How to Trade Stocks As a Business
To trade stocks for others for a living, one must become a stockbroker. This process is anything but simple and requires training and dedication. First, the proper licenses must be obtained, and then the real challenge begins.
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Instructions
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Depending on how you start, the first thing you must do is either find a broker-dealer to work for or take classes to study for your securities licensing tests. You will have to take these tests in any case: the Series 7 and 66 exams and probably the life insurance test. Health insurance and either managed or commodities futures licenses may also be required.
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There are numerous providers that offer courses that you can take to pass the insurance and securities exams, such as A.D. Banker and Passtrak. It will probably take you a few months to study for and schedule these exams. Once you have done so, you will either need to go find a broker-dealer to work for or else go into production, if you're already registered somewhere.
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The hardest part of trading stocks for others, at least at first, is getting started. Expect to put in long hours prospecting for business for at least the first couple of years. You will also need to learn to deal with unhappy clients calling you when their stocks go down.
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Find a reliable source of research, such as Morningstar, to use to find stocks and funds. Learn the history of the markets and understand the normal cycles that they go through so that you can capitalize on them instead of losing from them.
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Earning an advanced designation, such as the CFP or CFA, can give you added credibility and expand your repertoire of professional skills. Be willing to continually increase your sales and portfolio management skills in many areas, and practice cross-disciplines, such as tax preparation, which can increase your business as well.
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Tips & Warnings
Talk to several broker-dealers before you get started. There are several different types of business models suited to different types of people. Find out about product selection, commission payouts and back office support before signing on. Remember also that you can trade stocks as a Registered Investment Adviser for a fee, which doesn't require a broker-dealer or securities license.
