There has been a significant rise in the number of independent traders that have made it their full-time job over the last decade. This is mainly due to advancements in technology and the increased accessibility to the tools that allow people to trade from just about anywhere in the world. Learning how to trade successfully takes a lot of time and dedication, but it can be very lucrative if done correctly. Below we will go through X things that independent traders in the UK should know about before starting their trading journey.
Licensing and Regulation
It is crucial to understand the rules surrounding licensing and regulations whilst trading in the UK. These rules can change depending on the type of assets sold, so finding the rules you must abide by is a good idea. There may also be differences depending on which platform you choose to trade on; for example, if you are using TradingView, a trendy option, there may be different rules compared to someone trading on another platform.
You may need registrations and licenses to trade the assets you want to trade independently. To do this, you should visit the Financial Conduct Authority (FCA) website for all the necessary information. The FCA is the United Kingdom’s financial regulatory body that is independent of the UK government and makes sure that the financial industry is stable and that customers are protected. If you have any queries about what rules you have to follow as an independent trader, do not hesitate to contact them, as they will provide you with all of the answers you need.
Psychological Impact
Many people think that trading in the stock market is an easy way to make quick money and that anyone can do it; however, this is not the case. It takes a large amount of dedication and effort to gain a good understanding of how the financial industry runs, as well as how to actually make consistently good trades. You have to learn how to analyse the market using a wide range of tools to spot opportunities to make good trades and control your emotions when things don’t go as planned.
If you are good at handling pressure, you may have what it takes to become a successful independent trader. As a trader, you have to be able to make quick decisions under pressure while also managing the risk of your investments so that you don’t lose focus and suffer greater losses than necessary in a trade that doesn’t go your way. Getting good at this takes skill and practice and can often take a toll on your mental health if you let it get to you.
Tax implications
The United Kingdom has a complicated tax system that requires a good amount of research to understand how it works fully. Traders must be knowledgeable about the tax regulations surrounding trading. Different types of trading will be subjected to various tax forms, including capital gains tax, VAT (Value Added Tax), and income tax. If you fail to comply with the requirements surrounding tax in the UK, then you may run into legal problems and face penalties that can significantly hurt you financially. For this reason, independent traders must keep a clear record of their trading activities.
Trading costs
Those that are not involved in the world of trading may not be aware that there are several hidden fees that a trader may be subjected to. Most people understand that there are brokerage fees; however, depending on the type of trading you are participating in, you may also face transaction fees, exchange fees, and data subscriptions. It is essential to consider these hidden costs to factor them into your trading plan, clearly understand the expenses you can expect to pay, and calculate potential profits accurately.
Trading in the world of finance is a fantastic way to give yourself financial freedom and increase your income using the skills and knowledge you have obtained through hard work and dedication. It is essential to understand that becoming a successful independent trader isn’t something that will happen overnight and will require you to put in a reasonable amount of effort. Still, with your potential profits, it is easy to see why so many people are attracted to the job. You should now be more aware of some things that many people don’t know about being an independent trader in the UK and can use this knowledge to assist your decision-making on your journey in trading.
