Are you having trouble deciding between a career as a Wall Street trader or stockbroker? Each involves buying and selling securities , but the nature of each varies greatly, and these variations could make all the difference in determining which career will suit you best.
In this article, we'll look at these differences, as well as how to become a trader or a broker the paths start similarly, with the same requirements; then, depending on inclination and opportunity, you get a chance to opt for one profession over the other. While both brokers and traders deal in securities, brokers are also sales agents, either on their own behalf or for a securities or brokerage firm. They are responsible for obtaining and maintaining a roster of regular customers, both individual or retail, and or institutional.
Traders, on the other hand, tend to work for a large investment management firm, an exchange or a bank , and they buy and sell securities on behalf of the assets managed by that firm.
Brokers have direct contact with clients, and they buy and sell securities based on those clients' wishes. Some may even act as financial planners for their clients, shaping a retirement plan, dealing with portfolio diversification, and advising on insurance or real estate investments, if their firm offers such financial and wealth management services as the larger wire houses often do.
They deal not only with equities and bonds, but mutual funds, ETFs and other retail products, as well as options, for more sophisticated clients. Traders, on the other hand, tend to buy or sell securities based on the wishes of a portfolio manager or managers at an investment firm.
A trader might be assigned certain accounts, and charged with creating an investment strategy that best suits i. A broker often spends a great deal of time keeping clients informed of variations in stock prices. Additionally, brokers spend a fair portion of their days looking to expand their client bases. They do this by cold calling potential customers, introducing themselves and showcasing their background and abilities, or holding public seminars on various investment topics.
Both brokers and traders also look at analyst research to make recommendations to clients or portfolio managers to buy or sell securities. However, traders often do their own research and analysis, too. Despite the old-time stereotype of an individual shouting offers and orders on a trading floor, most traders today spend their time on the phone or in front of their computer screens, analyzing performance charts and polishing their trading strategies — since making a profit is often all in the timing.
Make no mistake, though: So, after this overview, it's time to look more specifically at what's involved in becoming a Wall Street trader "Wall Street" in the figurative sense of the financial services industry, that is; in the digital age, traders can, and do, work from anywhere. Though we'll focus on the trading profession, the path to becoming a broker the background and education is pretty much the same — especially, since, in today's financial industry, you probably need to be willing to take any entry-level position at a desirable firm that opens up.
But first, let's discuss education. Once upon a time, traders could be more of a self-taught breed; but nowadays, a four-year college degree is a basic requirement — at least, if you want to work for a reputable financial institution or company.
Most traders have degrees in math especially accounting , finance, banking, economics or business. Not that liberal arts types can't have successful careers as traders — any field that encourages research and analytic thinking develops future, useful skills.
But make no mistake: Some aspirants move on to obtain an MBA. Whatever your major, you should learn as much as you can about the financial markets. Make a regular habit of watching the financial channels or reading business publications like The Wall Street Journal or sites like — well, this one. Although some leap right in after college, it's not uncommon for traders to have some other sort of work experience prior to entering the field.
They might work in a finance department at a corporation, for example. That's even more true of brokers: Given the high level of client interaction, any prior sales experience is highly valued.
If you're interested in day trading, Investopedia's Become a Day Trader Course provides a greating starting point. The easiest way to get access to a Wall Street firm trading desk — the department where securities transactions take place — is to apply to an investment bank or brokerage.
Begin with an entry-level position: Learn everything you can. Many financial firms offer internships sometimes paid, sometimes not and year-long training programs for straight-out-of-college types, especially for those on a track to get their trading license.
Which leads us to…. Lasting nearly four hours, it consists of questions, covering investment products, trading activities and reporting, professional conduct, regulatory requirements and maintaining records. The Series 7, a six-hour, question exam multiple choice, plus 10 others , tests the basics of investing and investment products, as well as the rules and regulations of the Securities and Exchange Commission SEC.
Many traders take this exam too. In addition to the Series 7 and 57, many states require a candidate to pass the Uniform Securities Agents State Law Examination commonly referred to as the Series 63 exam. The Series 63 exam also tests various aspects of the stock market.
When an individual has a license from FINRA, he or she is then a member of the stock exchange and has the ability to buy or sell stocks and other securities. As of this writing, some changes are set for the series tests, effective March Candidates will then take an additional, smaller "top-off" exam related to the specific field they hope to enter. Currently, you need to be employed or "sponsored" by a FINRA-registered company to take one of the tests; sponsoring is often a part of financial firms' training programs, with hiring conditional on a candidate qualifying for the license similar to the way law firms engage law school graduates who are studying for the bar exam.
Before granting it, you will need a background check criminal and financial , a fingerprint card, and to register with the SEC unless you are conducting all of your business intrastate. After passing the exam s and attaining a license, you can request to be moved to any vacant trading desk. Here, you'll learn how to develop trading strategies, direct trade executions, and carry out trades on behalf of the investment bank or clients of the firm.
At the trading desk you also get an opportunity to study companies up close and get a feel for the markets. You'll gradually identify a niche for yourself, be it in futures contracts or equities or debt instruments. However, before starting assignments on an actual trading floor, you must be screened by the FBI; because Wall Street traders deal with sensitive financial matters, such as government securities, that if leaked, can lead to damaging market speculation and economic espionage, the Bureau checks to see if you have a criminal past.
People want to become traders for various reasons. Money is a key one, but passion and fascination with financing and the movements of investment funds are key too.
If you like dealing with people as well, you might prefer a broker's life. Whichever you prefer, be prepared to thrive in a fast-paced workplace — because money never sleeps. Dictionary Term Of The Day. Broker Reviews Find the best broker for your trading or investing needs See Reviews. Sophisticated content for financial advisors around investment strategies, industry trends, and advisor education.
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Become a day trader. Which Career is Right For You? By Christina Granville Updated May 30, — What Do Brokers and Traders Do? Becoming a Wall Street Trader So, after this overview, it's time to look more specifically at what's involved in becoming a Wall Street trader "Wall Street" in the figurative sense of the financial services industry, that is; in the digital age, traders can, and do, work from anywhere.
How much a fixed asset is worth at the end of its lease, or at the end of its useful life. If you lease a car for three years, A target hash is a number that a hashed block header must be less than or equal to in order for a new block to be awarded. Payout ratio is the proportion of earnings paid out as dividends to shareholders, typically expressed as a percentage. The value of a bond at maturity, or of an asset at a specified, future valuation date, taking into account factors such as No thanks, I prefer not making money.
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