Independent trader vs. stock broker
I received a client question recently asking if they should become a broker first and then become an independent trader. Their goal was to one day become a successful independent trader.
Typically, when you’re a stock broker, you’re more of a salesperson. You’re the one answering the phone and executing trades for others. Just because you’re executing a trade someone has asked you to place, doesn’t mean you understand why they are placing that trade now or any of the other thought processes going into that order.
Essentially, you become a Customer Service Representative. This is typically what most stock brokers do.
Some stock brokers get a percentage of the profit from the orders they place. If a customer places an order for 500 shares and it takes off, they are going to get a percentage of that profit.
It can be harder to become this second type of stock broker. In this role, you’d be giving tips and advice on where/when/how much of a stock to get into for your client.
What is your goal?
If your goal is to become a successful independent trader, I wouldn’t personally recommend becoming either of these 2 types of stock brokers.
Well, if you take the route of becoming a broker, your goal will be to focus on giving tips or taking calls for other people. It won’t be focused on yourself and on the things you want to learn to start trading independently. It will add extra steps to your goal of trading for yourself.
I recommend you focus on yourself and the skills you need to build to become a successful independent trader first.
If you do decide to become a stock broker, don’t become a sales person. Become the kind of broker that understands the market and can give sound advice.
Whatever route you take to become an independent trader, remember that it will take time, focus and lots of education to be truly successful.