Trading for a Firm

From Traderpedia

Trading for a firm means being employed to execute trades on behalf of a company of some sort. There are a number of different kinds of trading positions available with different focuses. There are also a number of different kinds of firms for whom one can work.


[edit] Types of Professional Trading Positions

[edit] Market-making

A market-maker is one who provides liquidity to the market place. Generally a market maker working for a firm, has a commitment ( in the case of UK listed equities) to maintain a two way price in SEAQ and SETS MM stocks during market hours, in return for special dispensations. Market makers will make a 2 way price to clients and run the risk of the trade themselves.

[edit] Proprietary trading

Proprietary or Prop traders are those who actually take positions using their firm's capital with the intention of pursuing speculative profits.

[edit] Sales trading

Sales traders are the link between centralised dealing desks ( institutional clients) and market makers. Their responsibility is to assist the institutional client base in executing orders efficiently by providing market intelligence and serving as an intermediary in negotiations about capital commitment with the market making desk.

[edit] Buy-side trading

A buy-side trader is one who makes purchases or sales transactions on behalf of a fund or portfolio, as in the case of a fund management company. The buy-side trader receives orders from the portfolio manager and then uses his or her discretion to seek best execution through brokers or electronic trading systems. The buy-side trader is also tasked with being the "eyes and ears" of the fund management company in the market and providing advice to portfolio managers about market activity.

[edit] Floor trader

A floor trader is one who is actually physically located at an exchange. He/she executes transactions with other floor traders face-to-face. Brokerages, hedge funds, and other types of companies employ floor traders. A floor trader may also independently hold an exchange seat that permits him/her to transact with incoming order flow and other floor traders. Independent floor traders are also known as 'locals.'

[edit] Where One Can Trade Professionally?

There are a number of institutions which employer traders:

[edit] Investment banks

Investment banks are institutions involved in issuing and researching securities on behalf of their customers. They employ traders to provide liquidity for those issues. They also provide brokerage and execution services to the buy-side and engage in proprietary trading.

[edit] Commercial banks

Commerical banks employ traders mostly to provide transaction support to their customers. This can include:

  • Buying/selling stock for retirement account
  • Making currency transactions
  • Purchasing government securities

[edit] Brokerages

Traders at brokerages are primarily order handlers. They receive orders from the firm's customers and make purchases and sales to those orders.

[edit] Hedge funds

A trader at a hedge fund is operating in a speculative environment. He/she may or may not have decision-making authority.

[edit] Fund management companies

Traders at fund management companies are primarily in the business of executing the transactions required of them by the fund managers. Also the fund management company will trade with your funds invested in them to grow the investment. They can come in all shapes and sizes, trading Forex, Stocks, Equities etc

[edit] Requirements for Trading for Firm

Education is often the first requirement to gain employment with a firm. Nearly all mandate at least an undergraduate degree. Increasingly there is a requirement for a graduate degree.

[edit] Related T2W Resources