How to Start Your Own Online Trading Business
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Back in October, Fem Founder published ‘7 Easy Business Concepts Every Founder Needs to Know’. The article discussed what you need to know to establish and run a business — from gaining a competitive advantage to customer acquisition, cost and everything else that matters.
But just in case the pursuit of a traditional business — selling a product, for instance, or providing a service — doesn’t appeal to you, there are alternatives. One alternative is online trading. Here, all you’ll need is a bit of capital, internet access, a PC, and lots of knowledge, foresight, and courage. So, if this pursuit interests you, here is a primer on how to start your own online trading business.
Trading Stocks
First thing to do here is to familiarize yourself with the stock market. The Balance defines stocks as “small pieces of a company.” When trading stocks, you are in effect buying shares in a company and earn a profit by selling them in the future, when the price increases. So, say you buy Apple stocks for $1,729.2 at $172.92 per share and suppose these stocks appreciate to $180 per share. You can then sell your stocks for that price, meaning you will have earned $70.8 from the trade.
Once you’ve acquainted yourself with stock trading, go online, find an online stock broker, and open an account. Some of our recommendations in this regard include TD Ameritrade, Fidelity, and E*TRADE, although you can try out other sites, too. From there, it’ll be about applying what you have learned, following the stock market, and buying and selling stocks.
Forex
Forex stands for foreign exchange. As with anything trading related, first thing to do here is to learn why currency values rise or fall, and what influences these fluctuations. Once you understand this, you can proceed to opening your own account online.
For forex, BM Magazine recommends starting with at least $1,000. Having that initial capital means you’ll have a buffer just in case you incur any losses at the start. Even if you do, it’s important to stay the course. Remember, not every venture will provide you a revenue stream right away. Study the different currencies you’re interested in trading, get the latest news, and keep trading.
Trading Precious Metals
The process involved in trading precious metals is pretty much the same as the previous two options: learn about it, open an account online (peruse the web for this step), and start trading. Articles on Investopedia that teach you how to trade gold are a great resource and are written clearly and are easy to understand. Gold happens to be the most popular among precious metal traders, as they use it to diversify risk during tougher economic times, which might impact their financial holdings.
As far as trading gold is concerned, there are a few options. One is through public exchanges, which are regulated platforms that are centralized and act as intermediaries. Another option, according to FXCM's article on gold trading, is over-the-counter trading through the New York Commodities Exchange. Among these two options, trading via public exchanges is the recommended as many risks, including fraud, lack of transparency, and loss of funds are mitigated.
The most important takeaway here is the need to continue to learn as you go along, starting with the basics up to the more advanced workings of the market. The trading platforms are relatively easy to use, and the capital required is by and large within your reach. Now, it is worth keeping in mind that investing doesn't guarantee anything. But that doesn't mean you shouldn't try it.