How to Start a Stock Market Business
The stock business can be a tricky one, with markets changing quickly, industry growth fluctuating and individual businesses varying in their performance on the stock market. Starting a share market business takes planning, consideration of many variables and a good deal of formal or informal education. Although the stock market can be profitable, it can also be unpredictable, making it possible to make or lose large sums of money very quickly.
Small business ideas for stock market professionals involve everything from personal investing to working as a stock trader, stockbroker, financial advisor and more. When it comes to working in the stock business, it's almost always best to start small and work your way up to options involving more financial risk. Some small business ideas involve only trading stocks, while others include a range of financial services. Here are a few business options to consider:
- Personal Investing: Get your feet wet in the stock market by working with your own personal money first. You can even do a trial run with fictional money to get a feel for how the markets work and how to make a profit. Then, invest some actual money to see how you fare. You might make enough money to gain some confidence or decide that the stock market isn't for you.
- Stock Trader: Stock traders use their own money or client money to perform frequent trades on the stock market. They're sometimes self-employed but also work for large corporations, buying stocks in hopes of selling them at a higher price. Day traders have higher minimums and more legal considerations than average personal investors.
- Stockbroker: Stockbrokers are responsible for gaining and maintaining a roster of clients to buy or sell stocks at a certain price. Stock traders use stockbrokers to help with buying and selling stocks to make a profit.
- Financial Advisor: A financial advisor could be considered a stock businessman, but he or she is also so much more. They manage entire financial portfolios for their clients that often include, but aren't limited to, stocks. They make their money by giving financial advice and helping with financial portfolio construction and maintenance.
While each of these share market business professionals could work for a large institution, each can also work in small business.
Personal investors use their own money in order to gain wealth through buying and selling stocks. Unlike stock traders, they don't trade four or more times per week and aren't subject to the same rules and regulations. These are investors who tend to invest for the long haul.
- Job Description: Personal investors typically budget a certain percentage of their income to invest in the stock market. They keep up with market trends, forecasts and growing industries to make wise investment choices.
- Educational Requirements: Formal education isn't required in order to invest your own money, which makes it an easy way to start out with the stock market. Success comes more readily when people read trade magazines, watch for trends and pay attention to forecasts.
- Small Business Ideas: While investing your own money in the stock market isn't a small business in the traditional sense of the word, some people do make a great deal of money doing it, enough to replace their regular salary. Think about how much money early investors in Amazon or Apple have made.
- Industry: Most personal investors continue to hold their everyday jobs, and personal investing can be done from anywhere. You can invest from your phone on a lunch break or sitting in the carpool line while picking up the kids.
- Years of Experience and Salary: The amount of money you earn or lose through the stock market as a personal investor varies with the wisdom in your stock choices, what the stock market as a whole does and how long you leave your money in the market.
- Job Growth Trend: Anyone can jump into the stock market and get started anytime, provided you can afford to purchase the stock you wish to add to your portfolio. Stock market forecasts can help give you an idea of your probability for making a profit, as well as inform you about which stocks are best to invest in.
Day traders buy stocks with the hope of selling them at a higher price. If you're already a small business owner, you might be able to act as a stock trader for your company by wisely investing your assets. Day traders perform trades four or more times in a week, must adhere to a $25,000 equity minimum at the start of each business day and adhere to margin rules in order to cover fluctuations in the market.
- Job Description: Day traders buy and sell stocks to make money, with the help of a broker. This is a fast-paced job and it helps to have an upbeat personality with a natural attention to detail. A positive outlook helps to cushion you from the stress of everyday buying and selling of stocks, as well as normal financial fluctuations.
- Educational Requirements: Many traders start out with a four-year degree in a financial or business related field, while others begin their careers holding an MBA or a Master of Science in Finance. You must also pass the Series 57 exam and become licensed as a trader.
- Small Business Ideas: If your existing small business has at least $25,000 in equity, you can become a day trader in order to grow your business's bottom line. If you want to go into business providing your services to others, you should look into becoming licensed as a stockbroker.
