How to Become a Trader?
Steps to Become a TraderDoes the excitement of the stock market thrill you? If you live to buy and sell securities, become a trader with these steps:
Conduct an honest self-assessment.
The right mindset is the most important requirement before you dive into this career. A successful trader has a combination of knowledge, skills, and personal traits that help you thrive in this hectic role. Contrary to popular belief that a trader job is the best way to cash in on some easy money, trading is actually a rather challenging field. You must be:
- Adept with mathematical analysis.
- Aware of behavioral psychology.
- Able to stomach risk-taking.
- An entrepreneur who's willing to put in long hours with very little leave.
- A lifelong learner.
- Committed to daily interaction with clients.
What type of degree should you pursue to become a Trader?
73% of people working as a Trader earned a Bachelor's Degree
What skills do you need to be a Trader?
- Excellent Communication
- Mechanical Drawing
- Microsoft Office Suite
Learn the market.
Traders must have a solid knowledge base about how the markets function and how the various securities trade. From stocks and futures to options and mutual funds, it's all different. Simple details like trading hours to details like the impact of news events, this knowledge is necessary, and without it, you and your clients could experience losses.
Develop your trading strategies.
The market is dynamic, and a proven strategy may suddenly fail. That's why experts recommend that novice traders select a couple of established trade strategies, such as:
- Start small.
- Watch your timing.
- Avoid stocks under $5 a share.
- Stick to limited orders.
- Stay realistic about profits.
- Make decisions with logic, not emotion.
Once you've formulated your plan, test it with your broker's virtual money account or if you're investment-savvy, back-test your strategy with the market's vast stores of historical data. Don't forget to factor in costs like brokerage and utility subscription fees to accurately assess your projected profits.
Raise sufficient capital.
Even top traders don't generate profits every day. Occasional losses are all part of the game. To manage these financial risks, a trader must have sufficient capital to back your deals. The amount varies, depending on your volume and risk aversion. However, maintaining a minimum balance of $25,000 in your trading account will satisfy the SEC's equity requirements.
Start small and then expand.
Even if you have sufficient capital and plenty of market experience, don't play big on your first few trades. Instead, start small and put your new strategies to work. Only increase your stakes after you realize consistent success with your modest transactions.
Once you've gotten the hang of working as a trader, take a look at your brokerage house. This is one area where you can expand wisely. Trading involves frequent daily transactions, which can lead to exorbitant costs. Do your research, and select a brokerage plan that's consistent with your volume, whether it's a staggering plan that's most cost-effective or a fixed option.
Trader Career Path
Trader Career Path
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