Tired of your boss or want to try striking out on your own? Well, seems like trading stocks is for you!
Or is it?
Trading stocks as a home business can help you achieve financial and lifestyle independence. Some people even get to finance buying a permanent property through facilities like home loans from NPBS simply by investing in the stock market. Feels ultimately better owning your home while building your stock trade empire.
If you are seriously considering trading as your primary livelihood, you need to properly establish yourself with the mindset and resources. Like any other business, it comes with risks, therefore preparation and planning are essential for success. Take note that defining yourself as a day trader on your tax lets you take advantage of higher losses in your business, according to the IRS.
Here are the steps you need to trade stocks as a home business.
Step 1 – Pay off all your debts. Or as much as possible. The debt will sit over your head, creating unnecessary stress that can affect your decision while trading. Doing trades this way leads to choices and transactions that do not follow your trading strategy.
Step 2 – Create a trading fund. Creating a trading fund and opening a separate bank for it is necessary. You could be strapped for financing when you’re starting out, but try to create a fund that is separate from your savings to keep your family’s financial security.
Step 3 – Write down a trading strategy. There are plenty of strategies available online, but you can still create your own investment strategy, which should include the parameters on how you pick stocks, when to buy them and when to sell. Creating the parameters will help you create a non-arbitrary operating system.
Step 4 – Subscribe to financial resources. As mentioned above, there are tons of information already present in the internet, so you don’t need to rack up your brain as much. Follow industry leaders and trading strategy blogs. A simple google search will do the trick.
Step 5 – Open your online discount trading account. Many online brokerage firms do offer trades with low cost transaction fees. Connect the trading account to the bank that you opened for trading.
Step 6 – Establish your budget. Limit investment money in any one stock. Set a daily budget and weekly trading limits.
Step 7 – Create a spreadsheet to track your investments. You need this to establish parameters for the dates of purchase and sale as well as the costs involved. There are also free management tools online, so check that out as well. Choose one with cloud storage, so you won’t lose your file in an unfortunate event that your machine broke down.
Step 8 – Stick to your parameters. Buy and sell based on your strategies, and discipline yourself to stay with your budget. Up and downs will occur, but never break from our parameters. A lack of discipline can lead to big losses and even failure.
Step 9 – File an IRS form with your taxes. The term “trader” is ambiguous according to the IRS, but a person who trades for a living and is continually seeking short-term gains can qualify. Consult a tax adviser if you have questions or concerns.
That’s it! Remember, stocks trading is a huge industry, so be sure to read up and equipped yourself with as much knowledge as possible before getting started. Good luck!