How to become a position trader

Is becoming a position trader right for me?

The first step to choosing a career is to make sure you are actually willing to commit to pursuing the career. You don’t want to waste your time doing something you don’t want to do. If you’re new here, you should read about:

Overview
What do position traders do?

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How to become a Position Trader

Becoming a position trader involves building a solid foundation in finance, gaining relevant experience, and developing a long-term trading mindset. Here’s an overview of the pathway to the career:

High School Diploma or Equivalent
At a minimum, a high school diploma or General Education Development (GED) certificate is often required. Many traders begin their journey without any formal higher education, especially if they are self-taught.

Bachelor’s Degree
A bachelor’s degree in finance, economics, business administration, or accounting, or a related field is usually the minimum requirement. This level of education provides essential knowledge of financial markets, investment principles, and economic theories. Particularly beneficial courses include mathematics, statistics, data analysis, risk management, and behavioral finance.

Master’s Degree (Optional)
Some position traders choose to pursue a Master of Business Administration (MBA) or a master's degree in finance or quantitative finance. This advanced education can provide deeper insights into investment strategies, financial markets, and risk management.

Gain Market Knowledge
Position traders must understand how various financial markets work. This includes familiarizing oneself with stocks, bonds, commodities, forex (foreign exchange), or any other asset class of interest. Reading financial news, market reports, and books on investing (such as those by Benjamin Graham or Warren Buffett) can help build a strong foundational knowledge.

Develop Analytical Skills
Position traders rely heavily on fundamental and technical analysis. Learning to read financial statements, conduct industry analysis, and understand market trends is essential.

Build Practical Experience
Many aspiring position traders start in entry-level positions, such as research analyst or junior trader roles, to learn the ropes. Working under experienced traders or investment managers helps develop practical skills and an understanding of different trading strategies.

Develop a Long-Term Trading Mindset
Position trading requires patience, discipline, and the ability to ignore short-term market fluctuations. Learning from successful long-term investors and practising with mock or paper trading accounts can help you develop the necessary mindset.

Network with Industry Professionals
Networking with traders, analysts, and other finance professionals can open doors to job opportunities and provide insights into market trends and trading strategies. Attending financial conferences, joining professional associations, or connecting on platforms like LinkedIn are great ways to build contacts.

Keep Learning and Adapt to Market Trends
Markets and trading strategies evolve, so continuous learning is essential. Staying updated on economic developments, emerging industries, and trading tools will help you refine your strategies over time.

Obtain Financial Licenses if Required
In the US, position traders working for brokerage firms may need to obtain specific licenses, such as the Series 7 (General Securities Representative) and Series 63 (Uniform Securities Agent State Law Exam). These licenses allow individuals to trade securities and provide investment advice.

Certifications
The following are some prominent voluntary certifications that can benefit position traders by enhancing their knowledge, credibility, and career prospects:

  • Certified Investment Management Analyst (CIMA) – This certification, offered by the Investments and Wealth Institute, focuses on investment management and portfolio construction. It is designed for professionals who want to enhance their investment management skills and is particularly relevant for those working in asset management.
  • Certified Alternative Investment Analyst (CAIA) – Offered by the CAIA Association, this certification is for those interested in alternative investments, such as hedge funds, private equity, and real estate. It covers the unique characteristics and risks of these asset classes, which can be beneficial for position traders focusing on alternative investments.
  • Financial Risk Manager (FRM) – This certification, offered by the Global Association of Risk Professionals (GARP), is geared toward risk management and covers topics such as market risk, credit risk, and operational risk. Understanding risk management is crucial for position traders to protect their capital and manage trades effectively.
  • Chartered Market Technician (CMT) – Offered by the CMT Association, this certification focuses on technical analysis, covering various charting techniques, indicators, and market trends. It’s valuable for position traders who rely heavily on technical analysis to make trading decisions.
  • Chartered Financial Analyst (CFA) – Although more comprehensive and focused on investment analysis and portfolio management, the CFA certification, administered by the International Federation of Technical Analysts (IFTA), includes important concepts like valuation, financial reporting, and ethical standards, which can be beneficial for position traders.
  • Certified Financial Planner (CFP) – Though more focused on financial planning, the CFP program, administered by the Certified Financial Planner Board of Standards, provides a broad understanding of investment strategies.

Professional Organizations
In addition to the certifying bodies referenced above in the Certifications section, there are other professional organizations and associations that cater to position traders and traders in general. Here are a few notable ones:

  • Association for Financial Professionals (AFP) – AFP serves finance and treasury professionals across various sectors. It offers training programs and resources related to financial management, treasury, and investment practices.
  • American Finance Association (AFA – AFA is a professional organization for academic and professional finance researchers and practitioners. It promotes scholarly research and provides a platform for networking and collaboration within the finance community.
  • National Futures Association (NFA) – While more focused on futures and derivatives, the NFA offers resources and support for professionals involved in trading in these markets, which can be relevant for position traders who trade these instruments.