MBA Degrees: Are They Worthwhile for Aspiring Stock Traders?

The business world is brimming with opportunities. As competition grows, job seekers look for different ways to set themselves apart from other candidates. Professional trader or stock trader is one such profession where competition continues to rise, with an average salary of $128,082; it’s no wonder many graduates are looking to enter the field. As a stock trader, you will either work for yourself or a financial firm and use your knowledge and expertise to identify different profit avenues.

One way you can set yourself apart includes getting an MBA. It provides you with all the necessary skills needed to navigate stocks. Not only does it ensure you a job, but it also allows you to excel. Let us show you the advantages of pursuing an MBA and whether you should opt for an online or on-campus program.

Online MBA vs. an On-Campus MBA

Both online and in-person MBA programs offer similar career and academic opportunities with the same accreditation process. For online programs, a synchronous model requires weekly meetings, often in live online classes. In contrast, in asynchronous models, you can access class materials and submit coursework at your convenience or by the deadline. The tuition fees fall in similar ranges, but you save transportation, room, and board costs in online programs.

The admission requirements typically require a bachelor’s degree, two to three letters of recommendation, a resume, a personal statement, and an official transcript. However, for online programs, you can often use your relevant work experience (up to four years of business experience) to enter a course without a bachelor’s degree.

On-campus programs are ideal for those looking for the whole campus experience. At the same time, a MBA online is preferable for those with familial responsibilities or who want to continue working and advancing in their positions.

Advantages of MBA

An MBA provides you with various skills that prove helpful in every business-related career. However, Stock trading is a technical job requiring a deep understanding of financial and economic matters. An MBA degree covers every aspect you need in your career as a stock trader. Here are a few advantages you can get with an MBA as a stock trader.

1. Financial Analysis Skills

You need to have a keen understanding of financial analytics as you need to assess a company’s financial health, review large datasets to identify patterns and make economic forecasts, and evaluate the benefits and risks you can receive.

An MBA will help you become familiar with multiple KPIs or key performance indicators such as ROI (return on Investment), debt-to-equity ratio, and operating cash flow. It will help you discover multiple ways to assess potential risks and benefits, such as cost-benefit analysis, SWOT analysis, and Multi-criteria decision analysis. You can make informed decisions regarding the stock’s growth prospects and intrinsic values. A thorough understanding of financial analytics will help you invest in more profitable stocks and help you become a more successful stock trader.

2. Risk Management

The stock market is volatile; factors such as market cycles, monetary policy changes, geopolitical events, and market sentiments regularly affect the frequency of price changes. Risks in stock trading are the possibility of financial losses occurring. It can occur due to poor investment choices, unexpected events, political instability, or unfavorable market conditions. Risk management is critical in stock trading, as you must protect capital and minimize losses. An MBA will help you learn the various risk management strategies available, such as:

• Diversification: To spread your investments over different sectors, assets, stocks, and industries to reduce the negative impact of the poor performance of a single stock.
• Position sizing: understanding the appropriate size of each trade, often by using a percentage of your portfolio or fixed dollar amount to limit exposure on your trade.
• Stop loss orders: Setting a predetermined price to sell your stock to limit your losses.
• Risk-reward ratio: to assess your potential loss against your gains and to select trades or alternatives with better potential returns.
• Risk capital allocation: The amount of money to risk in the stock market and leaving the rest for secured investments.
• Research and analysis: You learn about market trends, company fundamentals, financial statements, and technical indicators that affect stock prices to make informed decisions.

3. Quantitative Analysis

Quantitative analysis helps you determine the stock’s value by analyzing the price and volume of stock market securities. They often use the mathematical and computation model. Quantitative traders use this model when their transactions are large, such as when purchasing or selling thousands of stocks and shares.

They use computer languages to do harvesting or online scraping to collect historical stock market data to use as input for Mathematical models. If you have a scientific background with a mathematics or statistics degree, you can create your own programming language to create a trading system that helps automate the entire process.

Investors often combine the quantitative model with the qualitative model, which looks at the ‘how’ of things, such as brand value, ethics, management quality, and stakeholder satisfaction.

An MBA degree will help you become proficient in quantitative analysis. It will help you understand management sciences, and projected earnings, use spreadsheets such as Excel, and make computer models and simulations to help you make more informed decisions.

