If you call yourself a trader, other traders, profitable or not, see it as “treason” when they hear that you are also pursuing other businesses besides trading. In my opinion, it’s no wonder that those people are often the ones who struggle with their trading and their overall circumstances in life. The reason is a complete misunderstanding of how you SHOULD approach trading and how to improve your outlook on trading and making money.
Why do you want to trade?
Let’s start with the most obvious question…of course, we all want to make money – that’s why we venture out into the trading world, right?! But we don’t want money for the sake of just having money. We want money because of the things it allows us to do…
So what is it that you really want? A bold guess of mine would be that you are looking to quit your 9-5 job, work from home, be your own boss, maybe travel a bit more and enjoy independence and freedom of choice…
For most people, trading is not about Ferraris, penthouse lofts or sexy girls in bikinis; trading is the opportunity to change things up in their life and it is just an alternative way of making money, if you are honest with yourself.
Why do you limit yourself to one income stream?
I see it every week… People that, after trading for years, still can’t make a dime in the markets. They have invested thousands of hours, often tens of thousands of Dollars and their desperation level is at a max. They can’t quit, however, because they have invested too much. This type of pressure won’t help you on your journey and you will trade from a limiting state of mind.
Believing that trading is your only way out is creating mental anxiety and blockages.
What if, instead, you would run a small business, or pursue any other income-generating activity (freelancing, consulting, product reselling, passive income sources, affiliate marketing, real estate investing or flipping, …), on the side that generates enough income to cover some, or even all, of your expenses – while still allowing you to live a location-independent lifestyle? How liberating would it be if you knew that you can revert to other income streams of yours if trading isn’t working out?
None of the big corporations and most successful brands only have one product or skew. All successful businesses have multiple skews, several divisions and different ways of generating revenue.
Trading is a business and you have to think like a businessman. Be open to exploring other opportunities. Don’t limit yourself right from the start and certainly don’t listen to anyone else out there who is trying to tell you otherwise.
Trading and variance
Variance is a very important component in the life of traders – and an even bigger one for those that pursue a full-time trading career. You can’t forecast your profits as a trader; you never know when the market conditions will change and negatively impact your trading methodology.
Even the best traders will have long periods where they won’t be able to make money – not because of bad trading, but because of the concept of variance and alternating market phases.
If you depend solely on your trading income, you will be hit hard once variance strikes – not only from a monetary perspective, but also emotionally. When you depend on your trading results and suddenly the market throws a curveball, you’ll be happy to have other income streams in place that will offset your trading.
Become a better trader due to distractions
If you are a swing trader, there is very little to do throughout the actual trading day once you have done a thorough market analysis. In fact, if you are a swing trader, the most important day of the week is Sunday where you take a close look at all the markets you trade, update your charts, map out potential trade scenarios and set price alerts. Then, trading only becomes a waiting game and you need to let price come to you.
Swing traders who are glued to their charts all day end up micro-managing their trades, randomly flipping through time-frames and looking for something interesting to trade just because out of boredom. Having something else to do keeps you busy and away from your charts. Price alerts will make sure that you don’t miss anything of the action while you can generate additional income on the side.
Personally, I like to venture out into different areas – completely independent from trading – which also keeps my mind busy and helps me expand my horizon. I really can’t stress the importance of venturing out into a new area enough. By the way, this is also the reason why not leaving your actual job and pursuing trading as a side business can also improve your performance. It’s not all just black and white.
Building your account
The benefits of multiple income streams allows you to grow your trading account steadily without having to withdraw money. This is especially true at the beginning of your journey or if you want to keep building a massive account without needed to withdraw money.
The concept of compound interest is, as Einstein so eloquently put it “the 8th world wonder”. Knowing that your other income allows you to maintain a good living standard and that, at the same time, your trading account will just keep growing is very powerful.
I could go on and on, but I think you understand that in order for you to achieve your life goals, you should not limit yourself to one stream of income. And you have to be clear what it is that you are actually after. You don’t want to be a trader for the sake of trading, but because of the opportunities that it offers. Be open minded, use your talents, develop new skills and have fun while doing it.
What are your thoughts on this? Do you have any tips that could help other traders and what works for you? I look forward to hearing from you in the comments below.