For many full-time traders, it begins as a part-time job, which eventually started to niggle at them. Could they make a full-time career out of trading, and should they quit their jobs to do so? It’s not a decision to be made in haste or without proper research and preparation. The most successful traders are in the industry for years and years before they begin to see the fruits of their labour. Of course, it’s absolutely possible to build your own trading firm if you have the necessary skills and experience and take the proper steps.
Here are some key questions to ask yourself before building your own trading firm.
Have I prepared what’s necessary in order to trade full-time?
The idealised view is that you can quit your day job, open a brokerage account, and get started. Unfortunately, this is not the case. You will need to make sure that you have adequate business insurance and be fully legally compliant, such as by the ability to get quotes for business insurance.
You will also need to find enough capital to start trading, which can take some time to do. If you’ve been trading part-time for a while, you’ll have some concept of what full-time trading is like, but you need to be sure this is something you want to do as you’ll be spending your days watching the markets and trading.
Do I have enough trading knowledge and experience?
Many people assume that to be a trader you need to have a degree. This is not strictly true; however, as often, experience and knowledge are far more important. A degree in financial trading can certainly help to extend your knowledge, but you can also get a lot of insight from trading experts, seminars, the media, and online resources.
Can I handle the risk and uncertainty?
Being a trader requires a level head and a good amount of nerve to be able to take risks which won’t always pay off. Every now and again you will lose money, and you need to be able to pick yourself and carry on. On the other hand, one profitable trade does not make you a success, so you can’t rest on your laurels. You will have good and bad periods, so you need to ensure you have some backup funds which you can live on in the bad times. If you have consistently poor periods, it’s time to reassess your strategy to work out why your trades aren’t paying off as expected.
Have you got a good support network?
You need a network of people who you can call on for support, advice and potentially some trading secrets which may help you. Some individuals may try to influence you for their own agenda, so take caution and trust your instincts if you feel you are being manipulated.
Can you work on your skills?
Before you launch your trading firm, you need to get as much experience and practice as possible. Open a demo account and use virtual money to test your skills before you start trading in the real world.