How to Become a Stock Trader
If you’re competitive, good with numbers and calm under pressure, then you could have the makings of a successful stock trader. This is a career path that requires a cool head, financial acumen and the ability to make swift decisions.
Have you got what it takes to be a key component in the financial services industry? Find out as we explain how to become a professional trader.
What Qualifications Do You Need To Become a Trader?
1. Academic qualifications
Working as a “Wall Street” trader (don’t worry, that term applies to anyone in the financial services!) will require some academic qualifications including ongoing professional development. If you want to work for an investment bank you’ll generally need a degree. Degree subjects that will boost your chances of finding a job include accountancy, business, economics, maths, finance, politics and science. A 2:1 is essential and you’ll be expected to take part in a demanding selection process that includes psychometric testing and interviews.
If you don’t have years of experience, then an internship or placement will definitely give you an advantage. If you are a recent graduate, then doing independent research into the stock market and aspects of the trading industry such as trading systems, day trading, ETFS, derivatives and market prices. If you’re interested, check out a few investment banks and brokerage firms online as many of them offer part-time and full-time work experience opportunities.
If you don’t have a degree it’s still possible to become a successful trader by working your way up through the finance industry. However, you will need to gain some industry qualifications en route, many of which are short-term and able to be carried out during work hours.
2. Industry qualifications
Before you get started as a stock trader you need to qualify to be placed on the stock exchange’s list of people who are eligible to trade. The Financial Conduct Authority (FCA) also has to approve you.
An excellent example of an FCA approved entry-level qualification is the International Certificate in Wealth and Investment Management, which is offered by the Chartered Institute for Securities and Investment (CISI). Once you’ve gained this you’ll be able to work towards achieving their level 7 Chartered Wealth Manager qualification.
The Chartered Financial Analyst Institute also runs a study program, which is split into three levels of exams. Complete all three levels and you’ll be on your way to becoming a level 7 Chartered Financial Analyst.
If you’re planning to do some freelance stock trading you’ll be glad to know that there are a number of industry-recognised qualifications available online and in the classroom. Knightsbridge Trading Academy’s CISI accredited Online Trading Programme comes highly recommended, as does their Institutional Trader Programme which is held at the London Stock Exchange.
What Do Stock Traders Do?
As the name suggests, day to day traders trade stocks. They buy and sell stocks, shares, bonds and assets on behalf of investors during trading days. These include investment banks, big companies and wealthy individuals. Using their financial know-how and analytical skills, traders make quick judgements about when to buy and sell products in order to make money for their clients. They also survey the stock markets and make predictions.
If you become a stock trader you’ll be able to specialise in particular products such as shares, fixed interest bonds, mutual funds, hedge funds or foreign exchange markets.
Skill Set Required for a Stock Trader
Successful stock traders will need to boast a diverse skill set consisting of skills such as:
An analytical mind
How Do Flow Traders and Sales Traders Differ?
While flow traders and sales traders share some things in common, flow traders take high risks in seeking rewards, whereas sales traders don’t.
What do flow traders do?
Flow traders buy and sell products on the financial markets on behalf of a bank’s clients. The products they sell include securities and other assets such as futures, options and commodities.
The main responsibilities of a flow trader include:
What do sales traders do?
Because sales traders take their instructions directly from clients their role is focused on building relationships. They present new clients with financial opportunities, secure deals and advise on stock market developments.
The main responsibilities of a sales trader include:
It’s perfectly possible to become a freelance online stock market trader if you do your research. If you like the sound of this option, we recommend taking a course that will teach you the trading strategies that are related to various trading platforms as well as career advice for this role. Before you start trading, you’ll also need to learn about the best stock market analysis techniques and how to equate a risk management equation.
Popular Career Pathways for Stock Traders
When you first begin trading stocks you’ll shadow senior traders to learn the language of the trading floor. You’ll also be expected to increase your knowledge by attending lectures, seminars and conferences.
After 2 years as a trainee, you’ll have completed your CISI Certificate, so you can move on to the diploma programme of study with the CFA. You’ll also have the opportunity to rise up through the ranks and take on roles such as:
The role of a stock trader offers plenty of responsibility, excellent promotional opportunities and impressive financial rewards. So if you think you have what it takes to become a professional trader, why not explore our range of relevant online courses?