Funding a startup business can seem like a daunting task, and it can be tricky to acquire the necessary funds for any venture. People are increasingly looking for alternative methods for funding which do not involve a bank or loans. Trading on global markets involves investing money into assets in order to sell them on for a profit should their value rise. Many people trade from home to build personal funds, so here is a short guide on trading to fund a startup.
First and foremost, you will need to make or have made a sound business plan which sets out your goals and how much money you need to invest in the business. This will, of course, vary from person to person, but it will stand you in good stead for running the business.
Also, be realistic about the time period in which you would like to raise funds for this, as it can take a while to start making a profit from trading, especially if you are a beginner. The plan should be the skeleton which will hold your business together in the long run.
Getting Started Trading
Once you are sure of your plan and the funds you need, you can start to look into trading as a potential option for funding. This will involve opening an account with a broker like ETX, so you should search around for one which you think will suit you best.
Look out for the quality of the interface, commissions charged and the markets offered when considering who to trade with. It may also be worth checking the credit ratings of various brokers for credibility and reliability. When you are ready, you can deposit money into your account and start trading.
Choose Your Market
Before jumping into investing money, you must consider which market will best suit your business funding needs. [pullquote]There is a multitude to choose from, and each has its own qualities and behaviors in terms of activity and fluctuation.[/pullquote]
The forex market, for instance, allows you to buy and sell currency in order to profit from fluctuating exchange rates. This is a volatile market which means that changes in asset value are frequent and unpredictable. Gold, on the other hand, is known to be a steadier market and one of the safest investments, since its core value rarely decreases. Might seem obvious, however, be sure to always research the market you want to invest in.
Practice And Research
It is worth noting that many brokers also offer a demo account with which you can practice trading without investing any money. This is an incredibly useful tool for getting your head around trading and could save you a lot of money if you are just starting out.
It is also worth researching your particular market thoroughly to see how it works and to look at whether it is best suited for short term or long term investments. This will again avoid the beginner pitfall of investing too much too quickly, and as such, stop you eating into your startup capital.
Develop A Strategy
You are unlikely to make a long-term profit if you do not form some kind of strategy for trading. This is because all markets are unpredictable, so building a strategy around this will minimize risk and ensure you are not simply gambling on market movements.
Luckily there are plenty of free resources online which can help to teach you the trading philosophies and strategies that exist already, and you can implement these into your own thinking. Hopefully, the strategy will turn out to be profitable and you can continue to implement it throughout the early phases of business planning/running.
Manage All Risks
Every single market which you can invest in carries an element of risk, and it is important to understand that profit is never guaranteed from a single trade. If you want to build up enough of a funding pot to start a business, you must be willing to take some losses and still keep a clear head.
Minimizing losses will stop your business fund dwindling, so it is best to start off with smaller investments so that you can be confident you will not lose too much in the beginning. Always use logic over emotion, and accept that risk is natural to trading.
All trading can be done from the comfort of a room in your house, which is ideal for those setting up a business as it gives you the flexibility to prioritize your business and trade at times convenient to you. Ultimately, profiting from trading requires ample research, but it can also complement/supplement other startup funding methods too.