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How to Become a Professional Trader – 2 Main Paths

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Written By
Dan Buckley
Contributor Image
Written By
Dan Buckley
Dan Buckley is an US-based trader, consultant, and part-time writer with a background in macroeconomics and mathematical finance. He trades and writes about a variety of asset classes, including equities, fixed income, commodities, currencies, and interest rates. As a writer, his goal is to explain trading and finance concepts in levels of detail that could appeal to a range of audiences, from novice traders to those with more experienced backgrounds.
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Updated
Aug 22, 2023

A trading career has lured many with the promise of wealth and independence.

While the potential rewards are great, the path to becoming a professional trader is filled with challenges and requires a strategic approach.

If you’re considering a career in trading, you might consider that there are two main paths available.

Each path has its unique advantages and challenges.

 

Key Takeaways – How to Become a Professional Trader

  • Two routes exist for aspiring traders – jumping in headfirst or climbing methodically through a corporate structure – each with its own benefits and obstacles.
  • Start small, embrace losses as lessons, seek mentorship, and prioritize risk management to thrive in a trading career.

 

Here’s a closer look:

Dive Right In (Naive Approach)

The “Dive Right In” approach is exactly what it sounds like.

It involves jumping into the trading world without any formal training or experience, with the hope of learning as you go.

This method is attractive to many because it has a relatively low barrier to entry. It doesn’t require a significant amount of capital to start trading, and there’s no need to climb any corporate ladder.

By choosing this path, you essentially begin at the top, being your own boss and making all the decisions from day one.

However, the absence of formal training means that you’ll face a steep learning curve and you’ll make lots of mistakes.

 

Work Your Way Up (Structured Approach)

The “Work Your Way Up” approach involves a more structured and methodical path to becoming a professional trader.

It often starts with pursuing a relevant degree in college, such as finance, economics, or statistics. While academia may not replicate the exact nuances of real-world trading, it can provide a solid foundation.

After graduation, the next step usually involves securing a job within the asset management business. This offers hands-on experience and an opportunity to learn from seasoned professionals.

With accumulated experience, there’s the potential to move up within the organization or even work for yourself.

 

Tips for Both Paths

Regardless of which path you choose, always start trading with an amount you can afford to lose.

Early losses should not deter you from your goals.

Seeking mentorship and learning from experienced traders can be invaluable. They offer insights that can help you navigate the markets and the business of trading.

Emphasizing risk controls is critical. No matter what the game is (e.g., basketball, chess), beginners tend to like to express themselves offensively. Over time, they realize that taking a more balanced approach is likely to yield the best mix of results.

To sustain a long-term career in trading, you must develop strategies to manage losses and protect your capital.

 

Conclusion

When considering a trading career, there are two primary paths to choose from.

The “Dive Right In” approach offers immediate independence, but it requires navigating a steep learning curve due to the absence of formal training.

On the other hand, the “Work Your Way Up” approach involves structured education, starting with relevant degrees and progressing through experience in asset management.

Both paths have their advantages and difficulties.

Irrespective of the chosen path, some fundamental principles hold true. Begin with an affordable capital investment, understanding that early losses are part of the learning process.

Seek guidance from experienced traders and mentors to gain insights and market wisdom.

Emphasize risk management over excessive risk-taking, as balanced strategies tend to yield better long-term results.

Maintaining a trading career for the long-run necessitates a focus on loss management and capital protection.

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