1---Conventional business provides either a service or a product that is of value to the consumer. The successful businessman creates value through his own actions. Conversely, there is nothing that a trader can do to create value in the end product. In fact, he is actually doing something that is unheard of in business. His actions are much like someone buying a product from a retailer, and then turning right back around and trying to sell that same product back to the wholesaler who originally sold it to the retailer he bought it from. Certainly, if the price of the product increases enough, this strategy would be viable for a normal business. But if you were to write a business plan on this premise, you would be mocked.
<b>This isn't true at all. Your example is flawed. You are assuming you buy from a retailer and then sell back to the wholesaler. Almost all business work this way from producer-wholesaler-wholesaler-retail. you cherry picked a scenario from retailer back to wholesaler when in reality, trading can be thought of as from wholesaler-retailer-wholesaler-retailer ( A very viable strategy in most industries).</b>
2---A normal start-up venture benefits from marketing of various types. Admittedly, they will suffer from varying marginal return on marketing expenditures, but if the product/service is the least bit desirable, they will absolutely increase revenue through advertising. This is in sharp contrast to trading. No amount of marketing can increase revenues for a struggling trader.
<b>You can market to increase assets under management which...as most REAL traders can tell you.. can make you profitable. Undercapitalization is the killer of most business (including trading)</b>
3---In normal entrepreneurship, the successful business owner creates an entity that operates within his current skill set. This skill set was developed prior to starting the new venture. Traders take the opposite approach. They begin trading and hope to develop the necessary skills before their lack of appropriate skill puts them out of business. Imagine the recent high school grad who decides that he'll immediately get into business consulting. Rather than go to school to learn business, he sticks an ad in the paper and says, "after enough companies have contracted my services, I'll figure out what works and what doesn't". This is obviously a recipe for failure.
<b>Again, this is not true at all. Think Dell computers, facebook, Goldman Sachs, etc.... Started by people who were interested in something and then learned as they went along. You picked a high school grad going into business consulting. An obviously stupid cherry picked example. A better example would be a high school grad that starts a lawn company. Knows how to cut grass but makes it up as he goes along (learns how to properly scope projects, marketing, adds another service line like landscaping, etc..)</b>
4---Related to #3 is the idea that a successful entrepreneur most often developed a skill set in the industry that plays to his natural talents. This is in sharp contrast to most prospective traders. The latter don't really have any idea what talents are required to be a successful trader, so again they find themselves in a backward process, hoping to first identify the necessary talents and then hoping that they currently possess the same.
<b>Again.. just wrong. Just look at any Entrepreneur type of magazine. Filled with real stories of people jumping into unrelated fields they have no idea about it and trying to make a living.(countless cupcake/bakery stories out now with people who barely baked before)</b>
5---As a continuation of the above, many skills are easy to come by without much natural ability. These can be learned through some light practice and study. The result is often a business that returns $30-100K annual income. The training for these usually comes from vocational schools. They will often operate from home, much like the trader, but in comparison, a $15K investment will likely be recouped during the first several months, and they can expect annual income near the national median during the first couple years. Trading does not fall into this category. The trader who develops a "vocational school equivalent" trading skill set, might expect returns of 10-20% annual. With $15K seed capital it will take around 20 years to reach the median income, and that is assuming that there are no withdrawals. The conclusion here is that the required skill set to produce the results necessary to make a living, are the industry equivalent of top tier surgeons. I would say that the number of people at this level is probably similar to the number of those surgeons too.
<b>how does this not make it a business? You just need more money to start in this business is all. Can't start a plane company with only $1MM. Doesn't make it a "fake business" because you arbitrarily picked 15K</b>
I guess what I'm getting at is the idea that becoming a successful trader is undoubtedly much harder than starting a successful business. To the extent that a little encouragement will not solve the problem of most struggling traders. The reality is that they are probably never going to become a trading success, regardless of how hard they work at it.
<b> And yes. 90% of small business fail within 3 years....I guess an italian restaurant or a toy shop aren't real business either!</b>
<b>This isn't true at all. Your example is flawed. You are assuming you buy from a retailer and then sell back to the wholesaler. Almost all business work this way from producer-wholesaler-wholesaler-retail. you cherry picked a scenario from retailer back to wholesaler when in reality, trading can be thought of as from wholesaler-retailer-wholesaler-retailer ( A very viable strategy in most industries).</b>
2---A normal start-up venture benefits from marketing of various types. Admittedly, they will suffer from varying marginal return on marketing expenditures, but if the product/service is the least bit desirable, they will absolutely increase revenue through advertising. This is in sharp contrast to trading. No amount of marketing can increase revenues for a struggling trader.
<b>You can market to increase assets under management which...as most REAL traders can tell you.. can make you profitable. Undercapitalization is the killer of most business (including trading)</b>
3---In normal entrepreneurship, the successful business owner creates an entity that operates within his current skill set. This skill set was developed prior to starting the new venture. Traders take the opposite approach. They begin trading and hope to develop the necessary skills before their lack of appropriate skill puts them out of business. Imagine the recent high school grad who decides that he'll immediately get into business consulting. Rather than go to school to learn business, he sticks an ad in the paper and says, "after enough companies have contracted my services, I'll figure out what works and what doesn't". This is obviously a recipe for failure.
<b>Again, this is not true at all. Think Dell computers, facebook, Goldman Sachs, etc.... Started by people who were interested in something and then learned as they went along. You picked a high school grad going into business consulting. An obviously stupid cherry picked example. A better example would be a high school grad that starts a lawn company. Knows how to cut grass but makes it up as he goes along (learns how to properly scope projects, marketing, adds another service line like landscaping, etc..)</b>
4---Related to #3 is the idea that a successful entrepreneur most often developed a skill set in the industry that plays to his natural talents. This is in sharp contrast to most prospective traders. The latter don't really have any idea what talents are required to be a successful trader, so again they find themselves in a backward process, hoping to first identify the necessary talents and then hoping that they currently possess the same.
<b>Again.. just wrong. Just look at any Entrepreneur type of magazine. Filled with real stories of people jumping into unrelated fields they have no idea about it and trying to make a living.(countless cupcake/bakery stories out now with people who barely baked before)</b>
5---As a continuation of the above, many skills are easy to come by without much natural ability. These can be learned through some light practice and study. The result is often a business that returns $30-100K annual income. The training for these usually comes from vocational schools. They will often operate from home, much like the trader, but in comparison, a $15K investment will likely be recouped during the first several months, and they can expect annual income near the national median during the first couple years. Trading does not fall into this category. The trader who develops a "vocational school equivalent" trading skill set, might expect returns of 10-20% annual. With $15K seed capital it will take around 20 years to reach the median income, and that is assuming that there are no withdrawals. The conclusion here is that the required skill set to produce the results necessary to make a living, are the industry equivalent of top tier surgeons. I would say that the number of people at this level is probably similar to the number of those surgeons too.
<b>how does this not make it a business? You just need more money to start in this business is all. Can't start a plane company with only $1MM. Doesn't make it a "fake business" because you arbitrarily picked 15K</b>
I guess what I'm getting at is the idea that becoming a successful trader is undoubtedly much harder than starting a successful business. To the extent that a little encouragement will not solve the problem of most struggling traders. The reality is that they are probably never going to become a trading success, regardless of how hard they work at it.
<b> And yes. 90% of small business fail within 3 years....I guess an italian restaurant or a toy shop aren't real business either!</b>