- Industry: Like personal investors, day traders can often work from anywhere. You can work from your existing small business or even buy and sell stocks from your phone no matter where you are.
- Years of Experience and Salary: Salaries for stock traders range from $15,000-147,000 per year, but the national average is $53,815. This is lower than for all securities, commodities and financial services sales agents, who earn a median salary of $64,120. Salary estimates per experience aren't readily available, but the better a trader is at making a profit, the higher her commission and salary will be. This skill tends to sharpen with time and experience.
- Job Growth Trend: Opportunities for stock traders, as well as all securities, commodities and financial service sales agents, are expected to increase by 15 percent over the next decade, which is much faster than in other industries.
Stockbrokers differ from stock traders in the licensing they must obtain as well as whose money they're using to buy and sell stocks. They buy and sell stocks using other people's money in order to earn them a profit.
- Job Description: Stockbrokers arrange for stocks to be bought or sold by maintaining a roster of clients. They must find their own clients by cold calling or attracting them through conducting financial seminars and events. Unlike stock traders, they're not buying and selling stocks by using their own money, rather they invest their clients' money. An outgoing personality, resilience and the ability to connect well with others are a must.
- Educational Requirements: Like corporate stock traders, stockbrokers must pursue a formal course of education. This often includes a bachelor's degree in a financial or business related field and sometimes a graduate level degree, as well. Stockbrokers must pass the Series 7 exam offered by the Financial Industry Regulatory Authority (FINRA).
- Small Business Ideas: Stockbrokers can start their own share market business once they're properly licensed as brokers and insured and registered as a small business. When seeking to gain clients, it helps to have a proven track record through working for someone else first.
- Industry: Stockbrokers are stock businessmen and women who often work in small offices or corporate environments. Some self-employed stockbrokers can work remotely for some or all of their working hours.
- Years of Experience and Salary: Like stock traders, income predictions are hard to come by, but the average stock broker salary is $51,100 per year, which is lower than the median income ($64,120) for all securities, commodities and financial service sales agents. As a stockbroker builds a larger client base over time, they're likely to earn a higher salary.
- Job Growth Trend: Opportunities for stockbrokers, as well as all securities, commodities and financial service sales agents, are expected to increase by 15 percent over the next decade, which is much faster than in other industries.
Financial advisors are able to buy and sell stocks, but they also provide a wide range of other financial services. This includes buying and selling commodities, recommending investments, compiling portfolios, maintaining portfolios and helping clients plan for their financial futures.
- Job Description: Like stockbrokers, financial advisors must find and maintain their own client roster. They meet with clients on a regular basis and monitor the performance of their financial portfolios, recommending adjustments as they go. The ability to connect well with others, make decisions under pressure and handle stress well are an asset to personal financial advisors.
- Educational Requirements: Most personal financial advisors have a bachelor's degree, with many courses in finance, accounting and business. They typically engage in apprenticeships with more experienced financial professionals and must pass exams to buy and sell securities, commodities, insurance and more. Passing the Certified Financial Planner (CFP) exam can also enhance a financial planner's business.
- Small Business Ideas: While you might need to work as an apprentice when you first start out, once you learn the ropes, you can start your own business as a financial advisor. Check into registration and insurance requirements for your state before you open your doors.
- Industry: Most financial advisors work in office settings. Small business owners often work in small office buildings or even remotely, while corporate financial advisors work in larger office settings.
- Years of Experience and Salary: Unlike stock traders and stockbrokers, income projections for personal financial advisors are more readily available. Keep in mind that income is dependent on commission from clients, so building a client roster is your first step. One income projection looks like this:
Entry Level: $46,836
Mid-Career: $65,539
Experienced: $77,876
Late-Career: $83,568 - Job Growth Trend: Opportunities for personal financial advisors are expected to increase 15 percent over the next decade, which is much faster than in other industries. An aging population is increasing the demand for retirement planning and financial management.