How To Become An Equity Trader

Key Highlights

• Equity traders assist customers in achieving their financial objectives by buying and selling assets such as stocks on their behalf.

• Apart from hard skills like analysing returns from investment possibilities, equity traders need soft skills like excellent customer service to deal with clients successfully.

• To become an equity trader, it is essential to earn a bachelor's degree and get suitable work experience in the financial sector.

• An individual can register with the Financial Industry Regulatory Authority (FINRA) to boost their career chances.

Who is an Equity Trader?

An equity or share represents a portion of a business. Any investor can purchase or sell the company's shares on the stock exchanges once it has entered the secondary market. Equity trading is the practice of purchasing and selling a company's stock on a secondary market.

An equity trader is an individual who conducts market research and analysis to identify undervalued stocks with potential for future growth. An equity trader buys and sells a company's stocks, derivatives, etc., with the hopes of doing so at a lower price and selling at a higher price through extensive research and analysis.

An equity trader can join an investment firm as a trader to manage the portfolios of the firm's customers. He can also utilise his expertise for personal investing and profit-making. Nearly all equities traders who work for an investing firm also make personal investments to boost their income. Equity traders are different from investors. This is because they often sell their equity investments quickly as opposed to keeping them for years like investors.

Steps to Become an Equity Trader

Let’s now look at the steps to become an equity trader in India.

1. Explore Educational Requirements You should think about your educational requirements if you're interested in a career as an equities trader. According to authentic equity trader resumes, more than 80% of stock traders have a bachelor's degree. A little above 10.0% of equities traders have master's degrees. Even though most equities traders hold a college degree, becoming one with just a high school or diploma degree is not an option.

Selecting the right educational subject is a crucial first step to becoming an equity trader. The most popular subjects among equities traders, according to data from resumes, are economics, business, and finance.

2. Research Duties and Responsibilities of Equity Traders What stock traders perform on a regular day are the tasks and obligations of equity traders. The following is a list of the principal tasks and obligations listed in job ads for equities traders:

• Tracking and assessing stock market activity to provide financial data. Examining a company's financial records, such as its cash flow and balance sheets.
• Making investments according to the organisation's financial situation.
• Weighing the assets and liabilities of the business before making investments.
• Buying and selling securities using short-term trading models.
• Establishing trading techniques that are profitable and produce more cash for customers.
• Ensuring that trades adhere to government regulations and directives Creating market information reports for the trading team to ensure successful outcomes.
• Using sophisticated digital tools to analyse data and provide reliable market reports
• Assessing financial risks using data and making trading decisions based on that.
• Coordinating with the fund accounting and portfolio teams for prompt trade processing.
• Updating data sheets, performance valuations, and liquidity reports.
• Engaging with brokers to resolve trade disputes.

3. Register with the Financial Industry Regulatory Authority (FINRA) You may work as an equities trader without registering with the Financial Industry Regulatory Authority (FINRA). However, several businesses prefer to hire people who are registered with FINRA. FINRA provides a number of exams for stock traders who wish to prove their financial expertise and understanding. The following are the most preferred exams for stock traders.

1. Test Series 7: This test covers subjects such as variable annuities, corporate securities, and investment company securities. Obtaining this licence permits you to trade stocks and other securities. 2. Exam Series 63: The Series 63 exam gauges a candidate's capacity to uphold the interests of their clients. Additionally, it evaluates their understanding of laws framed by the Securities and Exchange Board of India (SEBI). 3. Exam Series 57: It measures a candidate's skill for trading stocks. Initial Public Offerings (IPOs), stabilising bids, penny stocks, and trading laws and regulations are among the subjects covered in this test. In case you work for a self-regulatory organisation (SRO), FINRA member company, or stock exchange, they may sponsor you to take these examinations and cover the associated costs.

4. Become Certified Employers frequently look for applicants who hold the Chartered Financial Analyst (CFA) certificate. Register to take one of the three CFA examinations to receive the CFA credential. Each test has 240 multiple-choice questions and takes around six hours to complete. The majority of candidates prepare for their CFA tests for at least six months. On the website of the CFA Institute, you will find a number of resources to aid in your preparation. Investment instruments, professional and ethical norms, asset classifications, portfolio management, and wealth planning are the subjects covered in the examinations.

5. Interact with Other Professionals You may improve your abilities and keep up with industry changes by getting in touch with other financial experts. To connect with equity traders in your region, think about joining the Security Traders Association (STA). The STA offers networking opportunities, career development programmes, and information on market developments. You may grow in your career by joining a networking organisation like the STA and forming close relationships with other finance professionals.

It's time to begin looking for employment as an equities trader. Consult your professional network as well as employment boards to find openings that are relevant to you. Make direct contact with the businesses you are interested in working with.

Key Skills Equity Traders Need

Developing the following skills can help you become a good equity trader.

1. Adaptability: In the world of trading, conditions can change quickly. So, adaptability is an essential quality. You must adapt your trading techniques or tactics to reflect the shifting market conditions. 2. Thinking analytically: Traders need to keep an eye on markets and examine trading trends to make trading judgements. Strong analytical thinking skills can aid them in market analysis, trend identification, and market review learning. 3. Mathematical skills: Math may assist traders in understanding and resolving difficult situations involving several numbers. They can grasp statistics and do a good quantitative analysis of the market with the aid of solid mathematical understanding. 4. Risk management: It is the ability to make choices that will provide the most advantageous outcomes and greatest rewards. Effective risk management is essential for traders to avoid unfavourable deals.

Conclusion

To become an equity trader, you should first obtain educational qualifications. Also, learn about the responsibilities of equity traders. Next, get the Chartered Financial Analyst certificate. Once you learn how to become an equity trader, you may use your newly acquired knowledge of finance and investing to locate investment opportunities for yourself, your clients, or both. An interesting range of responsibilities come with being an equity trader, and these responsibilities might foster career advancement and work satisfaction. People enter the equity trading industry because they know that they can turn an investment into significant profits.