Have you been thinking about setting up a business that is focused on online trading from home? With millions of people stuck indoors during the recent COVID pandemic, it’s only natural that trading enthusiasts have been searching for a way to make good use of their time, earn a decent income, and do it all without having to commute to an office. If you’re wanting to learn the basic facts about how best to set up a home-based trading business, it’s essential to cover a few preliminary bases.

For example, in addition to making sure you have the right software and computer capabilities, you’ll need to learn how to trade shares, how to analyze the market, how to keep accurate tax information, and how to choose a broker. Rather than dive into the endeavor too quickly and risk losing your funds, consider taking the time to learn the basics and set your one-person company up the right way. Here are four key areas that you should fully understand before opening your doors as a self-employed trader.

Choose a Broker with Low Fees and Useful Services

There are hundreds of brokers out there, some good, and some not so good. Choose one based on the platform’s ability to cater to newcomers. Aim for a brokerage that has low transaction fees, low minimum account balances, no hidden fees, and a comprehensive set of educational tools. Those tools should include a trading simulator.

Consider Following a Professional Investor

If you are unsure about market analysis, you can always follow along with one of the many professional traders who publish their buying and selling activity. Many of these websites charge nothing and are operated by long-time professionals who have been in the financial game for decades. If you choose not to follow anyone in particular, use your own analysis methods or specialize in a niche, like technology or consumer goods.

Learn How to Trade Shares

Peruse the platform you use and make sure you know how to place limit orders, stop losses, and other types of specific trades. The goal is to be able to purchase an investment with confidence, place limits on the amount of profit you want to take, and not to make a buy until the unit price reaches a specific point that satisfies you. When you tell the system you want to purchase so many shares of XYZ stock, it typically will ask you what type of order you wish to place, the dollar value of the buy, and several other parameters. Always be careful to fill in your specifics on every order and double-check on accuracy before hitting the buy button.

Choose Exit and Entry Points

Before you make a buy, always write down your exact entry and exit points for each trade. For example, if you wish to purchase 10 shares of XYZ company when its price reaches the $25 mark, you can adjust your order dashboard to automatically make the transaction. But also, be sure to set two exit points: a low and a high. Maybe you’ve decided to sell XYZ if it falls below $19 or rises above $40. Put those parameters in the software.