originally posted by: FamCore
If I wanted to be authorized to buy and sell securities like equities and commodities, or even derivatives how would I go about doing that?
If you're trading for yourself, you don't need licenses nor exams.
However, you can't trade commodities unless you meet certain financial and maturity requirements. This is set by the brokerage firm you select to
trade through. Generally speaking, you must have some minimum capital, and may be required to demonstrate experience trading other things like stocks,
before they let you trade commodities.
The easiest to trade are stocks. And you can "buy" bonds, no problem. To sell "bonds" or even sell "stocks" that you don't own, i.e. to "short" these
things, again you need to show some substantial financial capital before they'll let you do these things.
I wanted to individually trade these investments on my own without having to work for one of those firms, what exams would I need to take and would
I need to open up my own LLC or sole proprietorship to trade?
You need licenses and exams only if you want to trade other people's money. So, to let your friends give you some of their money to trade for them,
because you're a wiz at trading, you'll need to be licensed. If it's your own funds, you don't need any license, but should take the Series 7 Exams in
North America, for your own education, anyway.
3. Trading Software/Platforms? I'm also wondering if I would need a particular type of software or other computer applications to do this. I do
just fine monitoring the markets using features such as "Watchlist" on MarketWatch, but I would probably want to buy a full packaged software if I
were to move into securities trading as more of a primary source of income. Does anyone know of any packages of software that would be good for this
There are different kinds of trading, depending on your "time frame" holding positions.
This is one of the hardest type of trading, where you hop in and out of the market in a few minutes or hours. You need special permission to be
authorized to do "day trading". If you register for a general brokerage account, to trade stocks, say, and begin to do alot of day trades, the broker
my freeze your account, and not let you trade. So, read the fine print.
This is another one of the hardest type of trading, where you hold positions for even shorter periods of time, from milliseconds to a few seconds or
minutes. Many brokers forbid this type of trading and will close your account if they find you doing this. But, some brokers allow it. Read the fine
This is where you go long one security and short another, if you try this at some brokers, doing both long and short positions in your account, the
broker may kick you off their system. Again, read the fine print. Some allow this type of trading.
Trading has many many aspects, I just mention a few things.
For derivatives, you can trade "options" on stocks, and "options" on futures, if you have the capital requirements. To "write" options, i.e. take a
short position in the derivative, you need lots of capital and special permission.
You can't trade OTC derivatives, unless you are a corporation with lots of capital in the millions of dollars. So, you'll have to stick with ordinary
options on stocks and futures.
Oh, by the way, some brokers are required by law to only deal with "Sophisticated Investors" when offering their services, so you won't be able to buy
and sell certain things as an "Ordinary Investor", and will have to demonstrate prior experience trading things, and substantial capital to be able to
trade those securities being offered to the "big guys."
edit on 15-1-2018 by AMPTAH because: (no reason given)