Break into Stockbroking: How to Become a Stockbroker

There aren’t any physical stores selling stocks. Unlike a lot of other products, you can’t simply hand money to a cashier and get some shares. So how does the average person buy stocks? Through a stockbroker.

So what is a stockbroker? And how do you become one? If you have a passion for finance, this may be the career for you.

Below we’re going to cover the basics of what a stockbroker does, how to become a stockbroker, and what kind of education you’ll need.

What Is a Stockbroker?

Stocks are purchased through stock markets like NASDAQ and the New York Stock Exchange. To buy stocks through these stock markets, people use intermediaries known as stockbrokers.

Many stock trades are done electronically today by brokerage firms like E-Trade and TD Ameritrade. However, there are still individual brokers that handle trades personally.

A stockbroker is required to be knowledgeable and up-to-date on the current financial markets. Using this information, they give their clients advice on what the best time to buy or sell their stocks is. They comb through the information available on the markets to find the best prices and relay the information to their clients.

So what do they get out of it? A stockbroker could get a commission in the form of a flat fee or a percentage of the transaction value. Check out this link for more details.

Why Become a Stockbroker?

A stockbroker’s job can be lucrative. Some of the main advantages are that it’s a great way to use your knowledge or passion for the stock market. Another is that there is a potential for making huge returns via commissions.

This way, even if you don’t have high amounts of money to invest in trades, you can still benefit from your clients’ commissions. However, it’s not without its cons. One of the first ones is that commissions usually represent only a percentage of your clients’ primary investment.

This means that you have to work harder to get the same types of returns that you’re seeing from your clients’ investments. It also means that you need a large client base to get a significant amount of returns. Another is that, like with any other profession with a lot of sales work, you have to handle a lot of rejection.

How to Become a Stockbroker

Stockbroking doesn’t require specific educational requirements. However, there are types of degrees and coursework that can give you an advantage.

University Degrees for the Stockbroker Career

An undergraduate degree in business can be a good way to get a better understanding of the stock market. Many stockbrokers also go ahead to get a Master’s in Business Administration. Getting a Master’s in Finance is another route that is often taken.

Apart from these educational routes, knowledge of statistics is helpful. Maths or quantitative analysis also helps with analyzing statistics.

How to Become a Stockbroker Without a Degree

Stockbrokers who work on their own usually have previous experience. This is either working in either a bank or a brokerage firm. These are often positions that you can get even as a college intern.

Usually, stockbroking training is obtained on-the-job. While working, you get a lot of experience with monitoring the financial markets. You get to learn the regulations and get familiar with the accounting practices.

Whether you have an educational background in finance or not, there are specific exams that all licensed stockbrokers take. To get a stockbroker license, you have to pass the General Securities Representative Exam.

Usually referred to as the Series 7 exam, this exam is administered by FINRA, the Financial Industry Regulatory Authority. To take it, you should be sponsored by a self-regulatory organization such as FINRA or other similar firms.

Series 7 Exam

Consisting of 125 multiple choice questions, the exam has to be completed in 3 hours and 55 minutes. Passing this exam allows you to buy and sell the majority of securities legally. However, for municipal trading bonds, you’ll have to take the Series 53 exam too.

Stockbroking Resources

Now that you know how to become a stockbroker check out stockbroking associations and other in-depth resources. Use them to get started on your stockbroker career.

Are you interested in more finance information? Check out our website for more tips on stock trading and other financial topics.

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