4. Decision-Making Abilities

There are several responsibilities of stock traders, some of which include:

• Handling trade corrections
• Researching trading strategies
• Researching prices and markets
• Balancing relationships with stakeholders and key industry brokers
• Advising on the purchase and sales of securities
• Collating reports
• Interpreting data from data sources, charts, financial reports, etc
• Adapting to market changes
• Developing exit strategies
• Evaluating trading algorithms
• Monitoring portfolios to ensure they comply with guidelines and regulations.
• Analyzing finances and providing recommendations to companies for mergers, public offers, or acquisitions

To succeed as a stock trader, you must hone your decision-making skills. Throughout an MBA, you will receive multiple case studies that will sharpen your decision-making skills and teach you different ways to approach a problem. With an MBA, you can ensure the decisions you make for a company save time, manage trading resources efficiently, and quickly take advantage of market opportunities. Additionally, the degree will instruct you on data-based forecasting, allowing you to make better investment decisions.

5. Macro and Microeconomics Knowledge

Microeconomics studies individual and business decisions, while macroeconomics looks at the decisions of governments and countries. It’s vital to get the basics about these concepts as macroeconomic factors such as GDP (gross domestic product), inflation, unemployment rates, and government debt affect the stock market’s growth and performance.

At the same time, Microeconomics factors such as supply and demand or taxes and regulations help you analyze the securities you want to invest in. An MBA degree contains introductory economics courses, which provide the concepts needed to understand the international and local economies’ impact on the financial markets.

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6. Networking Opportunities

Whether you’re just stepping into the business world or already well acquainted, an MBA is vital in building your professional network. You can connect with students and alums of the university you obtained your MBA. These people belong from different backgrounds, which will help expand your worldview and build connections in the vast business world. Your contacts expose you to new cultures, ideas, and concepts, and you learn about the subtle nuances of stock trading that you can’t learn in the classroom.

It provides opportunities for joint ventures or partnerships and access to capital from funding sources who are looking to support skilled traders. It will even help you build a positive reputation within the trading industry.

7. Global Perspectives

A global perspective in your MBA program gives you a thorough understanding of the worldwide business environment. It allows you to learn and understand different cultures, global trends, and international regulations. This understanding enables you to be more strategic when conducting trades in other cultures or countries, as you can now identify risks and benefits in its global context. You also become more marketable to your employers as they seek employees with international experience or knowledge.

8. Ethics and Compliance

Ethics are your guiding principles and are codified into laws. As the technological and digital world grows, any ethical misstep is easily identified and publicized. People, especially employers, value ethics because they ensure transparency and fairness, compliance with regulations, and social responsibility, such as environmental stability. An MBA program will provide the perfect framework for ethical theories, actual world events, and case studies to equip you with a solid moral foundation. Here are a few things you’ll learn:

• Winning at someone else’s expense: the public is often concerned with how companies win, and monopolies that prevent healthy business competition are usually deemed unethical.
• Environmental responsibility: climate change is at the forefront of everyone’s mind; companies must take responsibility and comply with government emission standards.
• Socially conscious investing: To invest in companies who want to positively impact society by adhering to fair trade standards or implementing equal rights policies.
• Sin stocks: people face an ethical dilemma when investing in companies deemed sinful, such as casinos, tobacco, alcohol, gambling, weapons, and pornography, which are considered taboo.

Companies that follow ethical principles enjoy greater public support. So a stock trader with a keen understanding of principles is sought after by employers as it positively impacts the company’s public image.

Disadvantages of MBA

Despite its multiple advantages, MBAs are an unnecessary expense for many people. Instead, they use the years they would study to gain hands-on work experience, which also helps develop the necessary skills for a stock trader. Here are a few disadvantages of obtaining an MBA.

1. Expensive

Obtaining an MBA is a significant financial investment. Master’s degree costs can range from $30,000 to $120,000. This doesn’t cover the cost of accommodation, transport, and textbooks. Many also have to forego the opportunity cost of salary earning or professional work experience. Because of its high price, its return on investment remains uncertain, even if you will advance in your career. You must make predictive calculations to estimate the benefits you get.

2. Time-Consuming and Distance Learning

Completing your MBA can take one to two years, depending on your program and whether it is part or full-time. Your time is also occupied by various group projects, assignments, and extracurriculars, even after classes end, which leaves little opportunity to pursue a career to support yourself.

On the other hand, distance learning options save you the costs of relocating and pursuing a cheaper MBA degree. However, online learning operates through emails, live classes, podcasts, or chat rooms, making networking difficult without personal or face-to-face interactions. You won’t be able to learn from other students, their interests, experiences, and drawbacks.

Endnote

Whether you choose to become a trader as a full-time professional, to generate supplemental income or a part-time opportunity, you will surely succeed if you have the ambition, skills, and patience. There are several ways you can set yourself apart from other candidates or your peers to get ahead of them and watch your career grow, and an MBA is an ideal way to do so. Consider the advantages and drawbacks of getting an MBA and do additional research before making your final decision.