Why Trading education is a must for venturing into Finance industry

By Hitesh Chotalia

Venturing into finance industry? Start with Day Trading, which requires small capital or Swing Trading if you have a 9-5 job.

Millennials are taking their first step towards learning the basics of stocks and futures. Trading should have access to multiple sources of quality education. It's quite similar to learning car driving i.e. trial & error coupled with the ability to keep pressing forth, which will eventually lead to success.

One of the great advantages of stock trading is that the trading business lasts a lifetime. An educated trader has more chances of making consistent returns and managing risks better than a novice uneducated trader, whose approach to the stock market is only thrill-seeking.

Like any other skill-based profession, where you gain expertise by learning formal skills and then continuously update yourself by educating and practicing the required skills and try to be a professional trader for part-time or full-time income.

The younger generation is more open to learning and implementing new skills. They are tech-savvy and they have supportive professions for an additional cash-flow to fulfil their growing needs as they lead an upwardly mobile lifestyle with no time constraint and limited social responsibility.

This generation can look to trade both for cash inflow and wealth generation by starting at a fairly young age. They can start with Day Trading, which requires small capital or they can try Swing Trading if they are occupied during the daytime. One can also choose to take up trading as a full-time career option by opting to do Day, Swing and Positional trading for wealth creation.

Personal and Financial Goals

It is necessary to define your goals and the reason for trading. In a profession, one can achieve success if you have a set of defined goals. It is important to understand what your overall personal and financial goals are and link them to your trading plan.

Availability of Time for Trading

One needs patience and time in professional trading business. Either it can be done during working hours or by dedicating two hours per day post work. This is required to plan the trades and also ease trade management. If time is a constraint, especially during market hours, i.e. from 9:15 am in the morning till 3:30 pm in the late afternoon, one should avoid doing day trading as it involves active tracking of the live market during the trading hours. 

Trading Style

There are various styles of trading like (a) Day Trading (b) Swing Trading (c) Positional Trading (d) Long-term Trading, etc. If one is looking for cash flow to supplement his/her income, then one should select Day and Swing trading. And for wealth generation, one can always look at Positional Trading and Long-Term Trading, which does not require a lot of time and tracking of the market on a day-to-day basis. Hence, each style of trading has its own advantages and disadvantages.

Simulator–Paper Trading

When new to this profession, one will initially start trading on a virtual trading platform also called as a Simulator. Once you get more comfortable and acquainted with the rules of the trading business, then you can approach real markets with real money. Planning your rules and practicing the same on the simulated environment should always be the beginner’s approach.

Earning from Stock Market

Earning from the stock market is directly proportional to the efforts, in terms of time and adequate funding the account with required capital. The quantum of capital is relative to the desired returns one is looking for.

One can be self-directed to discretionary trading by managing one's own capital. He/she can also plan to manage money for HNI traders on the revenue sharing model and also take up the role of a consultant like equity advisor or relationship manager. There are also other opportunities like that of the associate technical analysts or lead technical analyst based on your expertise and experience.

Technical Analyst

A technical analyst studies the traded price and volume of the stock listed on exchanges and predicts the future price movement. The prediction can be done over various time frames like intra-day, one week, one month, one quarter, one year or even higher time frame. A technical analyst is also an expert in charting by using technical analysis software.

Equity Research Analyst

An equity research analyst studies and analyses balance sheet and profit-and-loss statement for annual and quarterly updates. He typically uses technical analysis to review the stocks, bonds and other financial instruments, and reports which securities or stocks are expected to be profitable and which are not. At broking house level, they generate investment ideas for their clients and at the fund house level for fund managers to help clients take optimal decisions about their investments.

Relationship Manager

Stockbroking houses both retail and institutional levels having a point of contact for the dissemination of trading ideas to their customers. The trading ideas can be for stocks, commodities and currencies and also for various styles of trading. They could be intra-day calls and short-term trading ideas. It's the relationship manager’s responsibility to disseminate such trading ideas generated through the research team.

About the Author:

Hitesh Chotalia is Head of Education, FinLearn Academy.

Read more from the author:

Why Trading is a must before venturing into Equity markets