I want to be stock broker
Most of the people without experience in the investing world think that a broker is someone who is buying and selling in the financial markets making a living out of it.
This is not the case, unfortunately.
The people doing the buying and the selling are traders or investors, not brokers.
To be able to do that trading or investing the trader will need a broker.
So the broker and the trader are two different things. The former granting access to trade the financial markets to the latter.
There is nothing special about a broker.
The broker can give advice, take market orders, cancel them, etcetera, but he will not be making a living out of trading the markets.
I want to be a broker when I grow up
The broker makes a living out of the commissions that the traders pay each time they buy or sell an asset.
The profession is closer to a car dealer than to a trader, whom profession is closer to that of a gambler.
The broker can choose then to be more honest or less.
In this sense there will be more problems in the binary options, CFDs or Forex markets.
Futures and stock brokers tend to be more reliable although there is a lot of hype in the day trading community there as well.
How to become a broker?
Well, this is very simple really.
You have to find work in any of the companies related to the business.
You can do that through a bank or through some broker.
If so you will be specialized in some of the assets, whether futures, stocks, CFDs, forex, traditional or binary options.
The people who work for funds are more in the managing wealth business which has nothing to do with brokerage. Although those companies also need sellers to be able to find buyers for their funds.
An example of how to become a broker is the Interactive Brokers one.
Everybody knows that broker.
It started in the late seventies, when its founder, Thomas Peterffy, bought a sit in the AMEX to be a member and be able to trade as a market maker in options.
There you can see what the man started to do: market making.
The market makers provide liquidity creating the famous spread that will be later traded by retail traders.
That is to say, the market maker will sell you the “ask” and buy you the “bid”. He makes the money through spread.
They are the true scalpers of the market and have to do continuous modifications in their risk management every day.
To be a market maker in the pit required some discipline after all.
Now it is easier to manage those things since everything is done by computers.
The fact is that market maker business are quite good, being similar to that of pure brokers, which tend to make money by earning commissions on each trade.
When the two figures merge we get some synthetic brokers like those of CFDs, Forex or binaries.
It is a good and easy business, although open to a lot of competition, especially in the initial phases of the company.
It is not easy anyway in places like the United States where the sector is very regulated nowadays and you cannot even trade CFDs.
To become a broker and work in one of these companies you do not even need to study at university, although degrees related to finance might help a bit to get there.
The fact is that many who work for the business have an interest in the stock markets, which will definitely help them to get inside the niche.
Those who open demo accounts with brokers have realized that almost the same moment they open the account someone starts calling them trying to persuade them to open an account.
Sometimes the calls are quite annoying and pathetic.
I even heard things like: “invest here and you will make 85% of profits”.
Those cases are part lies because they only tell you what might happen if you win but do not tell you that if you lose you lose all your money, for example.
Well, those guys who call you to persuade you to open accounts are actually brokers, the car dealers of the financial world.
And this is where the ugly part of the business is.
The person working as a broker will have a lot of pressure and monthly sales to do, just as any other seller is.
In the end, as I said in the beginning, this job does not differ much than that of a seller.
The difference is that professional sellers know very well their products but many brokers have not go a clue about markets.
Curious, isn’t it?
They simply talk by heart about what they have heard.
“You will make 85%”, “There is a great opportunity to invest now”, etcetera.
If you do not like sells this is probably not your sector, although it might depend considering the type of broker.
We can find the typical aggressive advice to customers trying to make them open binaries or Forex accounts instead of investing in the long term.
The sad truth is that most people who make a living in this business are brokers, for sure many more than traders.
That you can be sure of.