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Penny Stock Basics

5 KEY Things NEEDED To Become A Trader (StockBroker)

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Written by Timothy Sykes
Updated 1/4/2023 13 min read

So, You just got done binge-watching Wall Street or Stock Trading Movies like The Big Short or Wall Street (the original of course), cruised through a few hours of video on Youtube learning about Institutional Trading and now you have your eyes set on becoming a rich Wall Street professional trader (AKA – Stockbroker).

If you want to become a trader, a Wall Street titan, the next Gordon Gekko, I might not be able to help you. You need to understand there is a BIG difference between a retail trader (like me, on a beach) and an Institutional Trader (suit and tie Wall Street type)


If you want to learn what it takes to become an Institutional Trader trader versus a penny stock trader like me, keep reading and start drinking a lot of coffee, you’re going to need it!

This is definitely not your traditional guide on how to become a Wall Street trader. Basically, I’m going to outline the steps that one might take to go on the traditional route…then I am going to offer the non-traditional route I’ve taken. Then, I’ll let you make the decision! (hint.. choose the one that offers more freedom)

The traditional route to becoming a Wall Street Professional Trader

Basically, to become an Institutional trader, you’ve got to go through a years-long process of education, then jump through plenty of hoops and obtain proper licensure.

To summarize the typical trajectory:

Quick comment: becoming a successful retail trader (like me) or successful institutional trader both take a lot of hard work and commitment.  However, if you end up successful in either one, you have a great shot at becoming financially free and maybe even a millionaire.

So You might be asking yourself, How do I become a trader? To become a trader you have to build a strategy, research markets and gain trading experience.

Here are some more things that can help!

1. Study finance and go business school.

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To get your foot in the door on Wall Street, you’re going to have a tough time without a degree; it’s practically impossible, to be frank.  If you want to work for any respectable investment bank or hedge fund, you have to have a great degree from a top 20 business school. Is this fair?  I don’t think so.  Some of the smartest people I know do NOT have advanced degrees from top-tier business schools, but – Wall Street is picky.  Now.. every now and again does someone slip through the cracks without an ivy league degree? Yes, it’s just not that common.

2. Train at a brokerage firm.

Many Wall Street traders start their careers this way. To get positions at brokerage firms, though, you’ll need that aforementioned degree to be considered. While working in a brokerage firm or hedge fund, you’ll begin to learn more about the industry, stock market regulations and rules, different financial tools, and how trades are carried out.  Not to mention, the dreaded work hours!  Any rookie at an investment bank or hedge fund should expect to work on average 60-70 hour work weeks.

3. Get your licenses.

An institutional trader trades money on behalf of their bank for their clients.  Because of that, you have to get licensed in order to trade for others.  If you don’t, you’re breaking some serious securities laws.

Most every professional trader in finance will have a Series 7 and Series 63 Brokers License.

To get these, you’ll have to take and pass an exam (yup, you’ll have to pay for the pleasure of taking it). Once you’ve obtained these licenses, you can begin to make trades for clients.  There are also a dozen more types of licenses you may be required to get, depending on what kind of professional Wall Street trader you become.

disclaimer:  some of these tests are very tough to pass and require ample study time!

Do you need a degree to become a trader? You do not need a degree to be a day trader — Success is based on value and profitability.

4. Register with FINRA.

After you get your licenses, you’ll be registered with FINRA.  FINRA is great, it’s a regulatory body that helps keep the financial markets and brokers in check!  You can at any time look up a broker or professional trader to see if they’ve had any regulatory actions taken against them.  You can see that here.

5. From analyst to associate.

This is very big!  your first job on Wall Street will most likely include the word ‘analyst’.  Simply put, you are the investment bank’s or hedge fund’s low man or woman on the totem pole.

Unless you’re a genius, this is where you will start. 

As an analyst, you will earn your stripes by reading thousands of pages a week, being glued to your computer screen, getting coffee, arriving at the office before 6am, leaving after 6pm, and doing pretty much anything the associates want you to do.

I recently sat next to an analyst on a short flight to Vegas.  He worked for a very large hedge fund, his job? He was assigned to TESLA.  His job was to gather as much information as possible 24/7 about TESLA and report it up to his higher ups.  Tedious eh?  I think so!

Once you’ve performed well as an analyst for a few years, then you get promoted to an associate investment banker or associate institutional trader.  This is where you start making ‘Wall Street’ money.  Still working insane hours, but – you finally have autonomy over your book of business and decisions.

6. [optional] Do everything necessary to become a member of the NYSE.

