Posted by forex at 8:32 AM
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1. Draft a personal business plan covering your initial trading capital, if you plan to focus on day trading or swing trading, how much of a margin you will carry in your account, if you will be short selling, trading options, futures, or particular sectors of the market, and so on. Include where you are now financially, where you want to be in three months, six months, and a year, and a feasible road map for how you'll get there.
2. Select an online brokerage with the lowest possible commissions. To get in on the ultra-cheap institutional rates, you'll most likely have to train with a particular trading firm's system, which will cost you a portion of your start-up capital but can pay off substantially if the firm allows you to trade with their capital from home after training. This route often has a capital contribution of $3,000 or more, so do thorough research before committing to a remote proprietary trading firm. If going solo is more your style, expect to pay a minimum of $3 commission per trade. Choose a trading software or online trading platform that signals buy and sell points, based on trends and volume, throughout the trading day.
3. Organize your profit and loss records since these will be necessary when tax time rolls around. To qualify as a trader in the eyes of the IRS you must regularly seek to profit from daily market movements, you usually must place at least 1,000 trades in a year, and should devote close to full-time hours to trading. When you qualify, submit an Application for Change in Accounting Methods (IRS form 3115), also know as the 'mark-to-market election' form, by April 15 of the tax year for which you want the election to be effective.