Why Trading Is Such a Great Business: More Than Just Making Money

There are plenty of articles that talk about the risks of trading, and for good reason. Trading involves risk, and anyone who enters the markets needs to understand that. But sometimes I think we spend so much time talking about what can go wrong that we forget to talk about something else: what a wonderful business trading can be.

I have spent a lot of years around the markets, and one thing I continue to appreciate is just how unique this business really is. Trading gives an ordinary person access to opportunities that would have been almost unimaginable a few generations ago.

You don't need a storefront. You don't need employees. You don't need a warehouse filled with inventory. You don't have to convince someone to buy something from you, and you don't need to worry about a customer returning a product six months later.

With a computer, an internet connection, some trading capital, and a good education, you can participate in markets that are traded by people and companies all over the world.

What makes trading especially remarkable is that this opportunity is available to the average person. You don't have to work on Wall Street, manage millions of dollars, or have a degree in finance. An individual trader sitting at home has access to many of the same markets, charts, prices, and opportunities as professional traders around the world. That doesn't make success easy, but it does make the opportunity unusually accessible.

That's pretty amazing when you think about it.

The Opportunity to Make Money

Let's start with the obvious reason most people become interested in trading: the opportunity to make money.

There is certainly nothing wrong with that. Trading offers the possibility of taking an idea, risking a defined amount of money, and potentially earning a return if that idea proves correct.

Of course, the key word is potentially.

There are no guaranteed profits in trading. Losing trades are part of the business, and anyone who tells you otherwise isn't being realistic. The goal isn't to eliminate losses. The goal is to learn how to manage them so that they don't prevent you from being around when the good opportunities arrive.

That is one of the things I like most about trading. I don't have to be right all the time.

A trader can have losing trades and still be successful over time if losses are controlled and profitable trades are allowed to do their job. Once you truly understand that concept, your entire view of trading can begin to change.

Instead of asking, "Will this trade be a winner?" you begin asking, "If I'm wrong, how much am I willing to lose?"

That's a much better question.

Trading Teaches You About Yourself

One of the unexpected benefits of trading is how much you can learn about yourself.

Put real money at risk and emotions have a funny way of showing up.

You learn whether you're patient or impatient. You discover whether you can follow a plan when things become uncomfortable. You find out how you react after a loss and, surprisingly, how you react after a big win.

Are you tempted to immediately make another trade?

Do you move your stop because you don't want to admit you were wrong?

Do you take profits too quickly because you're afraid they'll disappear?

Do you chase a market because you're worried about missing the move?

A chart can teach us quite a bit about price, but trading that chart can teach us quite a bit about ourselves.

Over time, a good trader learns that controlling the market is impossible. The only thing we really have control over is ourselves—our entries, our position size, our stops, our risk, and our decisions.

That's an education that can extend well beyond trading.

Trading Teaches Risk Management

I often say that trading isn't simply about finding winning trades. A huge part of this business is learning how to manage risk.

You can find the best-looking setup you've seen all month and still be wrong.

That's trading.

Because we know that beforehand, we can build a plan around it. We can decide where the trade is no longer valid. We can determine how much money we're willing to risk. We can adjust the number of contracts we trade, and we can walk away when the risk doesn't make sense.

Think about how valuable that lesson is.

Instead of avoiding risk, a trader learns how to measure it, accept it, and control it.

I believe that's one of the greatest skills trading can teach.

The goal isn't to become fearless. In my opinion, a trader who has no respect for risk can get into trouble very quickly. The goal is to become comfortable making decisions when the outcome is uncertain.

And uncertainty is everywhere in life.

You Can Build Trading Around Your Life

Another wonderful thing about trading is its flexibility.

Different people can approach the markets in completely different ways.

Some traders enjoy watching short-term charts and making several decisions during a trading session. Others would rather look at daily or weekly charts, make fewer decisions, and hold positions longer.

Some specialize in one market. Others watch dozens.

There isn't one required path.

Trading can be built around your personality, your available time, your risk tolerance, and the type of decision-making you enjoy. That's very different from many traditional businesses where the business decides when you show up and what needs to be done.

Trading still requires discipline and work, but it offers an unusual amount of freedom in how that work is performed.

The Markets Never Stop Teaching

After all my years in this business, I'm still learning.

That's another reason I enjoy trading so much.

Markets change. Volatility changes. Leadership changes. A quiet market suddenly becomes active, while a market everyone has been talking about can go to sleep.

Patterns repeat, but they're rarely identical.

That's what keeps the business interesting.

You can study technical analysis, seasonality, support and resistance, chart formations, money management, trader psychology, economics, weather, interest rates, currencies, agriculture, energy, metals, and countless other subjects.

You could spend a lifetime studying the markets and still find something new tomorrow.

For someone who enjoys learning, that's hard to beat.

Perhaps the Greatest Benefit: Independence

There is also something satisfying about taking responsibility for your own decisions.

When I enter a trade, I know why I'm entering it. I know where I'm wrong. I know what I'm risking, and I know what I'm looking for if the trade works.

Nobody else has to approve the decision.

That independence comes with responsibility, of course. There is nobody else to blame when things don't work either.

But I think that's healthy.

A trader eventually learns to stop blaming the market, the news, another trader, or bad luck and simply ask, "Did I follow my plan?"

Sometimes the answer is yes and the trade still loses.

That's okay.

A well-planned losing trade can still be good trading.

It's a Business, Not a Lottery Ticket

Maybe this is the most important point of all.

Trading becomes much more rewarding when we stop treating it like a way to get rich quickly and begin treating it like a business.

Businesses have expenses. Trading has losses.

Businesses manage cash flow. Traders manage capital.

Businesses look for opportunities where the potential reward justifies the risk. Traders should do exactly the same thing.

And successful businesses don't judge themselves on one transaction. They look at results over many transactions and over long periods of time.

The same approach makes sense in trading.

One trade doesn't define us.

Neither does one bad week.

What matters is whether we're continually learning, controlling risk, improving our process, and putting ourselves in position to participate when a good opportunity comes along.

A Pretty Amazing Business

Trading isn't easy, and I would never suggest otherwise. There is real financial risk involved, and there are no guarantees of success.

But difficult and worthwhile are not opposites.

When approached properly, trading can teach patience, discipline, responsibility, independence, humility, and risk management. It encourages us to continue learning, challenges us to think for ourselves, and gives us the opportunity to participate in markets from virtually anywhere.

And yes, if we learn to do it well, there is also the possibility of making money.

That's a pretty unusual combination.

Maybe that's why, after all these years, I still find myself fascinated by the markets. There is always another chart to study, another lesson to learn, another opportunity somewhere ahead—and another chance to become a little better trader than I was yesterday.

For me, that's one of the real beauties of the trading business.

The Next Step

If you are new to CommodityTrends, our memberships take these ideas a step further. We show you how we read the charts in real time, analyze the markets each day, and identify potential trading opportunities as they begin to develop.

To learn more about our memberships, visit: https://www.commoditytrends.com/register

— Jim Prince, CommodityTrends.com

Educational content only. Futures and options trading involves substantial risk of loss and is not suitable for every investor. Nothing here is a recommendation to buy or sell any contract. Past performance is not indicative of future results.