How Old Do You Have to be to Trade Stocks? Kids & Teenagers’ tips

Trading concepts

Are you a kid or a teenager and do you want to know how old do you have to be to trade stocks, then you aren’t alone. There are many kids and teenagers who have set their eyes on stock trading. Believe me, trading isn’t just for adults and age doesn’t matter when you are ambitious to achieve something. 

Yes, trading isn’t just for adults. Kids and teenagers are also trading stocks and earning a great deal of money. However, trading as a kid or a teenager feels daunting, at least to many teenagers. But the reality is, even adults feel daunted if they have never traded before in any capacity. Therefore, you don’t need to feel overwhelmed because trading has never been as simple as it is today. 

So, how old do you have to be to trade stocks? What tips can make your journey easy for you? How can you start trading stocks and achieve success? These are the topics of our article today. So, don’t go away because you are going to learn a lot!

How old do you have to be to trade stocks?

Stock trading is one of the most exciting things for people of all age groups and our youngsters aren’t an exception. Trading is as much attractive for teenagers as it is for adults. Truthfully, who wouldn’t want to be independent, make money, and secure a future? Probably no one. Nowadays, trading stocks is getting more popular among kids and teenagers. But the question is how old do you have to be to trade stocks?

Learning all about how old you have to be to trade stocks gives you the energy to achieve financial freedom. So, keep reading!

Age limit

Unfortunately, kids and teenagers under 18 cannot open a trading account. Does that mean the trading door is closed for them? Yes, you cannot open a trading account until you are over age 18. However, there is a way around and that is custodial accounts. Your parents or guardians can establish a trading account for you. There are several trading platforms that offer custodial accounts. 

However, it is important to note that not all platforms are good for you. Why so? Because there are certain platforms that are costly. Therefore, it is important for you to find a trading platform that not only offers enticing features but is also economical. For example, FirstTrade is an economical option for opening a custodial account. 

How to trade stocks as a kid and a teenager

“How old do you have to be to trade stocks” is the first step. You need to know whether you can trade stocks or not if you are under age 18. Luckily, you can trade by opening a custodial account. However, is it a good idea to start trading just by opening an account? Is it possible to be profitable and successful just by opening an account? No, my friends, a big no. Here are a few steps you need to follow to achieve success in trading and gain financial freedom. 

1. Knowledge

It is enticing to start trading and there is a lot of sensation. However, you also need to keep in mind that trading is a risky arena, too. Therefore, it is important to learn the basics before venturing into this arena. You can start by learning the basics of the stock market and investments. Fortunately, there are a lot of online free resources to learn. Additionally, if you want to learn more, you can also enroll in paid programs. Always remember that knowledge is power and it leads you to success. Therefore, gain as much knowledge as possible before practically initiating trading.

2. Budget

Setting a budget for trading stocks is as important as opening a custodial account and gaining trading knowledge. Always keep in mind to invest the amount that you can afford to lose. Why so? Because trading is a risky arena. Secondly, you are investing for the future and your amount will remain bound for years to come. Therefore, it must be the amount that you don’t need for a time period. 

Fortunately, trading nowadays is easy. You don’t need hundreds and thousands of dollars to start trading. You can start investing with as low as $1 through fractional share investment. Let’s say you have $200 to invest. That is a good amount to invest today.

3. Open your account

As you already know, you cannot open a brokerage account until you are 18 years of age. However, custodial accounts enable you to start investing and trading as a teenager. Once you open a custodial account, the rest gets simple, especially when you have reasonable trading knowledge. Here are a few key points regarding custodial accounts;

  • Your guardian can fund your custodial account through gifts. $15,000 per minor per year is the gift limit. That means you can have your guardian fund your account up to $15,000 per year.
  • Guardian who opens your account isn’t the only person who can provide gifts. Anyone can fund your account. 
  • You as a kid or a teenager cannot execute trades autonomously. That means you will have to rely on your guardian to execute trades on your behalf. However, you can work with your parents to choose the stocks you want to invest in.

4. Carefully pick stocks for investment

It is also of paramount importance to choose stocks with a lot of care. Yes, you can invest in any stock but you need to choose stocks that’ll give you a good return in the future. Choose an industry and then a company within that industry for investment. For example, if you want to invest in a company operating in the tech industry, choose a company that has the potential to grow. Similarly, there are many other options for you to pick stocks for investment. 

5. Diversify your portfolio

Do you prefer to put all eggs in one basket or do you want to put eggs in multiple baskets? Yes, you understood it right. You should never risk your money by investing in a single company. Instead, diversify your portfolio by investing in different companies, even in different industries. It always gives you certain advantages. For example, if one company doesn’t perform well, the other will. Secondly, it is also important to watch your portfolio. 

6. Don’t panic

Finally, it is also crucial to keep your emotions at bay. If you have chosen your stocks carefully, then never panic if the stock price goes down. Always remember that stock prices may fall up to 10 or maybe 20% in a year. That is quite natural and prices will bounce back again. Panic selling and emotional involvement in trading cause a lot of problems. Therefore, always be rational when making trading decisions. 

The wrap-up

“How old do you have to be to trade stocks?” is a question kids often ask. You have to be 18 years old to open a brokerage account and start trading. However, you can have your parents or a guardian open a custodial account. You can start trading by funding your custodial account. 

In short, starting trading as a kid or a teenager isn’t a big deal these days. However, trading is risky and you might lose your money. Therefore, it is imperative to gain trading knowledge and choose stocks that have great potential for growth. Moreover, you should always diversify your portfolio to avoid risk money in a single or a couple of stocks. Best of luck!

Russell Crane

Russell Crane

Russell is an Algorithmic & Technical Analyst Trader @ PatternsWizard.
His passion is to share his knowledge about TA, patterns & more. Why hope for your trading to work when you can precisely know the performance stat of every pattern?

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