Your guide to starting a financial market trading business

Written by

Starting a financial market trading business does not mean you need to have people working for you. You can establish a trading business for yourself unless you want to become a broker or market-maker. However, the opportunity of making money as a financial market trading business is highly lucrative and according to one of the top financial analysts at Jones Mutual, a “hidden gem.” With that said, if you want to establish such a business, you need a guide to follow in order to secure success.

Plan your financial market trading business

Since you would be seen as an entrepreneur, you need to have a solid business plan to guide you to success. These plans include what your target market will be, what the cost of starting your business will be as well as how long it will take you to break even and start making a profit. With this information, you can determine whether a trading business will, in fact, be a potential line of making money for you.

You need to legalise your business

In order to prevent you from being liable should your business be sued, you need to establish a legal business entity. This will prevent you losing any currency and, in essence, form a protective barrier over the capital within your business.

Apply for taxes

Once you indulge in any form of business activities, you would need to apply for taxes. Depending on where you are situated, tax registration might require you to adhere to certain standards. As your business would consist of trading on the financial markets, you need to specify this in your application.

You need to open a business account

As capital will constantly be moving in and out of your account, you need to open a checking account that will offer you optimum services. Make sure the account allows you to convert between different currencies with ease and don’t charge you a fortune for these conversions. Your primary source of income would be the capital make and used for trades so you need to also ensure your account enables organised transiting so you can keep track of money coming in and going out with ease.

Business accounting methods

To make it easier for you to record income and expenses as well as when it is time to file tax returns, you need to set up an accounting system. You can either choose to do it yourself or hire an accounting firm to do it for you. However, it is wiser to hire a firm (although it will be an extra expense) so you can concentrate on your financial market trades.

Get the right business licences

Once your financial market trading business opens its doors, you would need to have the right permits and licences to ensure your business does not get shut down. This is a very important aspect of managing a successful trading business as many entrepreneurs forget this and lose out on a lot of the potential income curated from trades.

Business insurance for brokers

Should you decide to become a broker, you need to have business insurance. As you’d be hiring staff, you need to protect yourself as well as your staff from unnecessary capital losses. Another aspect of insurance you’d need to look at is workers compensation insurance. Although this might cost you more, the potential of your business becoming successful faster with more hand to help is a huge upside.

Find your portfolio strong points

Like every business has a certain brand, you need to establish your own currency pair “brands”. In simpler terms, you need to find out which market pairs you want to trade with and add them to your portfolio. Remember though, that in order to add a pair to your portfolio, you need to have enough knowledge of them to make a profit with confidence.

Using leverage to boost your business

When trading on the financial market, you can make use of leverage. This means that you can borrow money in order to trade a larger percentage of capital on a single trade. This can either make you a larger amount of profit, or if the trade goes south, can leave your business with debt to pay off. Thus, leverage should be used cautiously when wanting to start a trading business.

Article Categories:
Finance