Your Trading Business

I was asked last week what a trader should look for in selecting an options broker. That really got me thinking about what a trader needs to trade. Here I’ll share my thoughts.

Running Your Trading Business

Think of your trading as a business. Then think of the different functions that business requires to perform profitably. In a business different functions are performed by different departments. You have:

  • Administration
  • Information Technology
  • Operations
  • Marketing
  • Human Resources
  • Finance

Now, I’m not going to B.S. you and tell you these translate exactly to what a trader does, but… They kinda do.

Administration for Traders

To trade, one must be organized. We need the reports we need delivered to us in an easy-to-read, simple way. What are my Greeks? Breakevens? What is my portfolio risk? This is the stuff any good options platform must have tight.

Information Technology

Trading is an information business. We rely on data. And those data must be correct. “garbage in” leads to “garbage out” when it comes to processing data. Whatever platform you’re using, whether it’s through your broker or another analysis platform, it’s very common for the first blush of data they get to have some glitches. You may have seen on a platform a chart hit zero one day and the next candle is back up to what looks like a normal price. These bad bits of data are caused by computer glitches or sometimes human error. It happens all the time behind the scenes. But the best-run platform providers clean the data to make sure they’re right so you never even notice these glitches.

Trading Business Operations

How do we make any business run and crank out quality products? We need a factory to assemble the parts. Here the parts are data. This needs to be streamlined and efficient. We can’t be in the garage wondering where the screwdriver is every time someone orders a product, right? Well, we can’t be trying to reinvent the wheel every time we look at a trade. We need to get the prescreened trade idea, run it down the assembly line through the screening process and get it out on the dock for delivery to the market.

Marketing for Traders

What’s marketing? It’s literally bringing the product to the market. A business communicates what the product is, so buyers can see it’s available and make the decision to buy it or not. This is trade execution. And just like marketing in any other business, this must be streamlined and well communicated.

Back in the day, I remember being on a trading platform trying to create an OCO order and just not being able to figure out how to do it—how to communicate that information to the market. It’s gotta be easy (and fast) for you to find and click the right buttons and send the order type you need to send. This is both an issue of finding a broker who makes it easy to do by creating intuitive execution screens, as well as you working it out in advance so you know where it is and how to do it for the types of orders you’re likely to use. 

Human Resources

I don’t know why this is so far down the list. This is probably the most important of all of these to any business, but especially trading. People make businesses run. We need good people around us to help us reach our goals. I’m talking Community.

Traders absolutely need to be surrounded by a Community of traders for many reasons. Humans learn from one another. Being in a Community with other traders will hasten your learning curve. Other people can also be a great resource for trade ideas. And most importantly, trading can come with emotional swings. We all need people to share our victories and defeats with, who will cheer for us when we’re up and be there for us when we’re down.


This one is last for a reason. There are some important things to consider here, and some that often get too much emphasis. First is watching the money. Trading is a very bottom-line business. We need to keep tabs on our P&L and watch it closely. And we need good tools for that. A problem is that sometimes it’s hard to know what number you’re looking at on your brokerage platform. I can attest it’s worth your time to learn how to read your statements. Know how much money you have, what your risk is and how much margin you have left.

Part of finance is also taxes. My advice: Hire someone. Some active traders may be able to write things off that help their trading business. You work too hard at trading to pay more in taxes than is legally required by the tax code. Experts can help you with this. A good accountant can save you multiples on your taxes of what you pay him or her.

And then, last and least, there are transaction costs. Commissions (or fees as they are curiously called now) are important. But they are probably the least important of all of these. If you don’t have all these other business verticals dialed in, you shouldn’t be trading big enough for your extra couple of cents in commissions to matter. Try to save what you can on commissions, but don’t sweat it too much.

I hope that helps!

Trade smart,


Dan Passarelli
Founder and President
Market Taker Mentoring

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