Forex Trading: The Ideal Home Business? Part 2
08/07/2012 8:30 am EST
Sure, the commute cannot be beat, but whether you are leaving the comforts of your investment firm to strike out on your own, or are a home investor looking to make a go of it on a more full-time basis, there are some practical considerations to take into account, and also some potential pitfalls to avoid when it comes to planning your new home-based trading business, writes Andrei Knight.
Your Trading Room
As much as we love our kids, they are probably not going to be the best source of investment advice. If anything, the noise of their play and favorite television programs will prove an expensive distraction, and without fail at the most critical moments. Therefore, if you do not already have a dedicated office in your home, it is time to consider creating one.
A trading room need not necessarily be large, but it does need to be private, preferably with a physical door that you can close. Spare bedrooms work wonderfully for this.
If you presently have a guest room, ask yourself how often it is typically occupied versus how often you might need it for trading or other work. Guests can always spend a night or two on your couch (this has the added benefit of reducing the duration of their stays), or an air mattress can easily be brought in when needed.
If there are no spare rooms available, what about the attic or a walk-in closet? Working in your garage may not be the most appealing option, granted, but is there anything else which can perhaps move into the garage to free up additional working space in your home, for example your washer and dryer?
Worst-case scenario, you can always put your desk in a smaller closet, and sit facing into it with the doors open—three walls are still better than none.
The idea is to have a designated space for your work in order to create the feeling of going to work. No matter how short the commute, even if it is just down the hall, I have found it is still important to have that commute.
It is a way of refocusing your brain, telling yourself that the next couple hours have a definite purpose. Otherwise it is all too easy to get lost in e-mails, browsing Web sites, and other distractions.
Like any professional office, yours should have designated working hours. Left to our own devices, most of us would watch the charts or read news reports into all hours of the night, very often trading in dangerous, choppy markets with little to no liquidity.
Once you select the main instruments you intend to focus on, do a bit of historical research and find out during which hours of the day they have their biggest moves and the largest amounts of volume. This is when you want to be near your screen, and these hours need not necessarily be consecutive.
Besides the mental separation mentioned previously between focused work with a purpose and just going to your computer to check e-mails or “look something up," keeping a fixed schedule has one other main advantage—your family will be much more likely to respect your needs for periods of quiet concentration if you also respect their need to spend time with you. This way, everyone is clear on what happens when.
Your family is not a distraction from your work—your family is why you work. Reserving set hours for your activities, and also theirs, is one great way to show them exactly how much you care about them. You can also set goals together for certain purchases or holidays together, based on revenue targets, just like any other business does.
Keeping Your PC Healthy and Happy
Trading software collects and displays lots of data each and every second. This tends to create fragmentation on your hard drive. When a file is deleted, it leaves a space of a certain size. If the next file you save is larger than that space, it will be split into separate pieces in order to fill the available free space on your drive.
While Windows comes with its own defragmentation tool, there are commercial products which do a much more thorough job in much less time, plus they allow you to keep working while they run in the background. My own personal favorite is PerfectDisk from Raxco.
Some popular tools, like DiskKeeper, emphasize ongoing real-time defragmentation, so as to avoid the routine “deep” pass. While ideally suited to certain applications, in trading this can cause unwanted slowdowns at inconvenient times. Rather, what you want in this case, is a once-a-week deep, thorough pass—and you can even schedule it to run automatically while you sleep if you like.
You should also give some consideration to backups. Since most viruses target the C drive, I like to have two separate hard drives on my machine. The programs reside on C, and all my personal files and data live on D. If you are on a budget, then at least consider partitioning your existing drive into two separate halves.
For my C drive, I like to back up by creating what is known as an image. This saves all your programs and even all their settings. If your drive ever fails, or gets infested beyond your anti-virus software’s ability to clean it, you simply reformat or pop in a new one, click a button or two, and you’re back in business.
Norton Ghost and Acronis True Image are two popular pieces of software that can help you accomplish this. Otherwise, reinstalling Windows plus all your software can have you down for a week or more. What would that cost you?
For the D drive, I prefer to create file-by-file backups rather than the entire drive all at once. This can either be done manually, by dragging your files over to an external drive or online backup service, or you can use software such as SmartSync to automate the process for you.
If you haven’t already done so, consider investing in a second monitor. Most graphics cards these days readily support two, and you will find your productivity more than doubles if you do not always have to rely upon the Alt+Tab combination. Careful, though, productivity is addicting—I’ve recently added my fourth.
Lastly, besides your trading software, get yourself a good world clock. Many of us these days trade markets such as commodities or forex, which have hours beyond just the London Stock Exchange. It really helps to know which part of the world is trading, and who is asleep, at any given hour. SymmTime is a great little free application for this, or if you use Firefox you can also download a plug-in called FoxClocks.
Treat it Like a Business
If I may offer one final piece of parting advice, it would be to treat your new trading venture as a business.
Too many people view it as “get rich quick”, and their unrealistic expectations can lead them to take on large positions, which go devastatingly wrong when the market does something other than what they anticipated. Highly-trained and experienced fund managers are thrilled when they manage 10% per year; why would you expect to double your money your first few months out?
Successful businesses are always minding their books—so keep a trading journal. Don’t just record your entry and exit prices, but pay attention to why you took the trade, and if that opinion held or what happened to change it, as well as your feelings before, during, and after the trade. Over time, certain patterns will begin to emerge about your thought processes and behavior. This information is invaluable in charting your future adjustments and progress.
We may think it is the markets that we are trading against, but the secret that most professional traders know is that in the end we are really trading against ourselves. May your new home-based business be an educational, enjoyable, and profitable one!Andrei Knight is a fund manager, trading coach, and a highly sought-after keynote speaker who has appeared at events including the World Money Show, Traders Expo, IX Investor, and the International Traders Conference. He is the author of "Trading Forex for a Living" from Harriman House, provides strategic market analysis for leading Swiss broker Dukascopy, and is featured in the forth-coming documentary "Fibonacci: Unlocking the Market Code". His Web site, fxKnight.com, provides news, software, and educational services for active traders. He tweets regularly as @BlackKnightFX