There are different things to consider about how to start a stock trading business as you begin in this profession. However, before we begin… one of the great things about starting your own stock trading business is that you don’t necessarily need to be at your computer during live market hours or have to wake up extra early if you already have another demanding job. Even if you already have a full-time job, you can still easily start a stock trading business on a part-time basis and grow it into a full-time business over time. You can even turn your computer into your own “personal trading assistant” by having it trade for you on autopilot. (To learn more about how to do this click on How to Trade on Autopilot) And, your stock trading business can be operated at your own convenience… just like legendary trader Nicolas Darvas did. This is essentially how he traded as he was halfway around the world making a fortune in the stock market while Wall Street was sound asleep! With the trading business open all year long, you have continuous trading opportunities without having to leave your home (or anywhere else that you might be in the world!). The stock trading business is fascinating and potentially very lucrative allowing you to possibly achieve both personal and financial freedom. Now… let’s get right down to it about how to start a stock trading business!
The Key To Starting Your Stock Trading Business – Having The Right Foundation In Place
To give yourself the greatest chance in having a successful stock trading business, you will need to have the right foundation in place. This will be key in achieving your long-term trading success.
Invest in Yourself:
You should invest in yourself and get the best trading education available that you can get – it could be just the determining point of whether becoming a successful trader who is profitable or one who is struggling and unsuccessful. To start with, you should at least have a solid understanding of the following important areas about trading:
- How the financial markets work for the ones you are interested in trading
- Understanding different types of financial instruments to trade (stocks, etfs and options etc.)
- Having a trading style that will best fit your trading personality as well as meeting your trading goals and objectives (day trading, swing trading, trend trading or position trading – or combination of)
- Understanding price theories and behaviors (technical analysis and fundamental analysis)
- Knowing trading strategies to profit from
- Comfortable in navigating and operating trading platforms
- Knowing how to place different types of trading orders
- Having risk management rules
- Following your trading plan with discipline
- Tapping into trading psychology to unleash your full trading potential
The stock market really doesn’t know you at all as a person. As a trader, however, you are judged and rewarded on the merits of your own trading abilities alone with the potential of earning a significant income. This is why it pays to invest in the best trading education available so that you can possibly reap the endless personal and financial rewards and start living the trader’s lifestyle from this fascinating age-old business.
Trading Equipment:
- Computer (external monitor optional)
- Secured internet connection
Your trading equipment should be located in a comfortable area without any distractions to promote clear thinking.
Professional Online Trading Brokers:
Choosing the right online trading broker will largely depend on the type of trading style that you will be doing.
- Day Traders typically use direct market access (DMA) brokers offering super-fast executions with level II quotes and real-time scanners and live data feeds.
- Swing Traders, Trend Traders and Position Traders typically use the more traditional online retail brokers to power their trading.
With 24/7 easy log-in access to professional online brokers you can do anything from all kinds of research to placing trading orders anytime you wish – even if the market has already closed for the trading day. (To see our recommended online trading brokers click on Best Brokers For Trading)
Trading Capital:
The amount of trading capital that you will need to start a stock trading business will largely depend on the trading style that you will be doing as well as the amount of income that you are trying to earn from it – full-time income, part-time income or just making some extra pocket money at your own leisure. Although you can open and fund an online brokerage account with as little as say $500 to start trading with, this won’t nearly be enough if you are trying to make a living from trading the stock market on a full-time basis. If you don’t have that much capital to trade with and are looking to get more buying power, you do have some options.
- Overnight Trading – if you are going to be a trader that holds positions overnight (like swing trading, trend trading or position trading) you could sign up for a margin account with your online broker where you could be granted up to 2:1 margin buying power.
This means for stocks having 2:1 margin you could buy up to twice as much. For example, if you had a margin account with an account balance of $10,000 in cash you would then have up to $20,000 in buying power for holding positions overnight.
