Trading Management and Entrepreneurship

Contents
Course objectives ....................................................................................................................................... 2
Entrepreneurship Development ................................................................................................................ 3
Smart Goals ................................................................................................................................................ 5
Trading journal ........................................................................................................................................... 8
How to Gain Competitive Edge ................................................................................................................ 10
Business Plan (Trading) ............................................................................................................................ 12
Legal & Tax implications .......................................................................................................................... 13
Reading resources .................................................................................................................................... 14

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 Course objectives

Trading Management and Entrepreneurship course is designed to support you as a trader to think and
treat your business with the serious mindset of an entrepreneur or business owner. It equips you with
basic, simple yet easily overlooked skills that you need as an entrepreneur in your trading business.

At the end of this course you should:

1. Gain the mindset of an entrepreneur

2. Be able to set smart goals.
3. Create a trading journal.
4. Gaining competitive edge.
5. Be able to create a Business Plan (Trading)
6. Understand the legal and tax implications of your business.

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 Entrepreneurship Development

Forex Trading is a business like any other and it must be treated as such. Think of a business man or
manager who runs a hotel, a bookshop, grocery store or a company, this is someone who thinks in terms
of driving his business to profitability and sustainability. As a forex trader, you are this businessman/
woman and an entrepreneur.

Who is an entrepreneur?

According to oxford dictionary an entrepreneur is a person who sets up a business or businesses and takes
on financial risks in the hope of making a profit.
The entrepreneur is defined as someone who has the ability and desire to establish, administer and
succeed in a startup venture along with risk entitled to it and to make profits.
What is capital? Capital is anything that increases your ability to generate value for your business.
Business capital is financial asset that you can use in your business to generate growth and build
financial stability. Basically, anything that you can use to generate revenue and income for your
business that is capital.
There are different types of capital:
Working capital: pays day to day operations of the business e.g cash, machines and equipments etc
Debt capital: loans that the business has acquired to increase on its capital
Equity capital: shares and stocks in the company
Trading capital: amount available in the company for purchasing and selling assets

It is important to understand that as an entrepreneur your initial cash investment is not the only capital
that you have in the business.
Examples of capital for your trading business; initial cash investment, equipment (phone/laptop),
personal development, time, etc

One way to adopt an entrepreneur mindset, you must think wholesomely. Not just about making
money. Not just about the cash you have put in. Entrepreneurship is not about money. It’s so much
more. Its satisfaction, it’s working towards goals, building communities, working on yourself, it’s about
being deliberate and intentional in all that you do.
The best example of entrepreneurship is the starting of a new business venture. The entrepreneurs
are often known as a source of new ideas or innovators, and bring new ideas in the market by replacing
old with a new invention.
This startup venture or business can be classified into small, home business, social enterprise to
multinational companies.

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The major aim of an entrepreneur can be grouped into two

1. Make profit
2. Build a sustainable business

What is management?

Management is the process of planning, organizing, leading, staffing and coordinating all or parts of a
business function. To have a successful business you need effective management. In other words, you
should handle all areas of the business well in a way that it will drive the business into meeting its goals.

What is a mindset?

A set of beliefs that affect the way you think, feel and behave.

Therefore what we are saying is, to be successful in your forex trading business you must adopt an
entrepreneurial mindset and be effective in your management of it.

What is an entrepreneurial mindset?

1. That forex trading is a business like any other business that anyone can think of not a get rich
quick scheme.
2. You want to build a profitable & sustainable business.
3. You want to handle all the business functions towards its goal.

What are the characteristics of an entrepreneur mindset?

1. Willingness to create smart goals for your business, keep trading journal, take risks, work on
gaining competitive advantage and keeping your tax and law obligation.
2. Determination- learning from failure and keep going.
3. Focus- don’t allow distractions to interfere with your work.
4. Drive and consistency- have an inner drive to show up for your business on a daily consistent
basis.
5. Flexibility- in your time and how you work. Have a life and other activities that you can enjoy
beyond trading.
6. Consistent Learning- Always seek new knowledge and improvements. New books, new
techniques, new ideas. Do not allow stagnation in your learning.

As a trader, you are a business owner, an entrepreneur and a manager all rolled up into one. In essence,
as an entrepreneur you should have a mind that works on the growth of the business, harnesses
opportunities, overcomes obstacles, learns and implements strategies and works on remaining
competitive.

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 Smart Goals

An entrepreneur has a sense of direction of where they wish their business to head. To do this, they set
SMART Goals for their business. These goals are a guiding force in their business. It is important for any
business- small, medium, large or a start up to have these smart goals. Failure to which you will be working
blindly on your business without any sense of direction.

This is why setting goals is so important in your trading. It is a way of creating a structure for yourself that
will help you immensely in staying on track.

