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Learn to Invest

How To Become A Stock Broker?

By Louis H-P on January 11, 2021

Reading Time: 3 minutes

Anyone watching The Wolf Of Wall Street will have forged their own idea of a stock broker. Indeed this stereotype will be reinforced for older investors who may have once watched Wall Street. Although the excess seen in both films happens, the demands required of a novice stockbroker have some truth. Find out how to learn more about the actual job!

Key Takeaways

What does it take to become a successful stock broker?

Be prepared to question whether you have the necessary skills

Appreciate how listening over selling can bring success

What is a stock broker?

A stock broker is there to connect someone who has capital to deploy with someone, usually a company, who is seeking capital. To achieve this, a stockbroker has to convince investors that a company is worth investing in. Although hot stocks are easiest to sell in a market rally, the risk is you pedal overvalued stocks.

Where a stockbroker gains an advantage is through knowledge. If you point out an opportunity that an investor has not though about, in an area of interest, you are building a dependence. Stockbroking is all about having an opinion on a stock. The more often your opinions are correct, the more trades you will get to place.

You can also sell an idea such as a thematic investment or even a sector rotation. Each trade you place on behalf of a client leads to commission. Your pay is therefore based on your ability. If you are good at your job, the monetary rewards can be huge.

Are you sure it is for you?

It is a relentless job, so ask yourself if you are ready for it? Rejection is normal, so you need to have developed an ability to ignore it. It can also be hard to try and sell undervalued stocks as investors have performed fundamental analysis on them before.

A successful stock broker will have factual information at there fingertips. A prospective client will be impressed if you are able to answer their questions with short succinct factual answers. This displays your knowledge and will lead to the client trusting you: the hard part has been successfully achieved!

Have networks before starting the job

If you spent your university years with the shooting club or the hunting set, you will likely have met some wealthy people who could become clients. Joining a member’s club and become part of a sport’s team will help no end. You will spend 30 minutes competing and 4 hours down the bar networking!

You have two ears and one mouth.

A stock broker who listens to his clients needs will often taste increased successOne successful stock broker spends more time listening to client’s needs than talking. He may not be able to instantly solve the problem, or indeed ever, but occasionally when something comes across his desk he already knows someone who will be interested. This often leads to him successfully getting that client’s business.

Face up to your bad call

Many stock broker firms will have some form of morning meeting to discuss overnight developments in markets. This is also a chance for the research team to present ideas. Not all stock brokers and portfolio managers go the morning meeting, they find them boring.

Some time ago, a respected research analyst who had been pushing a stock had the embarrassment to discuss an unexpected profit warning issued that morning. Rather than blaming someone else, he explained how he had got it wrong and then actually started explaining why this was an even better opportunity!

The shares rallied 40% over the coming months and every time he spoke at future morning meetings, you could hear a pin drop – such was the desire to hear his opinionGetting it wrong happens to all of us, how you handle it will define if this mistake stops you from progressing. Remember, don’t get stressed over a problem, get energised to find a solution.


Many stock brokers will avoid advising clients when to sell stocks as it is easier to discuss away a profit warning, than the client selling early and missing out. This psychology may sound perverse but you have to be aware of it.

Your ability to generate trades will be monitored. If you fail to meet targets you will face the sack. It can therefore be safer to sell ideas to your clients that everyone else is selling. If you get it wrong, then everyone else will have been wrong too.

It may sound counter intuitive but although a sell off may cause clients to get fearful and ratchet back from investing, this is where a contrarian investor knows will be a good time to buy good stocks at a discount. So you may need to help with psychology as well as investment ideas!

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Louis H-P

Louis is a portfolio manager and a trader who brings a wealth of experience in private banking to The Lazy Trader. A fundamentalist and a trouble-shooter, Louis makes a firm contribution to the trading team.

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About author

Louis H-P

Louis is a portfolio manager and a trader who brings a wealth of experience in private banking to The Lazy Trader. A fundamentalist and a trouble-shooter, Louis makes a firm contribution to the trading team.

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