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When people plan to start their business, they often think about starting an online business as freelancers, creating an online shop, or YouTube channel. These aren’t bad options, but they require extensive commitment. On the other hand, some advertisements promise day trading just a few minutes a day will make you a lot of money quickly.
However, is this really a good idea? Is it as easy as it sounds to make money trading stocks, options, forex or cryptocurrencies? Or is it a better option to start an online business related to day trading and investing?
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Starting an Online Business in the Finance Industry
The finance industry is one of the most competitive niches worldwide. People are always looking to make money. Furthermore, tens of thousands of finance-related products are sold to investors and traders every day.
This type of business typically needs a huge upfront investment to develop a product that stands out from the competition. It also needs to attract enough customers to make money in the long term. The review about Eric Ferguson’s swing day trading newsletter Mindful Trader is the perfect example. It clearly shows how much effort and budget you need before things start working in your favor.
Eric spent years designing and coding trading strategies, back-testing, and adjusting before releasing the product to the public. He graduated from Stanford and had a perfect math SAT score. So, he had two major advantages as an entrepreneur in the investing business.
First of all, his talent when working with numbers and second an excellent education in this sector. Also, he invested six figures before he presented the product to the public. Today, Mindful Trader is one of the best swing trading newsletters with thousands of subscribers.
While this example shows how well things can go as an entrepreneur in the finance sector, it also clearly shows that education and starting capital are two important factors to consider.
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Starting Out as a Self-Employed Day Trader in the Financial Market
Investing six figures in an online business in the finance sector is well above the budget of many people. Furthermore, even substantial upfront investments do not guarantee high profits once you release the product to the public.
However, what happens if you join the side of the consumer? Is it realistic to make money day trading?
The internet is full of success stories of traders who began day trading penny stocks and made a fortune. However, like in other aspects of life, if something sounds too good to be true, it is most often.
In fact, the entry hurdle to day trading is pretty high in the United States. Traders have to fund and maintain their brokerage account with a minimum of $25,000 to actively day trade. The defined minimum is a result of a requirement defined by the SEC related to margin trading.
Day traders typically trade on margin. Often they can trade a four times higher amount of money relative to the funds in the account. For example, with $25,000, you can trade assets worth up to $100,000 with most brokers.
To do so, you need a margin account. The margin account is connected with the SEC definition of a pattern day trader using a margin account. To be more specific, traders making more than three day trades (opening and closing transaction is one trade) within five business days are categorized as pattern day trader. These traders need to maintain a minimum of $25,000 in their account.
Conclusion
In order to start an online business in the finance niche you need a high proportion of equity. As a vendor, you should consider investing six figures in developing a product for marketing and ongoing expenses.
Starting a self-employed day trading business requires a budget of at least $25,000 for the trading account and further expenses for subscriptions to trading tools, newsletters and services.
Remember, both business ideas do not guarantee success, even with the high upfront investments and budget requirements. All in all, the finance sector is one of the best sectors to make money. But, it is also the sector where you need high upfront investments before seeing any return on capital.
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