The profession of trader is certainly the most publicized business finance. Banks appear regularly in newspapers because the bonus payments to traders are stigmatized or because a trader has made mistakes that have earned close to his employer. But people who do not know exactly what lies behind this term are numerous iconic. Below is a brief overview.
Description of different types of traders
There are three types of traders distinct traders on own account traders flows (market makers or market makers) and sales traders. Flow traders buy and sell securities market counterparties in the market, which are either other traders flow or clients (institutional) of the bank.
The products concerned are generally securities and other products such as futures, options or commodity (commodities). They prices and execute transactions. The profit motive is secondary to maximizing the volume processed and the minimization of risk.
Traders dealing on own account on behalf of the bank itself. Their goal is to generate a substantial profit. They use it for the analysis of economic data, technical analysis, their sense of market correlations between different asset classes and seek to identify products over-or under-valued.
The sales traders deal directly with customers. They provide them with market information, perform transactions and offer ideas transactions. They are the intermediaries between the client and the market maker.
Typical trading activities
While there are many similarities in the work flow of a trader and a trader for its own account, that of sales traders, however, differs greatly.
The main difference is the risk - of sales traders do not risk as traders flow for its own account or take risks, although to different degrees, in the pursuit of profit.
Traders flow and own account
Traders and proprietary flow focus on the execution of transactions at the right price. They spend their day in front of screens the market hall, and follow the movements of the market. Markets can move quickly and strongly, especially with the announcement of statistics considered indicators affecting the market. In this case the activity could be frenetic.Their role includes the exchange with colleagues to pass calls and make instant decisions.
Traders in this activity must be alert and ready to make decisions based on the smallest movements in the market. They react to changes in parameters that are not already reflected in the market prices.
Prices are supposed to reflect the intrinsic value of an asset, which can instantly change for a variety of reasons.
Their decisions are motivated by the detailed analysis provided by market analysts, economists and salespeople of the bank with whom they are in close communication and information flows from financial information systems, including Bloomberg and Reuters are the most important.
Traders also use their own analyzes. The ability of independent thinking is essential in the role of trader, especially in the case of trading for own account.
Assistants junior trader or traders must make many subtasks, such as data analysis or administrative tasks before they are entrusted with the responsibility for the money bank.
Activity type of a trader or flow for own account
Typical activities of a trader or own-account flows include:
- to prices for the securities assigned to them
- execute trades on electronic platforms or by phone
- be closely linked with sales or clients, especially when the market is turbulent
- anticipate market movements and position depending
- inform all parties concerned of the biggest deals of the day
- retrieve information, particularly on mispriced securities
- data analysis and evaluation
The sales traders
The sales traders, who are more concerned with their relationship with their clients, seek, analyze and propose new products they consider to be attractive to their customers. They work closely with the traders, and thus provide valuable information.
Type of activities sales traders
Typical activities include a sales trader:
- gather information and analyze the market
- perform a detailed analysis and evaluation of data
- identify issues or financial regulation that may affect their customers
- develop the relationship with the customer and present ideas
- get prices market makers and traders execute transactions
- prospect for new customers
- keep traders informed flow of important issues concerning their customers
Testimonials
Testimony of a forex trader
"Since I graduated four years ago, I worked as a forex trader for a major U.S. bank in London. My job is to buy and sell currencies on behalf of customers of the bank, using my own judgment to extract as much value as I can. Apart from this, we are encouraged to take positions on all financial markets, trading for own account.
Interpret price movements during the day and study the global geopolitical and economic events to generate ideas for trades is a key component of the job. So, in order to succeed in this environment, an interest in current events in the world is crucial, as this work requires a lot of time and energy.
During my studies, I had the opportunity to work in a trading room for a small bank, and I liked the atmosphere, particularly the camaraderie between traders, and how to measure the market. It was at this moment that I knew I wanted to do trading. My academic curriculum and my experience certainly helped me to get this job, because the bar in the investment bank is very high.
My employer chooses people from all backgrounds and values diversity in the trading room. With a good academic level, you can learn the mechanisms, there is no doubt. What they really want is creativity and confidence without arrogance.
It is often intimidating for a junior when he arrived in the hall steps. I was in this case for some time. Everything goes so fast and the people are so focused on what they do they often seem unapproachable. But this is not the case. It is in the interest of all the juniors succeed, and on the job training is a priority. What is extraordinary in the trading room is meritocracy. If you have talent and you work hard, you will see quickly assign responsibilities with career progression and financial rewards that go with it.
I like to prove to the markets. It may sound a bit cliché, but every day is a new challenge. Sometimes it can be hard, especially when you lose money, but that's part of the job. Override his first big loss is a true test of character, and it is often at this time that people realize that trading is not for them.
The nature of the work, based on risk and benefit, because, inevitably, it is under pressure to perform. There are strong characters in the room, so confidence in itself is important. Be ready to face and defend his position in a logical and confident is key to success as a trader. To summarize, if you have an entrepreneurial spirit, if you know how to work under pressure and if you have a good work ethic (a good sense of humor can help too), this is definitely a rewarding and interesting . '
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