A lot of new traders can get frustrated over the feeling that they are not progressing. Months of mediocre
or poor results can have a massive impact on your mindset.

You will probably be working alone without a mentor, a boss, a supervisor or a hierarchy structure in the
organisation etc. most of the time it will be you and your trading software that is why you need to set
smart goals for yourself so that you can track your progress, motivate yourself and intentionally grow your
business.

Include a daily trading journal entry as one of your smart goals

What is a SMART Goal?

Smart is an acronym that stands for Specific, Measurable, Attainable, Realistic, Timely.

Your business goals that you set for yourself should be

1. Specific: Be absolutely exact on what you want to accomplish. You must answer the
question, what?

You cannot say for example that you want to be profitable. This is a general aim of any business but it
does not tell you specifically of what profits that you want to make. It is important to be specific so that
you can be able to work towards that set specific goal.

Instead of saying, I want to be profitable.

You can say, I want to make 40% minimum profit.

Here you are being specific. As you are trading, you will have it in mind that you a working to make a
specific amount of profit. This way, you are able to track your performance and make any changes or
adjustment that may come in as you work towards your tangible goal.

2. Measurable: Attach a number. e.g 2%, X Ksh, X $ etc 3 weeks etc

Your goal is not complete without a measurable number attached to it. When you attach a number to
your goal, you track your progress, it gives you the visibility of how your trading is performing. You are
able to measure how that goal is performing against the set number attached to it.
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Let us look at the our example;

I want to make 40% minimum profit.

40% here is a number attached to your goal.

So when you make say 28% profit, then you can sit down and analyses why you did not make the 12%
profit. You will then analyse the market against your performance and be able to understand what you
should have done to trade or what you should avoid in trading in order to cover the 12%.

Hence, having a measurable goal gives you more context and allows you to actually assess your
performance. So make sure you use metrics and data that is relevant to your trading.

Attach a number to any goal that you set.

3. Attainable: Your goal should be one that you can easily achieve in 3 months, 6 months,
one year etc .

Your set goal should be one that you can attain, not something that is way above you. Yes, it is good to
set big goals for ourselves, but you must set a goal that you know whatever it takes you can work hard to
achieve it.

Let us look at our example;

I want to make 40% minimum profit.

You must ask yourself, is this goal one that I can achieve? Am I being practical? Is 40% way above my
investment? Will 30% profit be better?

Consider your experience, past performance, market behaviors etc take care not to aim too high or too
low too early.

4. Realistic: Your goal should be real not a wish. Is it aligned to your values, beliefs, ethics,
do you have the resources needed etc

Your goal has to be realistic when you set it. Ask yourself questions like are you struggling with
overtrading? Analysis of the market? How is your investment? Consider your values, ethics, beliefs etc.

Your goals must make sense to you and not to anyone else.

So is, I want to make 40% minimum profit, realistic to you?

Adjust your goals to be as realistic as possible in a way that you can identify with.

5. Timely: Put a timeframe of when you want to achieve it your goal. Time, weeks, month,
year, etc.

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Make sure that your goal shows the timeframe within which you are to achieve it. Without a time frame
attached to your goal you will be trading in vain. Let us consider this example;

I want to make 40% minimum profit.

This example does not tell us the time bound of this goal. It therefore makes it abstract.

Look at this example.

I want to make 40% minimum profit in one year.

This example gives us a time bound for that goal. However one year, can be the general goal of your
trading. You will need to break this goal into smaller achievable goal that you can easily achieve.

I want to make 15% minimum profit in three months.

Three months is workable

You can set as many smaller goals for your trading business as possible. Don’t underestimate the power
of setting smart goals for your business. You are working for yourself without a boss to push you around,
in setting these goals you are also cultivating work discipline for yourself and your business which will
ultimately scale your business into a profitable, sustainable venture.

More examples of smart goals:

I want to have $1000 in my account by December 31st of 2022

I will spend three hours per day in researching and reviewing trade news and articles.

I will risk $5 per trade each day

Exercise: Create four SMART GOALS for your trading business

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 Trading journal

What is a trading journal?

Just like any business, you need to keep a record of your trade. You cannot trade without records that
show significant performance of your business. A trading journal is therefore, a log where you record your
trades. Trading journals are used by traders to reflect and evaluate on their performance upon previous
trades.

Why are trade journals useful?

1. You are able to identify weak and strong areas in your trading styles
2. They help you to be consistent in your trading
3. They keep you accountable in your trading business
4. It helps you in the long run to build your skills in trading

Keeping a journal is very simple and easy. You are to keep these records immediately you trade, don’t
wait. Record when your trade is fresh in your mind. There is no limit unto what you can record in your
journal

Here is a basic guide of how you can create a trading journal.

