Stock market education
Encyclopedia
To become a professional commodity broker
in the United States, an individual must take and pass the General Securities Representative Exam
(Series 7) and in most states, the Uniform Securities Agent State Law Examination (Series 63). To take the test, you must be sponsored by "a member firm, a self-regulatory organization (SRO), or an exchange." This requirement, as well as the administration of the test, is under the jurisdiction of FINRA, the Financial Industry Regulatory Authority
.
For individuals who are interested only in managing their own investments, several options exist to obtain a stock market
education:
Some of the core subjects covered by an undergraduate education during the course of a financial/business college education are:
For-profit financial education companies exist that offer programs of study (also referred to as "systems" or "courses" – the terminology varies) on stock market education. Unlike colleges that prepare students for working in the financial arena, these companies educate students with a more narrow focus – how to trade derivatives
for the purpose of personal investing. Examples of such companies are thinkorswim (formerly Investools), Invested Central and Rich Dad's Education (based on the "Rich Dad, Poor Dad
" book by Robert Kiyosaki
). These types of companies offer both classroom settings for learning and distance education
programs.
Another aspect that differentiates for-profit stock market education companies from traditional colleges is the commercialization factor. For-profit stock market education companies frequently develop other products – such as software and newsletters – that they market to their students. Colleges and universities, frequently founded for the purpose of providing education and established as non-profit organizations, do not follow this business model.
work one-on-one with a student, In this situation, the student receives more personal attention from the instructor than from a classroom or distance learning education. Some mentors offer their services for a fee.
More advanced topics would include:
Commodity broker
A commodity broker is a firm or individual who executes orders to buy or sell commodity contracts on behalf of clients and charges them a commission. A firm or individual who trades for his own account is called a trader. Commodity contracts include futures, options, and similar financial...
in the United States, an individual must take and pass the General Securities Representative Exam
General Securities Representative Exam
The General Securities Representative Exam, commonly referred to as the Series 7 Exam, is a required exam to become a Registered Representative of a broker-dealer in the United States....
(Series 7) and in most states, the Uniform Securities Agent State Law Examination (Series 63). To take the test, you must be sponsored by "a member firm, a self-regulatory organization (SRO), or an exchange." This requirement, as well as the administration of the test, is under the jurisdiction of FINRA, the Financial Industry Regulatory Authority
Financial Industry Regulatory Authority
In the United States, the Financial Industry Regulatory Authority, Inc., or FINRA, is a private corporation that acts as a self-regulatory organization . FINRA is the successor to the National Association of Securities Dealers, Inc. ...
.
For individuals who are interested only in managing their own investments, several options exist to obtain a stock market
Stock market
A stock market or equity market is a public entity for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.The size of the world stock market was estimated at about $36.6 trillion...
education:
- Traditional classroom setting
- Non-traditional classroom settings
- Self-education
- Mentor/apprenticeship relationship
Traditional classroom settings
Many colleges and universities offer courses of study in business, economics, and finance. However, the coursework is aimed at preparing the student for the professional world. They are not designed or intended to teach a student how to trade in the stock market, although the introductory/basic courses would provide a good basic foundation of knowledge. Those intending to follow the professional stockbroker career path usually begin their education by obtaining a degree in business, economics, or finance.Some of the core subjects covered by an undergraduate education during the course of a financial/business college education are:
- Basic marketing
- Business communication
- Business ethicsBusiness ethicsBusiness ethics is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations.Business...
- Financial accounting
- MacroeconomicsMacroeconomicsMacroeconomics is a branch of economics dealing with the performance, structure, behavior, and decision-making of the whole economy. This includes a national, regional, or global economy...
- Mathematics
- MicroeconomicsMicroeconomicsMicroeconomics is a branch of economics that studies the behavior of how the individual modern household and firms make decisions to allocate limited resources. Typically, it applies to markets where goods or services are being bought and sold...
- Real estate
- Risk managementFinancial risk managementFinancial risk management is the practice of creating economic value in a firm by using financial instruments to manage exposure to risk, particularly credit risk and market risk. Other types include Foreign exchange, Shape, Volatility, Sector, Liquidity, Inflation risks, etc...
- StatisticsStatisticsStatistics is the study of the collection, organization, analysis, and interpretation of data. It deals with all aspects of this, including the planning of data collection in terms of the design of surveys and experiments....
Non-traditional classroom settings
Non-traditional classroom settings are offered by:- Non-profit organizations
- Stock market organizations
- For-profit businesses
For-profit financial education companies exist that offer programs of study (also referred to as "systems" or "courses" – the terminology varies) on stock market education. Unlike colleges that prepare students for working in the financial arena, these companies educate students with a more narrow focus – how to trade derivatives
Derivative (finance)
A derivative instrument is a contract between two parties that specifies conditions—in particular, dates and the resulting values of the underlying variables—under which payments, or payoffs, are to be made between the parties.Under U.S...
for the purpose of personal investing. Examples of such companies are thinkorswim (formerly Investools), Invested Central and Rich Dad's Education (based on the "Rich Dad, Poor Dad
Rich Dad, Poor Dad
Rich Dad Poor Dad is a book by Robert Kiyosaki and Sharon Lechter. It advocates financial independence through investing, real estate, owning businesses, and the use of finance protection tactics....
