When people pause to look in the mirror, the disconnect between what they want to become and where they find themselves can be a reality check. Many people want to be financially literate, but what people need to understand is that it takes years of research and practice to grasp finances. Often, the inability to take action towards meeting financial goals is simply not having enough information to make things happen.

Whether it’s because they haven’t had someone in their life to influence them and guide their choices or they don’t have self-confidence, the good news is that becoming financially literate is an attainable goal for anyone who wants to go for it. And in this article, we will go over what it takes but know that just because a trader or an investor is financially literate, it will not guarantee success. This article will go over what needs to be done for traders and investors to have a chance.  

Financial Freedom Mentor

When traders discover Allison Ostrander, the director of risk tolerance and an options trader at Simpler Trading, their curiosity grows. They often find Allison relatable, and her $500 challenge is acceptable. Allison wanted to add to her income as a mom who could be there for her children while not tied to an office job. She began her trading journey fresh out of college with a degree in theatre performance – not business or finance. Allison saw trading as an alternative to waiting tables, and the rest is history, as they say.

Also, her trading style with profit recycling meant that even someone who didn’t have a $50,000 account could learn and grow their small accounts into larger ones. With a focus on increasing small accounts, Allison keeps the dark side of emotions in check. Also, as a mentor, Allison teaches traders to concentrate on analyzing trading setups and strategies with a critical eye to reduce losses.

A trader who constantly analyzes risk versus reward in the individual trade will want to develop a strategy with risk as the guiding focus. This mindset allows traders to minimize risk as much as possible. So this leads to how to get started with $500. Sometimes the answer is in the details. Curbed spending may not only open up money you didn’t know you had but allow you to establish good spending habits. If you don’t have $500 in your mattress, there are creative ways to make that happen.

Video Guide Trading with $500

Are You Looking for a Mentor?

If you are looking for a mentor that relies on her ability to be financially free, then look no further than Allison Ostrander’s Profit Recycling Mastery. Sign up today and gain access to her live-trading sessions, get real-time stock alerts, research her trade spreadsheet and see how a professional operates. Become a member today and never trade alone again.  

Steps to Financial Freedom

A common saying I like to remind myself is, “If you watch your nickels and dimes, the dollars will take care of themselves.” Frugality can be a tad bit annoying. However, it’s a necessary step to take. Look at the expenditures that nickel and dime your budget every day. The answer to this can often be found on credit card statements. When we account for the rising costs of consumer spending and the added stress it causes, it’s a simple choice. Look at it this way – investing in retirement funds, real estate, and college for kids – are all funds that will have a positive return and impact on our lives. 

When spending habits don’t offer a return in essentials or happiness, they should immediately be ditched. So, that doesn’t mean you have to give up Starbucks coffee if that brings you pure delight. But, Online shopping, digital games, and lavish luxury items can all add to significant spending. Also, if your shopping cart tends to have unplanned items, maybe grocery store pickup could allow you to have more money in your pocket for investments. Be present in the world instead of constantly spending cash. Eventually, the moments with family and friends will mean more than items in the landfill.

Open a Brokerage Account

Opening an online trading account through a reputable brokerage takes time, so setting aside an hour would make sense. Much like opening a bank account, these brokerage firms require identity verification and other information before opening the account, so ensure you have all that information before starting that process. 

Most online brokerage firms require between $500 and $1,000 to open an account. Some brokers have no minimum. While there are several trading firms, some of the most reputable are Fidelity, Scottrade, E*Trade, OptionsHouse, TD Ameritrade, Charles Schwab, TradeStation, and the platform I primarily trade on tastytrade. Most of these offer traders a training platform to place paper trades to practice without risking real money.

Once the account is opened and funds of $500 have been deposited, the ability to begin trading is available right away. Some traders who are just starting prefer to read educational books to learn the basics. Others are hands-on and choose to join the free online training room that Simpler Trading offers instead. Whichever route appeals to you, know that trading is a risky venture, and preparation is critical to trading.

Having access to trade the major indices – Dow Jones Industrial, S&P 500, Nasdaq, or the Russell 2000 – means that traders will have the opportunity to trade exchange-traded funds (ETFs) that represent the indices themselves. Traders may shift their focus to individual stocks, as well. Areas that should be avoided until a trader has had many hours of trading are futures and commodities. Although, paying attention to these areas can bring more insight to your trading approach.

Traders can study indicators that work with stock charts to apply the strategies they learn as they trade long (upward movement in stock) or short (when a stock price drops.) While the indicators often work together and in different types of markets, finding and using one at a time allows traders to build their war chest.

Find Your Trading Style

With an account waiting to trade, the first question that must be answered is, “What type of trader will you be?” Trading style is often determined by the time available to the trader and personality type or preference.

A fast-paced individual who enjoys watching the market throughout the day, but doesn’t like to worry about their trades overnight, might prefer day trading. Another trader may choose the more extended time frames of swing trading, with some trades lasting days, weeks, or months. By spending time finding out which type of trading works best for you, traders have more ability to go naturally into trading as a career or a strategy for extra income.

Allison offers a unique perspective on looking at capital risk, the chart, and the option chain, giving any trader a new perspective on investing. She mainly does overnight swing trades to get around the pattern day trading rule. When traders can keep risks as low as possible and still make a profit, they can grow their accounts. The primary way this happens is to follow strategy, not emotions.

Emotions and gut feelings have no place in trading. Becoming adept at ignoring emotions and following strategy lends itself to a successful trading career. Also, trade sizes matter while maintaining a trading career. Each trader determines their limits; however, trades that cost more than 5% of the total account size can lead to a shortened career.

Benefits of Financial Freedom

While Allison enjoys trading as a mom who returned to the office for a time after maternity leave, the trading lifestyle offers flexibility that most corporations can’t provide. Family and life balance is an added benefit to being a trader. Whether your “baby” is human, canine, or otherwise, there are more flexibilities to meet the challenges of work and home environments.

Why not learn from a professional if you need a more hands-on approach? Allison Ostrander’s Profit Recycling Mastery can help you through your trading journey and teach you real-time strategies that you can use for life. Sign up today and see what it takes to become a trader.

Steps to financial literacy list

Summary of Steps to Take

  • Open a Brokerage Account
  • Deposit money into the account
  • Get educated, learn the basics, paper-trade, and get comfortable with the platform.
  • Experiment with strategies (paper trading is beneficial here)
  • Learn to control your emotions

Questions on Financial Freedom

Q: I only want to use $500 to trade. Can I trade with $500?

A: You can trade with just $500. Make sure you’re only trading with money you can afford to lose. If you’re interested in trading with just $500, consider Allison’s $500 account challenge, where she trades options to grow a small account. 

Q: Should I prioritize paying down debt or investing?

A: Truthfully, it depends. Credit cards with high-interest rates should come off of your balance sheet immediately. The same strategies for saving money can be applied to paying down debt and saving for trading and investing trading. 

Q: Why do you want financial freedom?  

A:  Financial freedom is one of the most important things to obtain, especially in retirement. It will allow you to live the life you have always wanted and not worry about the stress of finance. 

Q: What is the key to financial freedom? 

A: Discipline and consistency will always be the key to financial freedom. It’s not easy to obtain, so traders and investors will have to work at it to achieve their goals. 

Q: How do you gauge your risk tolerance?

A: To determine your risk tolerance, you need to answer what kind of trader you are and what your focus is when making decisions about strategies and position sizing. There are strategies out there for every risk tolerance.