1. You can use a ledger book or a spreadsheet, be ready before you start trading
2. Draw out different columns of the information that you would like to record; date of trade,
underlying asset, position size, conviction etc
3. Record each time you trade and after
4. Write down everything, don’t leave anything out. Be honest. E.g if you entered trade and you
forgot to exit write that down and why.
5. Pay very close attention to your emotion and note that emotion against the trade you took
6. Write down observations of the financial markets of that day, new information of the forex news
etc. any little information that you found which in one way or another influenced your trade write
it down
7. Make notes of the intraday charts patterns of that day
8. Write everything down. Nothing is too small or too silly to be left out including why you missed a
trade on a certain day

Let us look at some of the columns in your journal

1. Reason for trade: The reason could be due to technical or fundamental analysis or a combination
of both. Once you have executed several trades you can reflect on this information to see if your
reasons for trading are bearing tangible results. This could also help you determine which strategy
works better for you.

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 2. Conviction: Conviction is how you feel about the trade. If you are making the trade based on a
technical pattern and if the pattern ‘checks off’ several guidelines, then we can list the conviction
as ‘high’. However, if the pattern or fundamental story isn’t really clean, then the conviction may
be ‘medium’ or ‘low’ depending on the factors basing the trade. By writing down your conviction,
you can calculate the amount of successful trades you have had with each rank of conviction
3. Position: is the amount of a currency which is owned by an individual or entity who then has
exposure to the movements of the currency against other currencies. The position can be either
short or long. You can log your position of that trade that you did as long/ short.
4. Date: The date that you trade. Make sure that you record as soon as you trade. Make sure to do
this only after placing your stop-loss and take-profit. Make it a habit to record in your journal the
same date, immediately that you trade

After a certain amount of time, preferably a few months or weeks, you will have enough data that you
can look at keenly which will help you in identification of your trading pattern that will help you make
trading decisions.

You can compile the data in your trade journal.

Example; If you have a conviction criterion in your journal, tally up the amount of successful trades made
when your conviction was high, medium, and low. Once you have this data you can make the decision of
whether it is worth trading only when your conviction is high or not.

You should keep a trading journal immediately you start trading. A journal is of utmost important to
testing different strategies and finding which trading plans work for individual traders. You will be able to
know which trade strategy works for you and which one does not.

Remember journals are there to help you keep track of your trading activities, set different trading
strategies, and help you make future trading plans and strategies.

Diag: daily fx

Exercise: Draw/ design own trading journal

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 How to Gain Competitive Edge

Competition in business is when more than one entity provide similar products or services that target the
same audience or consumer. Businesses will compete to make profits, increase revenue and grow their
market share.

Your forex trading business is no different. There are many players like you in the field. Each is competing
to grow their investment. So how do you maintain competitive advantage over everyone else?

Understand you are your own competition. Each day you trade you are competing against your yesterday
self and the trades that you did in the past. It is your job to make sure therefore that you are better in
your trading each time you trade. This way, you will maximise on your earnings as you work on meeting
the goals that you have set for yourself.

Here is how you can gain competitive edge.

1. Research.

Conduct market research on a frequent basis. Understand the financials by reading for example each news
releases that come out of Eurozone countries, gauge the health of their economy, study past prize
moments in order to have an understanding of where the future prices may lie, speak with financial
experts in the industries to gain a deeper understanding of the financials. Attend any trainings on forex
and financials that are available to you. Keep abreast with the dynamics of the market. Keep an eye on
central bank decisions and announcements, political news and market sentiment. Make research a
continuous habit that will help you stay on top of your game and enhance your trading decisions.

2. Constantly review your trading journal

After a couple of weeks or months, you should be able to see a pattern in your journal. Study it, analyse
what trading decision and time best work for you and what does not. Make any necessary adjustments
that you need in your next trade. Careful not to make changes that will negatively affect your outcomes.
Keep journaling.

3. Constantly review your smart goals

Remember that you are not just trading blindly but with a goal in mind. You must always go back to review
your set goals. Are you meeting them? Are you on the track? What needs to be changed? Your smart goal
is not meant for decorations but a tool to help you focus and readjust your trading strategies and to keep
you on track.

4. Create own vision and mission

Big businesses have mustered the art of creating visions and missions that guide them in achieving their
goals. That is one way that they stay competitive in the market. A vision statement states where you see
your business in the next two years, three years etc while a mission statement states what your business
is all about.

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Vision and mission are unique to you and your business. They should make sense to you and should be
aligned to your goals, beliefs, and values. With these in place, each day, you are motivated to work hard
at your business as guided hence remaining competitive.