To become a member or “own a seat” you don’t just pony up the cash and get a badge. No way. Membership to the NYSE involves jumping through plenty of hoops. To name a few:

  • Background check. It makes sense since you’ll be dealing with finances; still, it’s something you will have to do to become a member. You’ll be background-checked and fingerprinted before you can become a member.
  • Lots and lots of paperwork. If you want to be intimidated, take a look at the paperwork necessary to even apply for NYSE membership.
  • Attend an orientation program. Once you’re approved for membership, you’ll need to attend an orientation.
  • Take an exam. Yup: more tests. You’ll have to take an exam before you’re admitted to the NYSE, and you must pass.

Only after these steps (and a few more things you’ll need to do that I didn’t even get into) you’ll become a successful Wall Street Trader. Finally!

I’ve done both!  I’ve been a retail trader, better known as a day trader and I’ve also been a hedge fund manager.  If you couldn’t tell, I’ve chosen the life as a day trader… I love the freedom.

My road to becoming a trader was a little bit different than the one detailed above. Yes, I went to college. But I didn’t wait till I had a degree to start trading, and I ended up turning $12,415 dollars into more than $2 million before graduating college.**

When I was in high school, my parents let me invest the $12,415 dollars I’d been gifted (lucky, I know) in bar mitzvah gift money. They figured I’d lose it and learn a big lesson. But I devoted myself to truly learning how to trade.

I had made over $100,000** trading penny stocks while still in High School.

Long-term investing was never for me.  Trading always was much too exciting.  The immediate thrill of a profit was all I needed.  I was addicted!

  • I started with mutual funds and traditional investments but was disappointed by the low returns…It was like watching paint dry on the walls.
  • In looking for a type of investment that would deliver quick returns, I discovered penny stocks.
  • I didn’t have a lot of money to start with; so blue chip type stocks were out of the question.

I need quick movers!

I had some ups and downs at first, but I began to see that by reading charts and tracking companies, I could identify patterns that could deliver me profits.

I was obsessed. I was constantly skipping classes in college to trade penny stocks and launched a hedge fund. I began to garner attention, and was even featured in the documentary the documentary “Wall Street Warriors.”

Ultimately, for various reasons the hedge fund didn’t work out (including a MAJOR trading loss – best learning experience ever). This was for the best in the long run as the restrictions on the hedge fund industry kept me from answering any questions about my trading strategies. You can read more about it in my book, An American Hedge Fund. This is when I went back to basics and decided to focus on trading with a small account and started a blog, this blog.

Is Trading a skill? Trading is definitely a skill that can be learned by noticing patterns and studying markets.

How to become a day trader: a better method (in my opinion)

Like I said at the beginning of the post, I’m not here to make you the next Gordon Gekko. However, if you want to become a day trader who primarily trades penny stocks, these are the most important steps you can take:

1. Learn all you can about trading.

Before you ever make a trade, devote yourself to learning all that you can about trading. I established the Tim Sykes Trading Challenge so that I could teach my students all the things I had to learn the hard way. For many, this is a great way to kick start a trading career.

2. Study, study, study.

Sorry! Wish I could say it would be super easy, but it’s not. You need to learn. Don’t just learn. Keep learning. Study charts, study companies, study everything stock related you can. Knowledge is power in the stock market. With penny stocks, to gain an edge in the market, you need to be able to study the market and identify patterns.

For some traders, paper trading (simulated trading) is the perfect way to put their studies to work. Without investing real money, you can test your theories based on pattern recognition. It’s a great way to see if you’re thinking along the right lines with your investments.

3. Get your setup in place.

To start day trading, you don’t need a ton. You need a laptop, an internet connection, and a brokerage account. However, these things are vital, so be sure to have all of them in place before you start trading.  With everything going mobile these days, you can even trade from your phone!

4. Start small, aim small and miss small.

It’s always a good idea to start small as a trader. You can easily blow up your account if you make a bad trade; why end your career before it even begins? Keep your position size small when you start; this will make it easier for you to keep learning as you go, particularly since you’ll probably make some mistakes in the beginning.

5. Let yourself grow over time.

This builds on the last point. You’re probably not going to impress anyone by making risky trades, especially if you lose big. Let yourself grow slowly, over time. Learn from your mistakes, and refine your methods. Look at what is working for you and what types of trades are most consistent in terms of making profits. Focus on those, and increase your position over time. This is how you create a steady, and long-term career as a trader.

Do you want to become a Wall Street trader or Retail Trader?

In conclusion, if you want to become a Wall Street trader the traditional way, I’m not going to stop you.

However, I prefer to take the road less traveled and trade from any and everywhere in the world.

If you prefer my approach to trading, you can consider checking out my Trading Challenge team to learn the lessons I have to share.

How do I become a trader?

To become a trader you have to build a strategy, research markets and gain trading experience.

Do you need a degree to be a day trader?

You do not need a degree to be a day trader — Success is based on value and profitability.

Is Trading a Skill?

Trading is definitely a skill that can be learned by noticing patterns and studying markets.

How much has this post helped you?

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Author card Timothy Sykes picture

Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (888) 878-3621 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”