Are you having trouble deciding between a career as a stockbroker or a trader? Each career involves trading 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 the preparation required to pursue either career.

Brokers vs. Traders
While both brokers and traders purchase and sell securities, brokers are also sales agents, either on their own behalf or for a securities or brokerage firm. Traders, on the other hand, tend to work for a large investment management firm, and they buy and sell - or trade - securities on behalf of the assets managed by that firm.

Brokers tend to have direct contact with clients, either individual or institutional, and buy and sell securities based on those clients' wishes. 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.

Finally, a broker is also a sales agent and is responsible for obtaining and maintaining a client roster.

Background of Brokers and Traders
Brokers and traders tend to have high energy levels and strong communication and negotiation skills. They are usually proficient at multi-tasking and must be able to cope with a fast-paced, high-pressure environment.

If you are considering a career as a broker or trader, you should learn as much as you can about the financial markets. Reading The Wall Street Journal or The Financial Times, or watching the financial news on CNBC, is a good way to start.

A business degree is not required to enter this field, but if you are an undergraduate student considering a career as a broker or trader, it is advisable to take classes in economics or finance as well as in business and sales if your college offers them. Popular majors for those that go on to become brokers and traders include: economics, finance, business and math. Many have also studied physics, biology or electrical engineering. Even liberal arts graduates, such as those that major in history, English, political science and philosophy, have gone on to successful careers as brokers or traders. However, be advised that the road to success as a broker or trader will be longer and more difficult if you do not have any education in business or finance.

One important note for those considering this career is that many brokers and traders have additional work experience prior to entering the field. Particularly if you are seeking a career as a broker, any prior sales experience is highly valued. This is due to the sales component of the brokerage position.

Requirements for Brokers and Traders
Being a broker or a trader requires a Financial Industry Regulatory Authority (FINRA, formerly the NASD) license to execute orders to buy or sell securities. A FINRA license is obtained by achieving a passing score on the General Securities Registered Representative Examination - more commonly referred to as the Series 7 Exam. The Series 7 Exam tests the basics of investing as well as the rules and regulations of the Securities and Exchange Commission (SEC), an organization that governs the investment industry. 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.

In addition to the General Securities Registered Representative Examination, 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.

Many brokerage firms and investment companies will accept candidates for a broker or trader position with the understanding that the candidate will take the Series 7 and other required exams necessary to obtain a license. The firm will often provide training and classes, and pay for the exam fees for such candidates. This is often called "sponsoring", which helps the candidate apprentice his or her way into the position.

A Day in the Life of a Broker or Trader
A broker spends a great deal of time keeping clients informed of variations in stock prices. Frequently, a client is interested in purchasing a particular security if it goes below a certain price, or in selling a company's stock if it goes above a certain price. As a result, a broker must watch the market with vigilance to monitor these fluctuations. Similarly, a trader may be instructed by a portfolio manager to buy or sell a stock at a certain price point.

Brokers and traders also look at analyst research to make recommendations to clients or portfolio managers to buy or sell securities. Additionally, brokers spend a fair portion of their days looking to expand their client bases. They tend to do this by cold calling potential clients, introducing themselves and showcasing their background and abilities. Brokers also often hold seminars on various investment topics. The brokers advertise these seminars locally with the hope of drawing a crowd that will include potential clients.

A day in the life of a broker or trader is an exciting and varied one. Many brokers or traders enjoy their position so much that they make it a life-long career. Other brokers or traders go on to different positions in the financial services industry such as an analyst or portfolio manager. If you like a fast-paced environment, enjoy reading financial publications and are looking for a life-long career, then a trader or broker career could be for you.

Related Articles
  1. Investing Basics

    Picking Your First Broker

    If you're a rookie investor, your first big investment decision should be an informed one.
  2. Professionals

    Broker Commissions Are Here To Stay

    With two developed nations adopting a firm anti-commission stance, questions have arisen over whether or not the United States should follow suit. Find out why such a development is unlikely.
  3. Professionals

    Tips To Get Into A Broker Training Program

    Becoming a registered representative isn't easy. Learn how to succeed at the first step.
  4. Professionals

    Research Report Red Flags For Brokers

    Discover how to look past analysts' ratings to find winning stocks for your clients.
  5. Professionals

    Swim With The Sharks As A Stockbroker

    This job takes guts, hard work and a predator's instincts. Do you have what it takes?
  6. Economics

    The Difference Between Finance And Economics

    Finance and economics are often taught as separate subjects, but they are interrelated disciplines that influence one another in many ways.
  7. Professionals

    A Day in the Life of an Investment Banker

    Take a look at a day in the life of an investment banker, one of the most sought-after and stressful jobs in the financial sector.
  8. Professionals

    Top 3 Misconceptions About Financial Analysts

    Learn misconceptions about financial analysts, such as they exclusively study the stock market, they are the same as financial advisors and they are all rich.
  9. Professionals

    'Man Up': 3 Tips for Working with Male Clients

    Male clients aren't always financially literate. Here's how advisors can meet their needs.
  10. Professionals

    Becoming a Real Estate Agent Or Mortgage Broker

    Considering a career as either a real estate agent or a mortgage broker? Here are some factors that might help you choose between them.
  1. Do financial advisors have to find their own clients?

    Nearly all financial advisors, particularly when new to the field, have to find their own clients. An employer may provide ... Read Full Answer >>
  2. Do financial advisors get drug tested?

    Financial advisors are not drug tested by any federal or state regulatory body. This means you may receive your Series 6, ... Read Full Answer >>
  3. Is a financial advisor required to have a degree?

    Financial advisors are not required to have university degrees. However, they are required to pass certain exams administered ... Read Full Answer >>
  4. Do financial advisors have to be licensed?

    Financial advisors must possess various securities licenses in order to sell investment products. The specific products an ... Read Full Answer >>
  5. Do financial advisors need to meet quotas?

    Most financial advisors are required to meet quotas, particularly if they work for firms that pay base salaries or draws ... Read Full Answer >>
  6. Does a financial advisor need an MBA?

    Obtaining a license as a financial adviser does not require an Master's of Business Administration (MBA) degree. The Certified ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  2. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  3. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
  4. Black Monday

    October 19, 1987, when the Dow Jones Industrial Average (DJIA) lost almost 22% in a single day. That event marked the beginning ...
  5. Monetary Policy

    Monetary policy is the actions of a central bank, currency board or other regulatory committee that determine the size and ...
  6. Indemnity

    Indemnity is compensation for damages or loss. Indemnity in the legal sense may also refer to an exemption from liability ...
Trading Center