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4 Tips to Starting a Small Trading Business

Learning how to trade stocks for a living requires an extensive skill set that isn’t much different from any other profession. The thing here is that should you want to trade with your own money, you would have to look at and treat trading as just another business – one that warrants a mix of complete understanding of the subject and a comprehensive business plan to proceed with the venture.

Trading is one of the more lucrative business opportunities – one that has the potential to generate steady income while allowing you to set aside a hefty profit margin. If you wish to capitalize on this passion for trading and turn it into a source of livelihood for yourself, you would have to treat this as just another business. Before you jump the gun and start your trading business,

Also Read: 5 Tips for Managing Cash Flow in Small Businesses

Here is a List of Everything that you Need to Know:

1. Develop a Thorough Understanding of the Subject

Trading might seem easy to get into, and it probably is. But that should not deter you from acknowledging that there is a learning curve that’s involved here as well. Just like any other profession, succeeding and becoming a master trader will require dedication and patience on your part.

Have a specific method in mind and make sure to go through it, time and time again, till you’ve mastered the subject completely.

2. Build a Business Plan and Run a Simulation

A business plan should precede any venture that you have in mind. Ask yourself these questions and put them down on paper. That being said, building the business plan isn’t the end of it. You should take some time out and run the idea by online trading simulators. This will help you attain clarity and present a formidable business plan before the financier if needed.

  • The type of trading you’d want to get into – Day or swing?
  • How do you plan on managing risks?
  • Is there any software that you wish to use?
  • What is the setup and how do you project the expenses?

Building yourself a fool-proof business plan lends focus while taking you a step closer to the desired funds you’d wish to avail.

Now, your trading business idea might look like a handful on paper. However, that shouldn’t make you feel complacent about it. Rather, you can try running your plan with real-time simulators that are available over the Internet. When you simulate, you can get more clarity on the kind of things that may not be working for you and hence, revise them accordingly.

3. Arrange for the Funding

Money is the prerequisite to dabble in any business, and trading is certainly no different. Before you proceed with your business, you will need to raise adequate funds to keep every aspect of the trading business on secure financial footing.

While there may not be many overhead costs involved in this kind of business, you would still have to be ready for a few statutory expenses. After you’ve paid up for such concerns, you will have to ensure you have sufficient funds at your disposal so that you can initiate seamless trading.

You can shop around for different types of business loans to propel your venture to the next level. With Business Loans up to Rs.30 lakh, you can get the desired liquidity that can help your trading business tap into increased productivity and profitability.

Moreover, these collateral-free loans attach a Flexi Loan facility that allows you to borrow from within the sanctioned limit (as per your requirements) and pay interest only on what you’ve withdrawn and not the entire limit. In addition to these, you can save big by paying interest-only EMIs and repaying the principal only at the end of the tenor.

4. Set up the Entity and Start Trading

Once you’ve completed your due diligence, it will be time to set up the trading entity. Should you decide to enter into a partnership, you can consider adopting a Limited Liability Partnership (LLP) structure – one that would assign only a limited amount of liability to you and help you separate the trading business from all personal investments that you may have.

Otherwise, you can also set yourself up with a distinct trading account and get started right away.

FinanceGAB
FinanceGABhttps://financegab.com/
Ajeet Sharma, the founder of Financegab and a well-known name in the field of financial blogging. Blogging since 2017, he has the expertise and excellent knowledge about personal finance. Financegab is all about personal finance which aims to create awareness among people about personal finance and help them to make smart, well-informed financial decisions.

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