Create a 12-Step Business Plan

checklistAre you planning on trading binary options online for a living? If so, it is important to make the jump from thinking of binary options online as a hobby to thinking of it as a business. That can be hard to do when the industry largely encourages the former. More than ninety percent of binary options online traders who trade as hobbyists will never learn how to trade well enough to do it professionally. If you do, you need to take the same steps that any other professional would when getting started with a new business, and that includes coming up with a business plan.

A business plan is not necessarily interchangeable with a trading plan (which I have talked about in-depth previously), though the two can go hand-in-hand. Your trading plan can be a part of your general business plan. Your business plan takes a broader look at how you will organize your business, while your trading plan has more to do with the day-to-day of trading itself.

There are three main types of business plans:

  • External
  • Internal
  • One-Page

The 30-40 page formal business plan with which many people are familiar is the “external” business plan. A lot of new business owners are discouraged making a business plan, because they are under the misapprehension that all business plans are external business plans. You do not need anything this extensive though unless you are looking for outside investors. And odds are, if other people are going to pay you to trade for them, they are going to find you organically based on your public trading results anyway. So you probably do not need one of these at all.

Internal business plans are less formal than external ones, and have a focus on strategy and budgeting. You probably do not need this either, unless you are going to be trading with partners on a team. If you are going to be trading on your own (almost a certainty in the beginning), the One-Page plan is probably right for you. This is literally just a really brief rundown of your plan that fits on a single sheet of paper.

There is no single “right” model for a business plan; there are endless variations on every kind. A lot of the questions which are applicable to other businesses probably are not applicable to you right now. For example, you do not need to spend time thinking about the right kind of customer, unless you are planning from the start to manage other peoples’ accounts. If you are only trading for yourself, you have no customers. Likewise, you do not need to worry about a “product” or a “service,” because you are not producing anything. Nor do you need to market nor worry about demand (one of the nicest things about binary options online trading!).

There are a few topics you should go over, though. Ask yourself the following questions:

12 Step Binary Option Trading Questions To Ask Yourself

1. What resources do I need to get started in binary options online trading?
2. How much can I afford to invest?
3. What are my minimum needs to get started in trading?
4. How will I generate revenue?
5. How will I use that revenue?
6. Where can I get support?
7. What are my likely pitfalls?
8. What are my goals?
9. What is my trading plan?
10. What direction do I plan to take this business?
11. How do I measure success?
12. Where do I go from here? What is my next step?

 

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Now I want to talk about each of these different points in a bit more detail so that you know what to think about when you write down each.

1. What resources do I need to get started in binary options online trading?

In many ways, thankfully, binary options online trading is a fairly simple business to get into. The supplies you need are quite minimal. You need a computer and/or a mobile device (I do not recommend trading exclusively on a mobile device; a desktop or laptop is very helpful, if not completely necessary) with a reliable and fast internet connection. You need time to trade, though not necessarily as much as you might think (you can do this on top of a full-time job if necessary). You need money to invest. You need to choose a broker to invest with. And you need knowledge and a trading system. The last two will probably involve the most work (along with finding the venture capital). And that is really about it.

2. How much can I afford to invest?

Budgeting is always something to consider when starting up a new business, and trading is no exception. Take a good hard look at your monthly finances and savings, and ask yourself how much you can responsibly afford to invest. Can you add to your trading account each month? If so, what is the upper limit on that which will not interfere with the rest of your financial life? How much can you take out of your savings to fund your account while still leaving a safety net?

3. What are my minimum needs to get started in trading?

What do you need at an absolute minimum to start trading? And no, “$100” is not a good answer, even if it is your broker’s answer. Why? A couple reasons. Firstly, with $100 in your account, you cannot trade according to a responsible money management plan if the minimum trade size is even $10! You need to deposit enough that you can trade no more than 5% of your trade at the very outside, preferably less than that. Secondly, you will be making money at such a crawl at that rate that there really would not be much point. I would recommend starting with at least $500, but once you do the math, you might decide $1,000 or $2,000 is a better number!

While you are at it, also ask yourself what minimum testing results are acceptable to you when it comes to going live. How many net winning trades per month at a minimum would you be willing to start with? What win/loss ratio would you be comfortable with? Whatever rule you set for this, you may end up adjusting it in the future, but be very cautious about doing so. So long as you are setting realistic expectations at this juncture, those expectations should be attainable. It is dangerous to compromise in this area. You do not want to tempt yourself into trading with an inferior system later down the line.

4. How will I generate revenue?

Here, most business plans go into a pricing model. Thankfully for you it is probably much simpler than that. If you are trading on your own, your revenue is whatever money you make from your trading. If you are trading with a team, you will need to decide how and when to divvy up the winnings. If you are trading for clients, you will have to decide what percentage to take as a commission, and when you will be paid. Again, if you are trading for clients, you will need a much more comprehensive business plan.

