Should I Become a Day Trading Broker?
Day trading brokers, also known as direct access brokers, buy and sell stocks, bonds, options, currencies and other financial assets. Impeccable market timing and informed investment predictions are essential to these daily trades, some of which may be high-risk. Unlike brokers, who make long-term investments for clients, direct access brokers take advantage of quick transactions in order to turn a fast profit. Evening and weekend work is often required in this fast-paced profession.
|Degree Level||Bachelor's degree; master's preferred|
|Degree Field||Business, finance, accounting, or a related field|
|Licensure and Certification||Licensure is required; certification available|
|Key Skills||Customer-service, decision-making, and math skills; attention to detail and initiative; computer skills including email, financial analysis, presentation, and spreadsheet software|
|Salary||$49,807 (2015 median for stock brokers)|
Sources: U.S. Bureau of Labor Statistics, PayScale.com
Getting into this field requires a bachelor's degree, but master's degrees could expand your career opportunities. Fields of study include business, finance, accounting and related fields. Licensure is required. Voluntary certifications are available.
Typically, investment consultants have at least 2-8 years of experience in fields like accounting, depending on the job. The key skills are customer-service skills, decision-making skills, attention to detail, initiative, math skills and computer skills, including knowledge of email software, financial analysis software, presentation software and spreadsheet software.
In 2015, stockbrokers earned a median annual salary of $71,550, stated the U.S. Bureau of Labor Statistics.
Now let's check out the career steps for day trading brokers.
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Step 1: Earn a Bachelor's Degree
Aspiring day trading brokers can pursue a bachelor's degree in accounting, business or finance. While none of these programs are specific to trading, some may offer it as a concentration. Relevant programs are offered on site and online. While these curricula vary by school and major, students should seek programs that focus on investment planning, trading software and risk management.
To get the most out of your education, consider earning a master's degree.
Completing a Master of Business Administration (MBA) program may boost chances for career advancement. When looking for an entry-level job, prospective brokers should explore firms that offer MBA tuition assistance. Day trading brokers should look for MBA programs with courses developed through the Certified Financial Analyst (CFA) Institute.
Additionally, it is very beneficial to participate in an internship.
Aspiring day trading brokers can benefit from participating in an internship through an investment firm. An internship can enable a student to gain first-hand experience working with investments and can help form networking connections to aide in job searching after graduation.
Step 2: Obtain Licensure
All practicing brokers must be licensed, which requires passing the General Securities Representative Qualification Examination (Series 7). The Series 7 exam is offered by the Financial Industry Regulatory Authority (FINRA) and tests proficiency in areas like account records maintenance, transaction completion, client communication, portfolio management and marketplace analysis. Candidates must be sponsored by a FINRA member to be eligible to take the exam. Day trading brokers also need to register with the FINRA in order to provide client services. The FINRA requires day trading brokers to continue their education on a regular basis. The FINRA offers a variety of continuing education options for members, including online courses, annual conferences and online seminars.
Step 3: Gain Employment
Day trading brokers may be self-employed, but those who work for financial institutions have the advantage of more capital and analytical support. They can choose from a variety of markets in the day trading arena, such as stocks, options or currencies. Due to extreme time constraints where a market opportunity may be available for only a few minutes, many brokers choose to work for online brokerage firms in order to provide fast service to their clients.
Step 4: Develop a Trading Plan
Day trading brokers need a disciplined but flexible trading plan to fit the high-risk and fast-paced environment of the market. Market choice and a trading plan will influence the type of clients brokers can expect to service. Money management is an essential component to any trading plan, so brokers must have enough capital to cover any potential losses.
Step 5: Earn CFA Status
Becoming a CFA can help day trading brokers hone their skills and expand their clientele base. Applicants must have a bachelor's degree and four years of professional experience to be eligible for the CFA certification program. Brokers may complete this program according to their own schedules, but passing all three levels of the CFA examination generally involves several hundred hours of independent study, according to the U.S. Bureau of Labor Statistics.
To recap, with an undergraduate degree, licensure and experience, along with CFA status, a day trading broker can earn about $72,000 a year to buy and sell stocks, bonds, options, currencies and other financial assets.