Stock trading is in many ways a lot like owning a small, independent business. For example, when you trade in stocks, as in any business, you are exposed to financial risk.
Salaried workers can sleep peacefully in the knowledge that they would never be required to return their wages to the employer, even though there was a loss on the employer.
A self-employed person, with his or her own money, must pay for any mistake. Conversely, a wealthy self-employed individual would gain much more than the average salaried employee’s wildest dreams.
Being an employee is rarely a sufficient lifestyle for the independent-minded. Operating a small business or trading stocks are the two best options.
Here are the examples.
1. Fewer Commitments
Most companies need a brick and mortar office, which is normally rented out. Rent is a long-term commitment: rental payments, administration fees, municipal taxes, electricity, water, maintenance, and so on.
A stock trader, by comparison, works from home. Your current expenses may marginally increase but there are no long-term commitments.
2. Responsibility
A business requires staff, consultants, accounting staff, legal counselors. A big headache and a heavy responsibility to provide for people who depend on you.
3. Less Investment at the Outset
Each company needs investment. For instance, cars, equipment, and supplies for offices, advertisement, printing, renovation of the premises, and so forth. You would need working capital, in addition to a substantial minimum investment, to ensure continuing operations before a sustainable flow emerges.
The stock trader needs a good computer, many screens, and working capital that allows the trading account to open. Furthermore, the fund is available for trading.
4. The Risks
Having a business close without causing pain and sorrow, is unusual. Companies quit in difficult times. Debts are piling up, workers are pressing for bonuses. In addition, banks are abruptly cutting off their credit lines, leaving the company without oxygen.
Furthermore, assets and stocks which are worth their purchase value under regular circumstances, are thrown out, or sold for pennies. A stock trader may limit losses to a specific part of his or her investment.
5. The Possibilities
It’s hard to be creative in most businesses. The sorry fact is that the majority of self-employed people make fewer than wage-earners. The professional stock trader does not operate within a competitive realm of business that limits his or her potential.
