How To Become A Stock Trader (With Skills And Salaries)
Updated 30 September 2022
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A career as a stock trader can be a rewarding profession for individuals with trading and risk management skills. Stock traders can effectively analyse financial information to buy and sell stocks. Learning about the primary duties and skills of a stock trader can help you decide if this is the right career option for you. In this article, we explain how to become a stock trader, discuss their duties and skills and show you how much a stock trader can make.
How to become a stock trader
Knowing how to become a stock trader can help you understand the requirements and prepare better to start your career. Here are the steps you can follow to become a stock trader:
1. Complete your education
Many entry-level stock trader jobs require candidates to have an undergraduate degree. You can pursue a bachelor's degree in accounting, commerce, economics or business. Pursuing undergraduate degrees in business and finance can provide you with valuable skills relevant to stock trading. Earning a master's degree can enhance your credibility in the market.
Some stock traders prefer pursuing an accredited master's degree in business administration. Many companies prefer hiring candidates with an MBA degree for high-level jobs. A degree in business administration can provide a deeper understanding of business, finance and risk management. This course can cover management accounting, data management, current issues in financing and analysis of the market.
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2. Join an entry-level job
Many candidates apply for internships after completing their education. By completing an internship, you can gain knowledge and experience in stock trading. Internships can be a great way to learn fast-paced stock trading and how to buy and sell stocks at the right time. You can start searching for suitable entry-level jobs after completing your internship. There are some professional organisations, like the National Association of Stockbrokers and Traders, available at the state, national and international levels that provide memberships to individuals at different career levels.
3. Register as a stock trader
Stock traders can start working after becoming a member of a stock exchange. Some of the prominent stock exchanges are the Bombay Stock Exchange (BSE), Calcutta Stock Exchange and National Stock Exchange (NSE). After registering yourself, you can start buying and selling financial products. Gaining a stock trading licence can also enhance your professional standing in the market.
There are also some other licensing facilities that allow stock traders to become eligible to buy and sell financial products. You can get a certificate of registration from the Securities and Exchange Board of India (SEBI). Visit the official website of SEBI and download the form to apply for the certification. Once SEBI accepts the application, you can pay the membership fee and start trading.
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Skills of a stock trader
Stock traders require certain skills to work efficiently in the industry and provide accurate help to their clients. Here are some essential skills of a stock trader:
Research and analysis skills
Stock traders can develop research and analysis skills to become proficient at trading stocks. Developing these skills can allow you to determine the nature of the market accurately and the impact of the ongoing market fluctuations. You can gather the necessary information to understand and approach the market effectively. Stock traders use their analytical skills to get updates on the market trends so that they can understand the charts at different time frames.
Stock traders may require a basic understanding of mathematics to calculate profits, percentages and dividends. Increasing your calculation speed can help you remain competitive in the stock market. As a stock trader, you can also use different software programs to calculate accurate results. You may also use your mathematical skills to make decisions on highly complex data that involves difficult calculations. With great mathematical skills, you can analyse the data and make relevant conclusions.
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Communication skills can help stock traders effectively explain the financial terms and concepts to their clients. They use good communication skills to build trust with their clients. While communicating, make your clients comfortable and convey financial advice in simple language. You can also practise active listening. It can help you understand the concerns of your clients clearly and provide accurate and helpful solutions. Make sure you use clear and concise language while explaining technical concepts to clients.
Discipline and patience
Discipline and patience can help stock traders stay consistent and avoid trading at the wrong time. Experiencing gains and losses throughout the career can help stock traders to make necessary adjustments and approach the market effectively. Fluctuations can be fundamental parts of the stock market. Trading with discipline and patience can help you avoid losses and make calculated trades that involve minimum risks.
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Stock traders can develop a quality of keeping records of their performance. Develop a routine of keeping a trading journal and updating it with time. Keep the record of each trade from the beginning to its current market valuations. You can also include the entry price and the reasons to buy or sell that particular trade. Reading your trading journals can help you understand if you are following the right steps.
Understanding of the market
Develop a habit of learning from the market rather than making big bets against the market. The more time you spend researching the market, the more knowledge and information you can gain. Fluctuations in the market can teach you how to make adjustments to your plans and strategies so that you can match the ongoing market trends as closely as possible.
Ability to stay calm
Many beginner stock traders may become stressed when they suffer a loss. Some stock traders are more likely to make wrong decisions when they suffer a loss. With experience, stock traders can master these kinds of situations. Experienced stock traders know how to remain calm during tough times. This can help them take the correct actions to minimise their losses. To help you develop this skill, try to think practically and remember to perform thorough research and analysis before making any trade. This can help you feel more confident and prepared in these situations.
What does a stock trader do?
Connecting buyers and sellers with each other in the financial market is one of the main responsibilities of stock traders. Their everyday job includes selling securities to their clients, arranging trades and giving financial advice to the companies. The number of responsibilities of stock traders may depend on the size and scope of the firm. Here are some other duties and responsibilities of stock traders:
Finding and contacting potential clients.
Providing clients with the necessary information and explaining about the services they offer.
Giving advice to sellers about selling the securities and buyers about buying the securities.
Buying and selling stocks, bonds as securities and commodities, such as oil and gold, among others.
Monitoring the profit, loss and overall performance of the individual securities.
Recommending companies about public offerings and merging by analysing finances of the company.
Buying shares for the short term and long term depending on the market trends.
Researching stocks so that they can cut the risk and make a higher profit.
Stock traders also buy shares for the short term, which can be as small as a few minutes or a few weeks. They work closely with a brokerage firm so that they can get access to the shares. Stock traders use various analysis methods, such as fundamental and technical analysis, to perform research about the shares.
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What is the average salary of a stock trader?
The national average salary for a stock trader is ₹33,678 per month. This salary may vary depending on the education level and work experience of stock traders. Many companies offer higher pay to stock traders with more experience and knowledge of the industry. The average salary of stock traders may also depend on the location of the job.
Salary figures reflect data listed on Indeed Salaries at time of writing. Salaries may vary depending on the hiring organisation and a candidate's experience, academic background and location. Please note that none of the companies, institutions or organisations mentioned in this article are associated with Indeed.
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