Stockbroker

OFO No:

What is a Stockbroker?

To start off with, let’s understand the following 3 terms:

Stock:

• A company or corporation sells shares (stock) in that company to raise capital for the company to grow. The price of a share is usually constantly changing (up or down) depending on how well the company is doing, or what the political, environmental, financial markets and other factors are all doing at any one time.

Broker:

• A broker is like a ‘middle man’. He or she sells and buys goods on behalf of a customer.

Stockbroker:

• A Stockbroker, therefore, sells and buys shares for their clients.

Because prices of shares change constantly, this is a very risky business. Some even think it’s like gambling. It’s like placing a bet on a share to do well. The timing of buying and selling of shares is very important. If not done timeously, the customer/Stockbroker can lose a lot of money.

The risks are huge.

There are 2 kinds of Stockbrokers:

Execution Only Stockbrokers:

• They only buy and sell on the command of their clients. Almost all the risk is taken by the client.

Discretionary Stockbrokers:

• The Stockbroker makes all the decisions of when to buy and sell shares on behalf of the client. The risk then lies with the Stockbroker.

A good Stockbroker must have an abundant knowledge of the stock market and the various companies involved. They need to keep up to date with current events and any other factors that may influence the price of shares.

Stockbrokers must follow very strict rules and regulations of the stock market.

Stockbrokers usually make their money from a percentage of what the clients earn via their shares that the Stockbroker has bought on their behalf.

What does a Stockbroker do?

• researches and reads about companies on the stock market
• researches and reads about current events and other contributing factors
• reads annual reports from companies
• watches the share prices change constantly
• makes informed decisions of when to sell and when to buy
• buys and sells timeously
• liaises with clients
• advises clients

Are you . . . ?

• a risk taker?
• a person who can handle stress?
• a person with a good memory?
• good at mathematics?
• logical?
• good at comprehension?
• a decision maker?
• confident?
• ambitious?
• reliable and responsible?

How do I become a Stockbroker?

You will need a financial or business qualification. It’s advisable, once qualified, to get an entry level job in an investment bank or brokerage company. Once you have worked a few years, consider getting another qualification or a post grad qualification.

While you collect experience and skills in this job, it’s a good idea to network and build up your own set of contacts and professional relationships. Be ready for the day you become a Stockbroker!

TRAINING:

• CLICK HERE to check for a training institution near you to see what they offer.
• Make sure you understand their entry requirements for each course.
• To avoid scams, make sure your institution is registered with the Department of Higher Education. CLICK HERE to check accredited Private Higher Education Institutions. 

OTHER CAREERS TO CONSIDER: Economist or Forensic Accountant

Is becoming a Stockbroker the right career choice for me?