" book by Robert Kiyosaki
Robert Kiyosaki
Robert Toru Kiyosaki, born April 8, 1947) is an American investor, businessman, self-help author and motivational speaker. Kiyosaki is best known for his Rich Dad Poor Dad series of motivational books and other material published under the Rich Dad brand. He has written 15 books which have combined...
). These types of companies offer both classroom settings for learning and distance education
Distance education
Distance education or distance learning is a field of education that focuses on teaching methods and technology with the aim of delivering teaching, often on an individual basis, to students who are not physically present in a traditional educational setting such as a classroom...
programs.
Another aspect that differentiates for-profit stock market education companies from traditional colleges is the commercialization factor. For-profit stock market education companies frequently develop other products – such as software and newsletters – that they market to their students. Colleges and universities, frequently founded for the purpose of providing education and established as non-profit organizations, do not follow this business model.
Mentor/apprentice relationship
Also referred to as "personal coaches," mentorsMentor
In Greek mythology, Mentor was the son of Alcimus or Anchialus. In his old age Mentor was a friend of Odysseus who placed Mentor and Odysseus' foster-brother Eumaeus in charge of his son Telemachus, and of Odysseus' palace, when Odysseus left for the Trojan War.When Athena visited Telemachus she...
work one-on-one with a student, In this situation, the student receives more personal attention from the instructor than from a classroom or distance learning education. Some mentors offer their services for a fee.
Self-taught
The following resources exist in libraries and on the Internet for an individual to learn about investing in the stock market:- A stock market simulatorStock market simulatorA stock market simulator is a program or application that attempts to reproduce or duplicate some or all features of a live stock market on a computer so that a player may practice trading stocks without financial risk.- Types :...
allows one to trade without using real funds (also referred to as "paper tradingPaper tradingPaper trading is a simulated trading process in which would-be investors can 'practice' investing without committing real money....
"). These simulators are offered by organizations associated with the stock market (such as the Chicago Board Options ExchangeChicago Board Options ExchangeThe Chicago Board Options Exchange , located at 400 South LaSalle Street in Chicago, is the largest U.S. options exchange with annual trading volume that hovered around one billion contracts at the end of 2007...
) and the types of for-profit education companies mentioned in Non-traditional classroom settings. - Articles
- Financial magazines like KiplingerKiplingerKiplinger is a Washington, D.C.-based publisher of business forecasts and personal finance advice, available in print, online, audio, video and software products ....
and ForbesForbesForbes is an American publishing and media company. Its flagship publication, the Forbes magazine, is published biweekly. Its primary competitors in the national business magazine category are Fortune, which is also published biweekly, and Business Week...
provide investing articles, though their target market is aimed at more general investors. Magazines that focus on trading derivatives are Active Trader and Tradersworld. Magazines with an online presence also offer access to some, if not all, of their articles online. - Web sites devoted to the stock market or trading arena post articles online or send them via email to subscribers. These web sites can be free, non-profit, or for-profit.
- Financial magazines like Kiplinger
- Books written by investors and traders.
- Online forums that discuss subjects related to the stock market and trading derivatives.
- Non-profit organizations that offer stock market educational material:
- American Association of Individual Investors
- Alliance for Investor Education
- BetterInvesting Community
- Investor Protection Trust
- National Endowment for Financial Education
- North American Securities Administrators Association
- Securities and Exchange Commission, Office of Investor Education and Assistance
- Stock market organizations that offer stock market educational material:
- American Stock Exchange
- Chicago Board Options Exchange (CBOE)
- Council for Economic Education
- Financial Industry Regulatory Authority
- NASDAQ Educational Foundation
- New York Stock Exchange
Stock market subjects to learn
Whether an individual chooses a traditional or non-traditional education to learn how the stock market works, the following basic subjects are covered:- How the stock market works
- Risks associated with trading derivatives
- Types of derivatives
- How to make trades
- How to interpret financial news
- What to look for in a broker or brokerage firm
More advanced topics would include:
- Trading strategies
- Fundamental analysisFundamental analysisFundamental analysis of a business involves analyzing its financial statements and health, its management and competitive advantages, and its competitors and markets. When applied to futures and forex, it focuses on the overall state of the economy, interest rates, production, earnings, and...
- Technical analysisTechnical analysisIn finance, technical analysis is security analysis discipline for forecasting the direction of prices through the study of past market data, primarily price and volume. Behavioral economics and quantitative analysis incorporate technical analysis, which being an aspect of active management stands...