In today’s show, we will approach trading from a different angle, looking at it from a practical and pragmatic perspective by asking the question: “What is the business of trading all about?”
Matt strives to answer this question using interesting correlations of real life examples and other forms of business to give the audience an insight into the variables of trading.
There is a substantial risk of loss in futures trading. Past performance is not indicative of futures results.
Episode TranscriptRead Show Transcript
Welcome to Episode 5 of the Optimus Futures Podcast. In this episode host Matt Zimberg strives to answer the question, what is the business of trading all about? Listen to hear unique and alternative perspectives from an industry veteran. Gaining insight into the many components of trading futures. Please remember that this matter should be viewed as a solicitation to trade trading futures and options involve substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. Optimus Futures LLC is not affiliated with nor does it endorse any trading system methodologies newsletter or similar service. We urge you to conduct your own due diligence.
Have you been looking for practical advice to take your trading career to the next level? Can’t decide on which platform to trade on? Fearful of the current state of the market? Look no further. Welcome to the Optimus Futures Podcast. A place to learn from an industry insider with over 20 years of experience in commodity futures and options. Gain insight to the newest technology, platforms, risk management concepts, trading philosophy and advice about the current state of the market. For futures trading platforms, deep discount trading commissions, overnight margins, and instructional videos feel free to visit our website at Optimusfutures.com. Now here’s your host independent broker veteran and CEO of Optimus Futures, Matt Zimberg.
Hi guys, this Matt. It is Monday, so I wish everybody a good trading week. I want to approach today with the business of trading, from a different angle. That’s my goal, is always to give you a different angle to think about trading. I know that you’re exposed to a lot of information out there and everybody is going to give you a lot of perspectives and opinions. But I would like to give you, I’m trying to give you a perspective that others might not. Which is again, as I always say practical and pragmatical. So the question that I always ask is, What is the business of trading all about? Before I approach it and answer it I want to talk about a few other businesses. The whole purpose of this podcast is to illustrate that what you see in the front of the business is always something that people think of, but don’t really know what’s the inside of the business. And I’m going to use some examples just to illustrate that. So for example let’s look at the business of restaurants. If you ask anybody out there what’s the business of restaurant all about. If they had to define it in one word they would probably say food. But in reality its inventory is very, very important now. I’m not saying it’s the only variable that’s important but there’s a lot of restaurants that fail out there and they have amazing food and that’s because inventory was not managed right resources were not managed right. People were not in the right. So food is just one component of a restaurant. If you look at the business of news on TV or you know all the channels that were used to CNN, CNBC, Fox, CBS, regardless of their political affiliation. If somebody said what’s their goal, the goal is obviously to deliver news. But their goal is also to mix out advertising that cannot survive without advertising and advertising plays a very big role in the information that we receive. So advertising becomes part of the business. If you look at the business of cars, obviously there is innovation, quality and everything else. But the reality is that car dealerships are in the business of leasing. So they have an interest rate that they borrowed their money and to transfer the cost to the consumer. And this is where the profit lies. So management of interest rates and management of cash interest rates, is also an integral part of the business. So now let’s talk about trading for a minute. I would say that majority of people, if I ask them what’s the business of trading, especially beginners, they would say it’s making money, but there’s a lot more to trading. Making money in this business as a byproduct of other things. This is not the business of trading is all about, at least not in my opinion. If you’re successful in implementing certain things then potentially you might be profitable. And I say potentially. Let’s talk and analyze trading and what it’s all about. So there’s three variables that I think are very important here. One the business of trading is about decision making. Now there’s a whole philosophy out there about how people arrive at decisions. Whether it’s a CEO, successful people athletes, decision making is a field in itself. And this is what trading is. It’s a business of decision making based on the variables. And if you’re not used to making a lot of decisions you should get used to it when you get into the business of trading. And I would suggest looking at other resources and reading other books that have that expertise in decision making. And I hope that it would help you in the business of trading, so decision making is very important.
The second thing that I would say the trading is all about as a risk. I believe that including myself, maybe what attracted me to the market in the beginning was the reward. Obviously the potential reward of successful trading, but I think that risk is just as equally important. What does it mean risk? Risk is really understanding how many contracts you may trade when you trade what sort of risk you take on every single trade before you think about the reward. And I truly believe that the people that think about risk first before reward will have potentially, I should say potentially have better access success in the markets that only think about people. I’m sorry they will have better success than people that think only about rewarding itself and downsize the importance of risk. So risk should come first. This is the second variable.
The third variable of trading in the markets is a commitment to studying the markets on an ongoing basis. There is a lot of occupations out there that are repetitive and it’s doing the same thing over and over and over again without any learning curve. The business of trading is a business where you have to consistently study the markets and markets change. In essence yes they can gain. They can only go up or go down or go sideways, but how they do it and the percentage of volatility or the ranges that it goes to changes all the time or how long it can stay up or how long it can stay down at the bottom. Those things consistently change. So if you’re in the business of trading you’re in the business of on going education consistently. Now it doesn’t mean that you always have to change your method on an ongoing basis, but you definitely have to maybe make slight tweaks or changes and implemented in a way that is suitable for that market environment. So again I’m going to repeat what I think tradings all about a lot. The three variables one decision making. Second one is risk and the third one is committed commitment to studying the markets. The last thing I would say is that any byproduct of trading that you consider could be just as valid. Just because I chose these three there might be another 10 variables or five variables or one variable that are equally as important to you as a trader. But the key is not to think about the money first. The key is to think about everything around that is involved in that business in order to get you to the point where again potentially you could see some rewards from the markets. Which again a good week. And until the Podcast, thank you guys.
Thank you for listening to the Optimus Futures podcast. Subscribe to our podcast on iTunes, SoundCloud, and Google Play. You can also find us on YouTube, Facebook, Twitter and Google Plus all under the username Optimus Futures. If you have any questions feel free to send us an email to firstname.lastname@example.org or give us a call directly at 561-367-8686. Toll free at 1-800-771-6748. Once again thank you for listening to the Optimus Futures Podcast.
Please remember that this matter should be viewed as a solicitation to trade trading futures and options involve substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition Optimus Futures LLC is not affiliated with nor does it endorse any trading system methodologies newsletter or similar service. We urge you to conduct your own due diligence.