How To Start A Stock Trading Business In 2024 To Earn Profits?

Stock trading as an activity is centuries-old. Every year several new businesses start their operations in this industry. When done wisely, stock trading not only helps a business-owner in making money but also helps his clients generate significant returns on their capital.

So, if you are wondering how to start a share market business or are thinking of opening a trading account, read this blog because it will explain various ways in which you can get into this trade.

How to start a share market business in 2024?

There are multiple ways in which you can start a stock market business. Here are the most popular ways in which such businesses exist.

• Brokerage firm

One of the most popular forms of a stock trading business is a brokerage firm. Such a firm acts as a middleman between the buyers and sellers of stocks. It provides them with a digital platform to trade in securities. It charges them a brokerage fee for providing them a platform to trade and for facilitating such trades.

Earlier, it was a must for brokerage firms to have a physical office space, where investors and traders could come to trade in shares. But in this era of the internet, the most important thing for a brokerage firm to provide is an online platform where people can trade.

There are quite a few ways to expand the business of a brokerage firm. For example, a brokerage firm can use the route of a sub-broker to expand its business.

A sub-broker is a smaller broker who runs the business of a bigger brokerage firm on a franchise basis. A sub-broker gets access to a bigger brand name and trading platform through the franchise model. He, in turn, gets clients for the business. The brokerage thus earned is split between the larger brokerage firm and the sub-broker.

• Stock trader

You can also trade in your individual capacity in the stock market. This does not require you to set up a brokerage firm or any sort of business because you are not providing brokerage-related services. Instead, what you need to do is start a demat and trading account with a brokerage firm, learn the basics of trading, try to analyse stock market movements, and then begin trading to earn profits for yourself. Many individuals practice stock trading in India either part-time or full-time.

• Portfolio management service (PMS)

Under PMS, portfolio managers advise investors on how to invest their money in the stock market. Such advice is backed by the expertise of the portfolio manager and his research team. Therefore, PMS is typically started by people who have investment expertise.

It is a specialised service, wherein the manager and his team advise a client to invest in a certain stock or stocks. It is quite different from a mutual fund (MF). In the case of an MF, investors invest in the units of a fund.

However, in the case of PMS, they invest in specific stocks. Before recommending stocks to investors, the manager of a PMS and his team must understand the preferences and financial goals of an investor. As PMS is a specialised service, it is mostly aimed at high-net-worth individuals (HNIs).

Conclusion

Having a clear strategy and roadmap helps when you are starting a stock trading business. Whether you are starting a brokerage firm, a PMS, or trading as an individual, you should understand how much capital you have, what your expenses are likely to be, how much returns you intend to generate, how you will minimise your losses, and how you will stay afloat in tough market conditions.

If you are a beginner, you need to start from the basics. For example, you should learn about share market intraday timing, principles of day trading and swing trading, etc. In the initial phase, you may consider working with a seasoned trader. After gaining experience, you can start trading independently.