A stock trader carries out various transactions involving stocks and other stock-based financial products, also called stock derivatives.
In essence, a stock trader carries out various transactions involving stocks and other stock-based financial products, also called stock derivatives. Basically, shares are stocks or shares of companies. Most of the time, the stockbroker deals with shares of publicly traded and listed companies. In some cases, however, he or she may transact over-the-counter (OTC). They are normally traded and listed privately, that is, without the involvement of a stock exchange.
Depending on the company the stockbroker works for, he or she may be responsible for executing buy and sell orders under the direction of a portfolio manager. If the trader does not work directly for a portfolio manager, he may trade with outside investors. This may include individuals, pension funds, asset management companies and others. Sometimes traders will trade stocks using the funds of the company they are employed by. Other times stockbrokers are self-employed and therefore trade on their own risking their own capital.
Companies housed in stock traders often structure the trading department in a kind of hierarchy. Typically, from top to bottom, the positions will be as follows: Senior Trader, Middle Trader, and Junior Trader. Accordingly, the most advanced stock trading will be carried out by experienced traders and sometimes by brokers. Junior traders usually deal with relatively simple transactions. In addition, the senior stockbroker is usually tasked with devising trading strategies and ensuring that subordinates execute trades according to plan.
Before making trades, a stockbroker may use technical or fundamental analysis, or both. Technical analysis primarily involves reading charts from which the trader can deduce the likely next price moves. On the other hand, fundamental analysis involves evaluating the underlying pros and cons of a company, which will give the trader reasons to buy or sell its stock.
The most common stock derivatives that traders work with are instruments known as options. Basically, they give the trader the option to buy or sell a specific stock at a certain price within a certain period of time. In addition, the trader can carry out OTC transactions, which are normally carried out through a network of interconnected computers and telephones. In such a network, the trader can trade with other traders to buy or sell shares.
To enter a stock trading career at the junior level, you generally need to have around three years of experience in a trading role. The intermediate level generally requires around four to six years of experience. Finally, senior positions go to candidates who have at least six years of experience.
Additionally, to be eligible for most stock trader jobs, applicants generally must have at least a college degree. This includes degrees in mathematics, computer science, finance, and economics. To work for a company, a stockbroker generally needs to have a license. In the United States, for example, an example of such a license is what is called a Series 55 License. Also, to move up in a company, you usually need to work hard, as well as earn graduate degrees, and sometimes take exams. for industry-specific certifications.