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What Causes a Stock Market Crash?

You can usually predict, well before the event, that a stock market crash is going to happen. There are certain events which happen prior to the crash, and which lead up to it. To begin with the market is quite weak, a situation which is known as a bear market. When this happens many people are eager to invest in shares, believing that the value of those shares is bound to rise and therefore make them a good profit. This interest in the market does indeed cause the share values to rise, and the market becomes a bull market, in other words an especially strong one.

Mutual funds are an especially popular type of investment at this point in the investment cycle. The market is quite stable at this stage, and there are good profits to be had from investment in this early part of the cycle.

More investors join in at this stable part of the investment cycle, as investors are encouraged to buy and to increase their profit in the stock market.

Companies release stocks onto the market during the bull market phase, and it is common for IPOs or Initial Public Offerings to be available in this period before a stock market crash. Companies do very well out of this situation, with the value of their stocks rising steeply, and great confidence from investors in the value of their stocks. More and more money is being invested by people who want to be the first to buy stocks in a particular company.

Those investors who bought shares in the beginning phase of the cycle are now keen to sell them, before they lose their money, knowing that the value of their shares will soon go down. Sometimes during a bull market there can also be various scandals and scams on a corporate level, because people become greedy. The market is becoming flooded with stocks, and yet people feel that the values of stocks will continue to rise.

Eventually the stock market reaches the point where people have invested so much it is ‘overbought’, and the only way to go is down. This is the beginning of the stock market crash. Stocks start to lose value, and when people become aware of this fact, they then want to sell, and before you know it everyone is selling rather than buying, and this brings about the stock market crash.

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Requirements For Stock Broker License

Brokers know the complete understanding of the stock market and hold considerable experience in trading in stocks. Thus they are able to give advice and counsel their clients about their investments and carry out transactions at the stock market.

However, there are certain prerequisites for becoming a certified stock broker at the stock exchange and carry out transactions as well. You need to hold a stockbroker license in order to trade at the stock exchange. Unless you hold this full broker license, you are not authorized to trade at the stock exchange.

You do not need a degree for becoming a stock broker but most of the brokers do have a degree. But you need to pass the General Securities Registered Representatives Examination to obtain a stockbroker license. Initially you need to work with a firm for nearly four months or more to be eligible to give the exam. This minimum four months period is taken to be as an on-job training period for preparing for the exam. Apart from the General Securities Exam, certain states in United States may also require you to take an additional exam for Uniform Securities Agents State Law Examination.

These two examinations prepare you for getting into the stock market and understand things like terminology, trading, legal aspects, etc. After you pass the exam, you are considered as a trainee. You need to get trained further and take classes and courses for another two years to further enhance your skills and understanding of the stock market. If you wish to stay ahead in the trade, then even after you obtain your license, you need to keep on updating yourself with the latest industry trends and market changes. This would make you the most successful stock broker in the market.

It takes more than a simple stock broker license to become the best and reputable in the industry. You should necessarily possess the business acumen to stand out. You should have strong analytical skills, sharp memory and ability to interpret situations and circumstances. Moreover, it is not necessary that you need to essentially become a trader at the stock market after obtaining the license. You can also become business analyst, stock accountant, stock market analyst, etc. All you need to do is to find the best job for yourself that suits your personality. If you do not want to become a full service stock broker, you can also start your own online business and become a discount stock broker. There are many people who need stock brokers who can buy and sell stocks based on their instructions.

There are numerous opportunities in the stock market after obtaining a stock broker license. All you need to do is to find the best job and climb the success of ladder that suits your personality the most.