It’s Tough Becoming a Stock Exchange Trader
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Professional traders at the New York Stock Exchange endure years of training and preparation to follow this elite career path. They typically start by training at brokerage firms, where they learn the financial industry and its instruments, trading as a service to clients, governmental regulations and how to become a broker. Brokers are required to complete the Series 7 and Series 63 licensing procedures, which enables them to trade and become official members of the Financial Industry Regulatory Authority. The NYSE may determine additional licensing is needed because of the nature of certain financial instruments.
Additional Steps for Professional Trading
Professional traders are members of NYSE or they work for a firm that holds a membership, which are called seats. Seats are acquired through supply and demand, and cost runs high. It can be a few thousand or over $1 million. The median cost for membership two years ago was at $40,000. Before applying for membership, brokers first need to be members of the FINRA or an SRO, which is a self-regulatory organization. Those approved for a membership must attend the orientation for new members, including traders who are inactive for a period of six months or more. An exam is given during the orientation. New members must past the exam before they can take the NYSE floor.
After orientation, members receive a badge number, which must be worn on the floor and visible to everyone. The badge number coincides with the trader’s location on the floor. All traders have passed a background check. Work within the financial industry demands it. The background check with the Federal Bureau of Investigation requires a fingerprint as well. While many trades currently take place online, the NYSE floor is still crowded, and traders must also pass a physical to show they are medically fit for the NYSE floor.
Stock Trading Careers
Stock trading careers consist of traders, analysts and stockbrokers. Traders are professionals hired by firms to produce profit. They execute trades and research markets for fund managers. Many become fund managers. Traders are in a risky business, and companies only want the best, preferably those with a financial degree from a top institution. Analysts research investments made by the brokerage firm, and they recommend to buy, sell or hold regarding the investments. Reports are made for the traders and fund managers. Analysts are proficient in mathematics, economics and finance. Stockbrokers are the sales people of the firm. They give professional, financial advice. Stockbrokers market products to clients and execute trades for them. A college degree is typically needed to be a stockbroker. Firms will train future stockbrokers to pass the required exams, and familiarize them with clients.
Overview of Trading on the Stock Exchange Floor
The NYSE arena floor is crowded with buyers and sellers trading shares of stock Monday through Friday. The floor works like an auction, where transactions are made for investors. Specialized brokers act as the auctioneers. Orders have been executed via wireless handheld computers since 1995. The electronic system was developed by an NYSE member, who executed 1,000 shares of IBM stock through the handheld in 1995 to begin the stock exchange’s electronic era.
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