(To learn more about having a margin account click on Stock Trading)
- Day Trading – if you are interested in day trading using your own personal account (margin account) with your online broker, you will need to maintain $25,000 in that account as required by FINRA (Financial Industry Regulatory Authority).
Furthermore, if you are classified as a “pattern day trader” by your online broker your day trading buying power could go up from 2:1 to 4:1 with having a margin account. For example, with an account balance of $30,000 in cash your day trading buying power could go up to $120,000.
(To learn more about the rules of being classified as a “pattern day trader” click on Day Trading)
- Prop Trading – if you don’t have the required $25,000 to maintain in your trading account with your online broker if classified as a “pattern day trader,” you could join a prop trading firm and day trade using the firm’s trading capital.
As a prop trader, you won’t have to worry about maintaining the required $25,000 in your trading account. However, you will be required to put up a risk deposit to have access to the prop firm’s trading capital.
Risk deposits can range approximately from $2,500 and up. The amount of your risk deposit will greatly determine the amount of your day trading buying power. For example, a $5,000 risk deposit (with 20:1 margin) will enable you to day trade with buying power of $100,000.
And, many prop trading firms also offer remote trading so that you can trade right from the comforts of your own home or anywhere else.
(To learn more about remote prop trading from your home click on Remote Prop Trading)
Trading Success Takes Time And Dedication
Just like building any kind of successful business, success in the trading business is no different. To be successful in your trading business it will take time and dedication to acquire the necessary trading intelligence and trading skills to gain the confidence in order to possibly become a successful and profitable trader. If you take the time to become a dedicated student in studying the craft of trading the financial markets, the stock trading business can be fascinating and possibly very lucrative to you.
Trading Schools – The FAST-TRACK To Building A Stock Trading Business
If you really want to start building your trading business as FAST as possible, you may then want to consider enrolling in a trading school where they can really shorten your learning curve to trade like the pro’s. A trading school can teach you how to become the type of trader you wish to be, whether it’s a day trader, swing trader, trend trader or a position trader (or any combination of). Although some trading schools have been known to be “fly-by-night” and no longer exist, you want to choose a trading school that has a strong reputation in the industry and that has been around for a long time offering outstanding trading education programs and producing successful trading graduates. (To learn more about recommended trading schools click on Stock Trading Schools)
Be Your Own Boss
By starting your own trading business you are now the boss – with you as the “CEO” of it!
Trading Business vs Traditional Business – A Comparison Of The Two
The trading business offers many benefits that just can’t be found when compared to other types of traditional businesses. The following table compares some of the more common elements as to how each type of business operates and functions.
| Trading Business | Traditional Business | |
| • Start-up Capital | ✓ | ✓ |
| • Computer and Internet | ✓ | ✓ |
| • Accounts Receivables and Collections | ✓ | |
| • Inventory, Warehousing and Shipping | ✓ | |
| • Property, Plant & Equipment | ✓ | |
| • Leases (Equipment and Office Space) | ✓ | |
| • Accounts Payable and Invoice Processing | ✓ | |
| • Business Loans | ✓ | |
| • Employees and Payroll | ✓ | |
| • Costly Employee Benefits | ✓ | |
| • Advertising and Marketing Costs | ✓ | |
| • Commuting Time | ✓ | |
| • More Time for Family and Friends | ✓ | |
| • Virtual Office (Extended Vacation – No Problem) | ✓ | |
| • Live Anywhere You Wish | ✓ | |
| • Work from Home | ✓ | |
| • Customer Support | ✓ | |
| • Report to Boss | ✓ | |
| • Managing Employee Morale | ✓ | |
| • Legal and Liability Concerns | ✓ | |
| • Burdened by Governmental Rules and Regulations | ✓ |
Last Thoughts About Starting A Stock Trading Business
The dream of having your own stock trading business is just waiting for you to take the first step. Get started today where you have the opportunity to start enjoying the personal and financial freedom of the trader’s lifestyle!