A great vision & Mission should be catchy and have less than ten words, the lesser the better:

Example: Vision: To create a $10,000 hedge fund.

To found a trading international firm

Mission: To make 1% profit each day

To maximise on trading value

You can print out your vision and mission and post it somewhere that you can see each day as you work
on your business.

Exercise: Create mission & vision that reflects on your business and explain why you think they suit your
business

5. Network

There is power in networking that you should capitalize on fully. Network with like-minded in your
industry. Networking strengthens your understanding in the financial world as you get to learn from
others, it opens your eyes to fresh ideas and perspectives as you share knowledge with others, it broadens
your mind and opens your eyes to opportunities and possibilities.

There are different ways that you can network, through social media by connecting with the thought
leaders and colleagues in your industry. Look out for networking events either online or to places near
you and attend. Introduce yourself fully to anyone that you meet by telling them what you do and allowing
yourself to learn from them as well.

If you are working alone or with a team, it is advisable that you find ways that you can fully network in
your industry and other related areas that maybe beneficial to the growth of your business. Put yourself
out there and position yourself to be seen and heard.

6. Manage your emotions

Volatility in the forex market can also wreak havoc your emotions – and if there's one key component that
affects the success of every trade you make, it’s you. Emotions such as fear, greed, temptation, doubt and
anxiety could either entice you to trade or cloud your judgment. Either way, if your feelings get in the way
of your decision-making, it could harm the outcome of your trades.

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 7. Be patient & consistent

Like every other business, forex trading needs patience and consistency. It is not a get rich quick scheme.
With a poor mindset, you will make rush poor decisions that will cost you dearly. Put in the work and plan
well as you work on your goals.

Exercise: Identify and explain four ways that you can do to gain competitive advantage in your business.

Business Plan (Trading)

A business plan is a document created by a company/ business/ enterprise etc. That describes the
company's goals, operations, industry standing, marketing objectives, and financial projections. The
information it contains can be a helpful guide in running the business. What's more, it can be a valuable
tool to attract investors and obtain financing from financial institutions.

Other Importance of a Business Plan:

1. It helps a business owner build a stronger firmer foundation of his business

2. It acts as a guide in operations and growth of the business.
3. It highlights the strategy for growth of the business and hence helps to keep the business in check.
4. It helps you set achievable goals for your business.
5. It is an asset if you want to sell your business down the road since it highlights the journey your
business has undertaken hence helps you in pricing it right.

As a trader in forex it is equally important to create a business plan for your business. You can first start
off by creating a simple plan that you will continue to build on as you progress and grow your business.

Components of your Business Plan

1. Cover page : write your name and the nature of your business

2. Mission statement: what your business is all about

3. Vision: where you hope your business will be in six to one year

4. SMART GOALS

5. Accountability partner and why it is important to have them keep you accountable

6. Capital : initial financials & financial projections , equipments, loan to start your business etc

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 7. SWOT ANALYSIS

Here you will highlight the Strengths, Weakness, Opportunities, Threats that affect you and your business.
It is very important to recognise and be aware of these SWOT so that you are able to manage your business
effectively.

You can tabulate on a table as example below:

Strengths Weaknesses Opportunities Threats

Disciplined Easily distracted Demo accounts Power blackouts

8. Competitive Edge: Highlight what makes/ gives you competitive edge in your business
9. Trading Journal: Insert your trading journal
10. Declaration: Write a personal declaration of how you will follow through your business plan, think
like an entrepreneur and treat your trading business like any other business.
11. Finally, write your name, sign and date to own and commit to your document

Legal & Tax implications

Just like any other business, as a forex trader you are subjected to remit income tax to KRA. A Kenyan
resident who generates profit from trading while residing within the borders of Kenya, the profit is
regarded as normal taxable income and needs to be declared in Kenyan Shilling in their tax returns. In this
case, it doesn’t matter where the income originates from, but rather where the person resides while
generating that income.

According to KRA any persons who are making their sales through digital platforms or earn commission
charged to vendors for their use of digital platforms are to charge and remit VAT (companies) & Income
tax and taxes payable to KRA

For your own benefit, consult more on your tax obligations from a registered accountant or a KRA official.
Source KRA site

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 Reading resources

For your further reading go to the below links

https://byjus.com/

https://www.forex4noobs.com/forex-blog/goal-setting-your-way-to-success-in-forex-trading/

https://www.dailyfx.com/education/find-your-trading-style/trading-journals.html

https://www.ig.com/en/trading-strategies/top-risk-management-strategies-in-forex-trading-200630

https://www.forextime.com/forex-time/mission-values%20

https://www.tradeforexkenya.com/

https://www.youtube.com/watch?v=bWW3f0nCQLU (youtube)

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