How to Become A Day Trader

Day traders are individuals who serve as intermediaries between buyers and sellers within the financial investment marketplace. They usually work long hours and the job can be stressful since big money is involved.  

Should I Become a Day Trader?

The basic job of a day trader is to buy and sell several kinds of securities multiple times during a day without carrying any open positions to the next day. All buy or sell positions are squared-off on the same day before the market closes. Day traders typically purchase or sell various types of securities like, commodities, stocks and bonds etc. They keep their eyes on even the slightest changes in the financial market and based on those changes, make predictions for their clientele and advise them on the right time to buy, sell or trade.

  Source: U.S. Bureau of Labor Statistics (2018)

The U.S. Bureau of Labor Statistics does not have a special category for day traders so they are included in the category of Securities, Commodities, or Financial Services Sales Agents.  According to the BLS 2018 data, people of this profession made an annual mean salary of $98,770 which was approx. $47.49 per hour. Moreover, BLS predicted a 4% employment growth for this career between 2018 and 2028.

Career Requirements

Having extensive and foundational knowledge of how the markets function is a must for all day traders. Employers look for individuals who are ambitious and have strong decision-making, mathematical and customer service skills. Employers prefer hiring candidates who are familiar with all simple details such as, the exchange trading hours and holidays as well as the complex details like, how news events, margin requirements and allowed tradable instruments etc. impact the financial market.

Steps to Become a Day Trader

All aspiring day traders must complete the required education, work and certification/licensure requirements needed for this career. All details about these aspects are given below.

1. Education

Typically, day traders are required to hold at least a bachelor’s degree if they want to work at an entry-level position. However, employers prefer hiring people who possess a master’s degree in finance, accounting, economics, or business.

Students with these degrees often take courses that include topics like, Macroeconomics, Investment Theory, Business Forecasting, Data Mining, Mergers & Acquisitions, International Finance and so on.

2. Field Experience  

To further improve their job prospects, people of this profession either opt for further education i.e., an MBA degree or they acquire field experience through internships or apprenticeships. Students of bachelor’s or master’s degree may complete an internship to gain hands-on-experience with a securities firm in the last semester of their degree.

On the other hand, working at an entry-level post can help aspiring day traders to polish their teamwork, overall work ethic and communication skills. In addition to all that, newly hired day traders are provided with on-the-job training by their employers which helps them prepare for the required examinations to become licensed.

3. Licensure

The U.S. Bureau of Labor Statistics states that the day traders are required to be registered with the Financial Industry Regulatory Authority (FINRA) as a representative of their respective firms. To maintain the validity of this licensure, they are also required to continue education.

4. Certification

As per the BLS website, employers prefer hiring day traders who possess professional certifications. For instance, interested individuals can become Chartered Financial Analysts through The Chartered Financial Analyst (CFA) Institute. To become a CFA, candidates are mandated to take a sequential series of 3 exams.