Platforms, Brokers, Data Providers, and More	p. 243
Suggested Reading and Education	p. 255
Market Exchanges	p. 273
Glossary	p. 283
About the Author	p. 307
Index	p. 309
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