How to Become a Trader

There are two main kinds of traders, those who deal with their own money, and those who trade with the money of an employer. There are also important differences to each of these, which finance professionals are quick to point out. However, for someone who simply wants to become a trader, meaning to facilitate trades on the stock market (or, colloquially, on Wall Street) some basic guidelines apply. Here's how to become a trader and get the best chance at managing a greater amount of capital in financial stock markets.

Steps

1. Acquire your own capital. This is the first step to actually being able to trade in financial markets. Finance pros always recommend distinguishing money that you use for trading from money that you may need in the short term, in order to prevent some distinct budget problems.
   
2. Access a broker. In order to start trading, you'll need access to the stock market. Unless you already work for a bank or other institution as an employed trader, you'll need to start by making an agreement with a broker or brokerage firm. Brokerage services get paid commissions for every trade that you make, but that doesn't make it impossible for you to make money.
   
3. Set up tools and a trading office. Nearly every trader needs some designated personal space to pursue market trading. If this space is in your home, you may be able to use it as a tax-deductible expense. Traders will also commonly need computers and other tools for looking at stock pricing background and current trends in markets.
   
4. Seek out trading employers. When you have enjoyed some practice as a trader with your own funds, you will be able to offer this experience to an employer. Establish connections for possible positions as a trader.
   
5. Establish your trading status through tax filing. When you come to your first annual filing after having set up a trading office, the way that you report financial income will help to determine how you are treated as a trader or finance professional. Ask a professional tax preparer about specific rules that relate to trade-related income and how it is taxed.
   

Tips

• Practice with paper trading. Some pros recommend starting out with theoretical paper trades, where the beginning trader does a little experimenting before putting their own capital into the markets. There are some good electronic tools out there to help with paper trading, where instead of actually making a trade, the beginner just postulates a trade and tracks the result.
  
• Go to a good school. Finance industry insiders often point out that employers tend to hire traders from schools like Princeton, Harvard, Yale and other Ivy League institutions. If you're looking at becoming an employed trader, it can help to have this kind of academic connection to the markets.
  
• Think about an MBA. A business degree, according to many experienced finance experts, is not a necessary qualification for becoming a trader, but it can help a lot for those who want to be employed trading equities on Wall Street. The MBA can also come in handy at different times in an individual's career, so consider the eventual benefit of this kind of academic program.
  

Article provided by wikiHow.


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