If you have been lured into dreaming of becoming a broker, looking at the multimillion dollar salaries people earn, think again! Remember and be warned that everything comes at a price. If it’s only the money you are after, then be aware that this is a high risk profession. It takes its toll on the body and mind. You have to be prepared to work in a very high stress environment and make quick decisions. The profession necessitates that you have a good understanding of the principles of economics and study at least two to three sectors in industry thoroughly. People trust and put money in the market based on your recommendation. So you have to be very careful about, where you ask them to invest their money. Of course, becoming a broker and trading stocks for a living is an exciting and challenging profession, but let it be remembered that it’s no business for the faint of heart! After that essential warning, let me unfold the path that will lead you to become a stock broker, who performs the important function of channelizing investor money to drive the growth of profitable businesses.
Tips on Becoming a Stock Broker
Like any specialized profession, there are hundreds of skills that need to be assimilated to become a stock broker. In the following lines, I outline the path, one is expected to follow, with the goal to become a broker, who can consistently deliver under pressure on Wall Street or in any financial capital around the world.
Study Math, Economics in School
It’s essential that you study mathematics, statistics and economics at school, as number crunching and data analysis is something that you need to be good at, as a stock broker. Economics is essential to understand the dynamics of an economic market. Get a basic knowledge of how businesses work. If you have anybody from the family, or an acquaintance who is a stock broker, or works at a stock exchange, learn the basics from him or her. Ask questions and try to understand how stock market works. Learn what ‘investing’ really is all about. A good place to start is a book called ‘Intelligent Investor’ by Benjamin Graham, wherein you will be provided with the essential lesson of not mixing emotions with logic, while making investment decisions.
Choose a College Major in Finance or Economics
Choose economics, business administration or finance as your college major. I suggest that you pursue a postgraduate degree in business finance, if it’s available at your place of study. Big Firms prefer well qualified people, but it’s not a necessary prerequisite. You must be able to sell! That is most important. A degree will provide you with all the technical knowledge that’s required to read financial statements and interpret them, understand the various types of securities, the trading system and data analysis, as well as interpretation in general.
Join an Investment Club
Join an investment club where you can meet and study from like-minded people. It will give you some taste of investment planning. Here you may find experienced stock investors and brokers, from whose wisdom, you might profit.
Create your own Virtual Stock Portfolio
To become a stock broker, one must learn to choose winners on the stock market. For that, you need experience and a trained eye. One way of getting that is playing a virtual stock market game and creating your own virtual portfolio. A lot of brokers learn the ropes this way. Maintain a proper account and buy imaginary stocks based on real market data. Tabulate your profits and losses regularly. Keep playing this virtual investment game till you start beating the markets, that is you start picking winners often. For that, you must read the business news regularly and study emerging industrial sectors minutely! In this way, you can learn stock investing on your own!
Get Hands on Experience as a Trainee
Stock brokerage firms hire trainees that get on the job training and coaching to clear the exams that are prerequisite to become a broker. This is the best and most practical way of learning the ropes to become a securities analyst and an investment advisor, who doubles up as a broker.
Clear Requisite Exams to Become a Broker
You have to clear ‘General Securities Registered Representative Examination’, also called ‘Series 7 exam’. It is administered by ‘National Association of Securities Dealers’. Some states also require you to clear the ‘Uniform Securities Agents State Law Examination’ and the ‘Uniform Investment Adviser Law Exam’. It is necessary that you clear all these exams to become a licensed stock broker. Once you clear this exam and your training is over, you will be interviewed by your sponsoring and training firm.
Go after Opportunities Aggressively
The interviewers look for go getters who are confident and sell aggressively. So prepare yourself accordingly. Usually the training grind prepares you for this. Out of say 100 trainees, selected 5 or 6 may make it through the interview and get hired as stock brokers. So prepare thoroughly and give it your best shot!
Learn from the Masters
It is a good idea to get an extensive experience working for a firm, before opening your own stock brokerage business. Learn from successful stock brokers who are the masters of the game. Observe what they are doing right. Learn how to read the market pulse. You have to be a constant learner and a very hard worker.
Becoming a stock broker is something like being a gambler and that too gambling on other people’s money. So you have to be very careful. There are bound to be losses on the way. Learn why the losses happen when they do. Analyze your profits and losses on a regular basis. I will sign of by saying that to become a successful stock broker, always think long term.