The funny thing about trading is that when you are able to manage your risk, you’ll start to see your rewards.

While it may seem to be “negative” to be focused on managing losses, the perspective of the trading reality is somewhat different from what it’s like in real life.

In life and business, it’s good to stay positive. When times are down, business is bad, staying optimistic and focused is necessary to pick oneself up and pull through. It helps when you’ve got a solid business plan, done your research and weighed the pros and cons.

In the broad sense, it goes the same for the trading business. Except that when you’re building your trading plan, you focus on not losing first and on making profits second.

Your Negative Business Plan for Trading Profits

When you’re going through losses and suffering drawdowns, you have to be positive and pull yourself up in order to keep on going.

But when it comes to the actual trading, you always weigh the risks first. The worst case scenarios, what ifs, and step-by-step process of entering and exiting the trade whether it’s for a profit or a loss. Not only that, you have to cater for unseen risks as well.

Risk to your trading business can include:

• Broker Risks
• Market Gap Risks
• Connection Down-Time Risk
• Sudden need for cash at home / business risk
• Strategy Risk
• System Risk
• Etc

So while it might seem “negative” to be so risk-focused, it’s what keeps you alive so that when you’re going through a drawdown, you can stay “positive”. You may not realize how important it is to reduce as much risk as possible, while staying focused on trading for profits. But when one of these things do happen, you’ll be so grateful and thankful that you prepared yourself for it.

Does that make sense to you?