5. How will I use that revenue?

What will you do with your profits from trading? Will you take them out and use them to pay for expenses? Will you put them in savings? Will you keep them in your account? I highly recommend the latter. If you are constantly removing money from your trading account, you will never be able to grow that account. You have to be able to build your account up, or you will always be investing the same small amount of money. 2.5% of $500 is a much lower number than 2.5% of $5,000. If you are always removing money from your account as you win, your balance will never move far above the $500, and you will never be able to trade 2.5% of $5,000, or $50,000. If you are planning on removing money from your account constantly to finance your everyday life, I suggest you look for a reliable day job before you start trading.

6. Where can I get support?

Identify online trading where you can talk to other binary options online traders. That way you can get the support you need emotionally, and also gain access to educational materials. Ensure that your binary options online broker provides you with a reasonable amount of support as well. You may also want to search for a binary options online mentor or coach who can teach you about trading and help guide your progress. This is not an easy business to pursue completely on your own in a vacuum.

7. What are my likely pitfalls?

Try and predict what some of your biggest pitfalls are likely to be. Maybe you know that you struggle with money management, or perhaps you know that you tend to be an emotional trader. You might also know that there are potential problems with your trading method, certain types of markets you need to avoid trading in, and so on. Perhaps you know you will react badly to failure. Whatever your likely pitfalls are, make a list of them. Avoid the ones you can. Those you cannot avoid completely, you will need a contingency plan for.

8. What are my goals?

Why are you trading binary options online? There are a number of long- and short-term goals you can list in this section, but make sure the goals you list are actually useful. Useful goals are : Smart, Measurable, Attainable, Relevant, and Timely. These goals will keep you on target, but they will not discourage you. They are realistic enough that you can actually achieve them, and specific enough that you can measure your progress toward them. A great goal to start with is, “I want to trade binary options online for a living.”

9. What is my trading plan?

This is a whole detailed section in itself, one which you will probably look at every single day as a binary options online trader. Your trading plan is a document which includes a detailed approach to binary options online trading, including:

• What assets you will trade
• What your trading method is
• What your entry criteria are
• What your exit criteria are
• What expiry times you will trade
• How much you will risk per trade as a percentage of your account (your money management plan)
• What days and times you will watch the charts
• Your trading schedule
• What devices you will trade on
• Where you will trade
• If and how you plan to use auto-trading, signals, and alerts
• Which signal services you will use, if any
• A checklist for any trade you are thinking of taking
• What you will do if you encounter a losing streak

You may think of other details to consider in your trading plan as well. There is no limit to what goes into your plan; in fact, the more, the better. Just try to keep it succinct on the page, so that you can view it all at a glance and review any time you need to. I keep this file right on my desktop so I can look at it any time. Some traders even print it out and tack it to the wall next to their computers.

10. What direction do I plan to take this business?

Will you always be trading on your own, or do you think someday you might want to try trading with partners? Are you thinking of taking on clients someday? If so, what would you need to achieve with your own personal trading account to feel comfortable doing that?

11. How do I measure success?

Setting goals is perhaps the first step in measuring success, because you cannot figure out if you are making progress unless you know what you are progressing towards. Even once you do, though, you need to come up with mile markers you can use to help you establish where you are. The first instinct for most new binary options online traders is to use the dollar amount in their account as their measurement of success. While you definitely want to see that number climbing, I recommend that you steer clear of this definition of success. Why? You will be moving along slowly in the beginning, unless you happen to have a huge account to start with. That method of tracking success encourages impatience, and may make you feel like a failure when you are not one.

I suggest instead that you measure success according to other quantitative and qualitative criteria. Look at your statistics and figure out which ones are most important for determining profitability. Measure success as you push those statistics higher and higher. Your return percentage matters more than the dollar amount. You can also measure success according to your own personal performance. If you follow your system rules, make all the right choices, and stay disciplined, you can count that as a win every day. And remember, no one has perfect success with a business! Do not get too down about your failures. Just learn from them and move on, and you will get better and better at what you do.

12. Where do I go from here? What is my next step?

You can plan all day long and never get anywhere if you do not eventually take that plan and put it into action. So the last step in writing your binary options online trading business plan should be to figure out exactly what you need to do next. What can you do to start accumulating the venture capital you need to start trading? How can you begin soaking up the knowledge you need to become an expert? What trading methods can you begin trading right now? What communities can you join, and what conversations can you start?

Once you come up with your next steps, do not stay nebulous about them. Instead, translate them into achievable short-term goals. Set a schedule for accomplishing these tasks. Put aside a certain amount of money each month until you have enough to trade. Decide on a weekly schedule for researching and testing binary options online trading methods. Come up with a tentative guess at when you could start trading live. Know that you will probably have some setbacks as you move toward that time, but don’t let that hold you back.

It takes time and thought to come up with a binary options online business plan, but you can probably get one written out in an afternoon. Doing so can actually save you a lot of time and money, since it will get you on target and on schedule. Since you will be more focused, you will be less distracted, and you will have a much better shot at achieving your goal of trading binary options online for a living.