Trading as a business means more than just trading to earn income. It requires that you treat all aspects of your trading just as you would if you were starting and growing a business. It is a logical, methodical approach to trading that is intended to be free from the potentially compromising influences of emotion. (See Trading Psychology.) Research, planning, implementation, performance evaluation and modification are all important elements of trading as a business. You should expect to invest your time, energy and money into making your trading business succeed, just as you would with any business. There's no point in starting something if you're not committed or in trying to cut corners just to save a few dollars.

Researching the market you intend to trade includes understanding the nature of the investment instrument, what influences the price of the instrument, and how to employ the instrument in a trade strategy. The WLF Network provides such information for E-mini® day trading, futures trading, options trading and forex trading.

The planning stage refers to the development of a trading system. A trading system is a set of rules that specify when to get into a trade, either long or short, and when to close a trade, either at a profit or at a loss. This trading system can be developed from scratch or learned through courses or books. A trading system needs to be consistent with your personal level of risk tolerance and available risk capital. For a overview of trading systems and their development, you may want to request our free brochure, How to Invest.

A trading system starts with an idea. Maybe you’ve spotted a pattern in price activity. It could be a day-of-the-week effect, a time-of-the-day effect, or a new relationship with other, related markets. Many of us have ideas but have been stopped short by the daunting task of translating that idea into a trading system and then properly testing that system. While many trading platforms such as NinjaTrader, MetaTrader and AIQ have become fairly sophisticated in their application for system design and testing, it seems that a trader needs to be part programmer in order to take full advantage of them - and many of us are not. Our custom trade system programmer can help. He has coding and programming experience with all of the major trading platforms and is even a trader himself. He can translate your idea into a trading system and then test it. The result may be a fully automated, personalized trading system that generates investment income for years to come.

Once you have a trading system, it needs to be implemented to determine its performance. The goal is not only profitability but the swings in total account equity resulting from (a series of) winning trades and losing trades should be tolerable to you. For example, a system that tends to be profitable but that also tends at times to draw down half of trading equity or more will likely be undesirable because of this risk. Implementation of a trading system should first be done in simulation under real-life conditions without risking actual dollars. The WLF Network provides an online futures demo, an online forex demo, and for those wanting more personal assistance, our general futures and options paper trading account.

The resulting trades, both profitable and not, of implementation of a trading system provide important feedback for performance evaluation and modification of the system. This continual cycle of system design, implementation, feedback analysis and system modification is performed until such time as the trader has confidence in the ability of the trading system to generate profit. At this point, the system is implemented with actual dollars and implemented with rigid adherence to the rules of the system. Feedback analysis continues in case system modification becomes necessary to respond to changing market conditions.

Like any business, trading as a business requires investment capital and working capital. Investment capital is meant to cover the costs of research and education as well as the development costs of designing or otherwise acquiring a trading system. Working capital or cash is held in your trading account and is needed to cover the costs associated with buying and selling and carrying open positions. In the case of futures trading, cash is needed both to cover the margin associated with trading as well as cover any net trading loss on open positions on a day-to-day basis. As is typical of any business, you should expect some fluctuation in performance and cash is necessary to carry you through any drawbacks.

Finally, keep a record and receipt of all expenses associated with your day trading business. Consult your tax professional both to determine how trading profits are treated and taxed, and what expenses can be deducted for tax purposes.