Diversification

I want to talk briefly about diversification. I don’t mean diversification in the sense of choosing multiple stocks, or a mix of equities or mutual funds to invest in, but rather developing income streams that are outside of our stocks/options/futures/FX trading. I think this is important for a number of reasons.

• Trading is stressful. Having other interests (especially ones that make money) helps by providing your mind with alternatives to the intense focus exerted when trading.
• Trading fortunes wax and wane. It's nice to know that although you're having a bad day in the markets, your other enterprises are profitable.
• Not relying solely on trading for your income relieves the pressure of having to win all the time, which we all know is impossible. When you are under pressure to (read as "desperate to") make money trading, you can make some serious mistakes, and it becomes a vicious cycle - I know, I've been there.
• It just makes good sense not to have all your eggs in one basket. What if one day, for whatever reason, you can't trade anymore? You need to diversify so that you have something to fall back on.
• Trading cycles/seasons sometimes cause a string of losing trades. As I write this in the week of Thanksgiving, I haven't even bothered to open my trading platform as the market is just too thin to get good movement. Sure, it happens. But mostly it's range-bound at this time of the year. So I'm not making any money trading, but I am elsewhere.
  

So what can you do?

Get a job! No, just kidding!
I can't tell you what to do, but I can tell you what I did.

I wanted freedom to work my own hours around my trading. For me, this meant something internet-based. Because I wanted an online business, I searched the internet for opportunities. It took a long time, and I had to sort through a whole bunch of crap and buy a lot of stuff, and it was at times overwhelming and at other times very depressing. But I finally found it.

You can too, if you look long enough and explore every option with an open mind. Those of you who have "The Secret" will know what I mean. I was obsessed with finding just the right type of business that would not only earn an income, but also be ethical, and help others to do the same.

The point is, I firmly believe that it's not just a good idea to have alternative income streams, but essential.

My advice is not to rely on trading alone for your income, but to DIVERSIFY.

Until next time...


Cheers,
Terry
www.TraderTerry.com