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- With the Rise of Online Stockbroking, Should You Become a Stockbroker?
- What a Stockbroker Does and How to Become One
- A 9-5 job versus a full-time trader: What should we choose?
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However, in this article, we will focus on how the average person, with either extensive or very little trading experience, can enter into the arena of trading and creating wealth. The first option—and likely the easiest because it is so flexible and can be molded around daily life—is trading from home. However, day trading stocks from home is also one of the most capital-intensive arenas.
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If the trader's account falls below this minimum, they will not be permitted to day trade until the minimum equity level is restored either by depositing cash or securities. Therefore, potential traders should be aware of the other options, including markets that require less capital and have lower barriers-to-entry.
The foreign exchange forex or currency markets offer such an alternative. This market is open 24 hours a day during the week, and thus provides an alternative to those who cannot trade during regular market hours.
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The contract for difference CFD market has also expanded. A CFD is an electronic agreement between two parties that doesn't involve ownership of the underlying asset.
This allows gains to be captured for a fraction of the cost of owning the asset. As with the forex market, the CFD market provides high leverage, which means that smaller amounts of capital are needed to enter the market. The stock market can also be traded using a CFD. While the stock is never owned, the contract allows profits and losses to be reaped from speculating on the underlying stocks or indexes by mirroring its movement. High leverage does mean higher risk; if a trader does not have a large amount of capital, this market can still be entered with very low barriers.
Educating yourself on the risks involved and building a strong trading plan are absolute musts before partaking in any trading activity, but when you're highly leveraged, it becomes even more paramount. Proprietary trading firms have become very attractive with their training programs and low-fee structures. If the idea of trading from home does not appeal to you, working on a trading floor might.
With the Rise of Online Stockbroking, Should You Become a Stockbroker?
A day trader working for a proprietary trading firm is typically a contractor, not an employee. They receive no wages or perks—just a share of the profits made from trading whatever the firm is into. The trader is provided with company capital or leveraged capital to trade and the risk is partially managed by the firm.
While personal discipline is still very necessary, trading for a firm takes some of the weight off of a trader's shoulders. Working for a firm may also require working in an office during market hours, although some firms allow traders to trade remotely from home. The benefits of working with a trading firm can include free training, being surrounded by other successful traders, exposure to innovative trading ideas, greatly reduced fees and commissions, access to capital, and performance monitoring.
What a Stockbroker Does and How to Become One
Many proprietary trading firms will accept people who have shown initiative in their backgrounds and have some education in their prior field. This is because the firm can monitor a trader's risk, and those not showing promise can be released with very little overall loss to the firm. Payment in a firm like this is based on performance; it is normally a percentage payout of your net profits after fees. Some licensing may be required; this depends on the structure of the company. Even if it's not a requirement, passing the Series 7 exam will mean that there are more firms with whom you are available to trade.
Each firm operates a little differently, so find one that suits your needs, personality, and circumstances. Some require you to use some of your own capital. If you run a search for a list of proprietary trading firms, you will be able to see what is available to you. Once you've decided which trading method fits you the best, the next step is crucial.
A 9-5 job versus a full-time trader: What should we choose?
If trading from home is the main interest, you must decide what markets you will trade in based on your capital and interests. You must then make a comprehensive trading plan —which is also a business plan because trading is now your business—and decide how you will operate as a trader. Next, explore different online brokers and compare what they offer. Seek out a mentor or someone to help you. Then it is time to start trading. Securities and Exchange Commission.
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Personal Finance. The markets are highly regulated by SEBI and regular audits happen at the company level to ensure compliance, only someone with very high levels of integrity can work here. Know where you want to go: The Capital markets are not just about picking stocks, they are much more.
Having a clear idea of which field interests you the most will help you make smarter career decisions. Decide what you want to do: Once you know which part of the capital markets you want to be associated with, it is important for you to understand that for a particular business to work, besides the core research team there has to be an efficient support team too.
For example the broking and distribution business cannot function without a strong operational backbone or IT support. There are a plethora of opportunities in the capital markets; you need to first and foremost decide where you want to go. Read and read more: It is common knowledge that stalwarts in the capital markets whether it is Warren Buffet, Rakesh Jhunjhunwala or our own Ramdeo Agarwal have one thing in common; their habit to read. They are all vociferous readers and seek to continuously grow by adding on to their knowledge base.
Certify yourself: A couple of NCFM and NISM certifications besides being mandatory like the research analyst certification for the research analyst profile, depict your seriousness towards your vocation. If you can add a CFA or a CA certification to your profile, then you do wonders to your credibility as a serious candidate. Choose your workplace wisely: Getting the correct exposure at an entry level in your career is vital to your growth prospects in the future.
Candidates often pay more importance to the CTC tag than the learning which they can accumulate from their first job in the capital markets which often leads to stagnation at later stages in their career. Choose your mentor properly: In the capital markets, not even the best of the best like Warren Buffet have made completely accurate predictions! Having a mentor who can help you rise above such situations and help you cope with different situations will be an added advantage. All in all working in the capital markets is like reading a thick beautifully written novel, you know that if you keep on reading, you will enjoy yourself immensely but the urge to give up during difficult passages is also there.
Only the ones with the right attitude can enjoy and cherish the time spent reading it and look back with content.