Question: How can I become a stockbroker or stock trader?
Hey im a junior in highschool and I have an ambition to become a stockbroker. I believe i would fit in very well with the requirements of having a high stress job and I have experienced the stock market and have a good understanding of it. However Im not sure what is the best way to make the most money being a stockbroker and what education i would need to be one. Thanks and please be specific!! Oh and by the way ive been listining to Howard Stern and hearing that Sal the Stockbroker Governale was a stockbroker and that encouraged me and he said how he made half a million a year. Thanks!!
Answer:
There's a very big difference between a stock broker and a trader. A trader can be a stock broker but very few stock brokers could make as traders. A trader has a stock broker by at least 10 IQ points, a stock broker could never work as hard as trader
In the US to be a stock broker you need to be an employee of a Broker/Dealer so they can sponsor you in order to become a licensed stock broker.
Firms usually want college graduates, but it is not really necessary nor really a requirement but many firms like it and make it their requirement. Bank broker/dealers usually want all the sales reps to be college graduates.
Your college major is not important, (No courses in the academic world prepares you to be a broker). But since your coming into the world of Finance, some of the more helpful majors would be Finance, Accounting, Economics or Statistics,
You should be good at math and have a decent idea about the stock market.
You should be good at selling, and it would help if you have an outgoing personality.
So if you‘re good at sales, or have a good sales background in place of a college degree, you’re part way there.
Try to get with any major brokerage firm they will put you through an in-house training program, which is primarily getting you ready to take the necessary test for licenses. You will need a Series 7 which is a General Securities Brokers test, and a Series 63 which is just for state approvals.
Most brokerage firms, except bank B/Ds, will put you on salary and once you have passed the test, they will slowly take you off salary and put you on commission basis pay out. Banks will usually keep you on salary but no commissions.
If you have your choice, you’re always better going to work for a regular B/D rather than a bank - You will learn, faster, better and the proper way of how the industry works. As a broker for a B/D you can always find another B/D that will hire you or at the worse, you can always work for a bank. But if you’re Bank B/D trained and licensed, it’s very difficult to go work for a regular B/D unless you have years of experience or believe you can bring a “big book”
It's much easier to be a stock broker than a trader, if you study for your exams you can be a broker, but a trader must learn more not only about the products but also the markets, the entire trade processing cycle and the clearing ot trades.
A trader must learn on their own to be successful, a stock broker needs a good sales assistant to be successful.
I have managed both traders and stock brokers, it's harder to become a trader, but once their you can always write your own ticket
The most important skill to be a stockbroker is "sales". If you can sell you'll do well as a stockbroker. If you can't sell...... it doesn't matter how much you know.
Stock trader is a whole different story. Read a hafl dozen of these books and see if it interests you;
http://joefahmy.com/2010/03/17/recommend…
http://www.chrisperruna.com/2010/01/10/2…
Perhaps they don't have those qualifications in some micro-bank boutique in Houston, but the rest of city all studied at the best.
There's the thing about any broker or trader. They all tell you their success stories and their best trades that worked out. But they never tell you about how much they lose. Don't you wonder how sal the stock broker went from making $500,000 a year to quitting the job? It's not only that always wanted to work for Howard stern, but i'm a listener too and he explained that he LOST all his money and his clients and had to file for bankruptcy. 1 year he made $500,000 and the next year he lost it. You didn't get that part did you?
"A Nobody" and "Common SEnse" gave you responses that will help you decide.
"JAMES' if you are addressing brokers and/or traders here in the United States, you have no idea of what you are talking about. I had 8 floor traders/specialist and none of them went to a big name school, in fact one of the better market makers only went to high school, My fixed income trader went to a regular school while my NASDAQ trader did go to an Ivy League school but he was a real A.H
It's simply a case of going to a good university (we're talking top 2 in each state), and getting into the door for an interview. In terms of what to study, you'd be looking at a degree which is highly mathematical (Maths, Physics, Economics, Engineering... the list is long).
'University doesn't matter' is a myth: Why? Because although it doesn't necessarily make you perfect for the career, the odds are, there will be somebody as perfect for the career as you, but got the Harvard degree to match. I'd hire somebody with guts + a PhD from Harvard over somebody with just guts any day. Even if you are better, they won't take the risk of rejecting a Cambridge student over a average student, just incase they might happen to be better, because the odds are, they probably won't be. To be a trader you have to be smart and hard-working, I think not many people would argue that they're different from the attributes needed to get into a top university, and that's why they're picked from there.
Success in the business is normally one or both of two things:
1) Get trained at a top bank (Goldman Sachs, JP Morgan, Morgan Stanley...). These banks only higher the best from the best universities. We're talking top 5 universities from each country: Stanford, Harvard, Cambridge, Tokyo etc.
2) Have contacts... good ones. This normally will come with 1).
What you don't need to think about, is the qualifications you need to legally be a stockbroker; the bank will sort that if they want you (but just incase you're interested, it'll be the 'series' exams, go onto investopedia and they have a revision area which will give you an idea of the content).
One final thing:
- A stock broker is a mainly a salesman; he looks at stocks, then calls clients and asks them if they want him to buy them. His payment is through commission.
- A trader is a stock picker; he looks at stocks, and then buys and sells them on behalf of a hedge fund (or himself, particularly in the futures pits). That is normally what people are thinking of when they think of a trader.