Trading as a business
What do you look for when you consider doing any good business? Profits? Of course but it comes last even though it is the first to come to your mind. Before that you have to spend a lot of time and money to set up the infrastructure if you are planning to go into manufacturing or you have to have enough capital to buy or enough reputation or financial standing to get the goods of your choice you want to trade, on credit from its manufacturer or to get a bank loan. Even if you want to go into services you need the area experts plus the set up costs (for example setting up of a hospital). Even after that there are risks of the slow demand either because of a general slowdown of the economy or the advent of a competitive product which might be much better than your product owing to the use of the latest technologies by the competition or their's being a very innovative product. There are additional risks of not being able to get 'good hands' to share your burden or if there is a strike in your company by the employees or by the exodus of some key persons from your business . We all know of many such risks.
Any business should be considered only if it is scalable. What does it mean? It means that there should be enough consumers to keep buying your products at reasonable prices when you increase its output. Even if there are buyers ready, check if you are logistically equipped to meet the increased demand while keeping the business profitable. If you look around you will find many businesses doing very well at a smaller level but cannot be grown further owing to the problems mentioned above.
Trading (Forex/Equities/Commodities etc.) is one business which is recession proof. It also requires relatively lower capital and has the potential to offer a very high rate of returns (even 100 percent returns in a year on the capital employed is not unheard of). You can do it at your chosen time and also take time out to do all other activities of the world by simply taking time off and come back, say after a holiday, to start growing your money from where you left it. Imagine doing the same thing in your current job or business. (This reminds me to tell you that the purpose of any business activity is to make yourself redundant. It should go on auto pilot mode after you succeed. This is exactly what the Tatas or Birlas have done.) So what is the problem in this 'business'? Well, you need to develop the skill and it takes years of hands on experience to become an expert that too if you are persevere enough. You can also hire an expert to do it for you but this makes the business like any other business with the risk of the person leaving you for greener pastures. The other risk is that of even losing your capital if your 'calls' keep going wrong for whatever reasons. Please remember that it is a 'zero sum game' and if you earn 100 Rupees someone else must lose it.
My experience in the field says that if you take time out to develop your trading skills and then do it as a serious business with proper game plan and money management strategies you would be among the winners. You can reduce the learning time considerably by learning from the experts in the field. Like in any other field, a good guru here also would be a person who has enough hands on experience (by experience I mean that they should already have committed all the beginner's as well as the veteran's mistakes and tell you beforehand what not to do. After all, it's always good to learn from other's experience that it burns without putting your own fingers into the fire).
Please offer your comments and suggestions.
Did it sound exciting? Are you ready?