Anyone who wants to participate in a forex trading business should have a business plan. In this article we will show traders how to approach setting up a business plan for trading the forex market. Just like any other business startup, you have to have a business plan in writing, and follow it.
Advantages Of A Forex Trading Business
Traders can work their home trading business from home, work, or anywhere in the world with a good internet connection and work space. Forex traders can work while they travel or manage another business, as long as they are near the computer. You can trade part time on the side while full time employed. Traders can take a day off whenever they want if they are sick or need a break. If a trader is mobile, they can set up notifications on their phone or mobile device to notify them as to when the market is moving. Most forex website and brokers have mobile options and impressive apps..
Forex Trading Business Plan, Startup Costs
Here are some fixed costs associated with starting up a forex trading business. All traders will need a desktop computer or laptop, good quality phone or wireless device if you are mobile, internet connection, and funds for funding a live trading account. Most charting systems like Metatrader are free with your brokerage account.
There are some optional costs associated with a forex trading business. Fees for forex education courses are optional. To reduce or eliminate the cost associated with education, you can go to the Forexearlywarning website and all of our online forex courses are free, and these education courses are the best in the retail trading industry. This will save a forex trader a lot of money as education courses can range up to $50,000. Also, some charting systems have a monthly cost but the Metatrader platform is free and works just fine. Reduce costs of your forex trading business with these tips.
Another optional expense might be the cost for trading signal or alert services. These can range between $40 and $200 per month. Once again top quality trading plans and live signals are available from Forexearlywarning. Check out Forexearlywarning for only $19.95 per month. Forexearlywarning provides trend based trading plans, a complete and detailed trading system, and excellent tools for entering your trades. Doing this will keep your monthly operating cost very low. Keeping expenses low is good for all business startups, until you are trading profitably.
The final expense of a forex trading business is risk capital or working capital to fund a live trading account. This is not money paid out, but funds that a trader deposits into an account that you, as a trader, completely control There are a lot of misconceptions about funding a live trading account. Trading a leveraged market like the spot forex reduces the amount of working capital needed. With leverage of 50:1 and higher, traders can enter the forex market with live accounts funded in the $2000-$5000 range and have plenty of equity to reap good profits.
You should not fund a live trading account at all until after you demo trade. There are no costs associated with a demo trading account, so no risk to your capital. You should never fund a live trading account until your demo trades are successful. You may not need to fund an account at all if your demo trades don’t work out. Don’t take a chance trading live funds until your demo trades are successful. There are even some entities that will fund your trading account for you, if you successfully demo trade.
To protect your live account and working capital, make sure your broker is financially viable and maintains client account protections. After you successfully demo trade and get a live account funded, you can move forward with live account trading. Having a great trading system and implementing good money management procedures, trade after trade will make your live trading account and working capital grow.
Forex Trading Business Plan Checklist
Use this checklist of items for your trading business startup. Find a trading system you like, find a reputable broker, find a charting system you like, we suggest Metatrader to start. You can move on to more sophisticated charting systems and your experience level and personal tastes dictate. Find online forex trading courses to take, and make sure you are available to trade in the main forex trading session.
As part of your trading system, traders should have simple but powerful trading signals, like the one you see above. This is The Forex Heatmap® from Forexearlywarning. This system tells you what pair to trade and it works for 28 pairs. The example above is a sell signals on the GBP/JPY.
Skills Needed For A Trading Career
Here is a list of some of the basic skills a trader would need to consider a forex trading business. A trader would need to have knowledge of how to operate a personal computer or laptop, have basic typing skills, know how to download software programs from the internet, etc. They would also need to know how to set up Metatrader or other forex charting systems. They would also have to have the discipline to study the details of a trading system they are using, good reading comprehension, and the discipline to follow the trading system with demo trading.
Forex Trading Business Partners
Here are some business partners you might need as part of your forex trading business. A reputable forex broker, education provider (free or paid), signal and alert services, trading system provider that may also includes signals and alerts. It might also be a good idea to have a business partner and trade under a joint account. This might be a good idea if you have a full time job or live in a location where the main trading session and most trading is in the middle of the night.
Forex Trading Business Entity and Taxes
As a “trader” you may be able to deduct quite a few expenses, like your home office expenses. Understand the Internal Revenue Service definitions of “trader” versus “investor”. If you qualify as a trader, you can take the deductions. Self employed traders can file Schedule C. Income might be reported on Schedule D as capital gains. Traders can download annual trading data, with details of all trades, from their broker fairly easily. Traders might also consider trading under an entity like an LLC. These suggestions are for traders who reside in the USA. In all cases check with a tax advisor for guidance in the country that you reside in.
Conclusions About Forex Trading Business Plans – In this article we present as much information and ideas as possible for consideration to make your forex trading business startup successful. Use these ideas to think about how to improve your business plan on the way to forex trading success.