A day in the life of a trader is about making quick, informed decisions in an unpredictable environment. Traders are in charge of buying and selling financial products in order to make money for their companies. They’re constantly on the lookout for new ways to make money, but they also have to manage their own risk because it’s their job to get the most value out of every dollar invested.
Traders must develop a thick skin and a sense of humor so they can handle the intense pressure and volatility of the stock market. They must be able to remain calm and focused even when everything around them is falling apart.
Read on to learn more about what it’s like to be a trader and what it takes to become one yourself.
Trader Job Duties
The duties for traders include the following:
- Trading stocks, options, currencies, and other financial instruments
- Researching markets and analyzing economic trends, news, and other factors to determine potential market opportunities
- Examining current market data related to securities, such as price, volume, and exchange rates, to identify opportunities for trading
- Deciding when to buy or sell stocks or other assets in accordance with current market conditions
- Monitoring the status of stocks in an online trading account
- Maintaining profit and loss records for each trade
- Creating reports that explain risk assessment, market trends, and other financial information
Trader Salary & Outlook
The median annual wage for traders is $102,048. The highest earners make over $190,000 per year. Those earning higher wages tend to work in the securities industry.
The number of jobs for stock and commodities traders is expected to grow steadily over the next decade. This growth is due to the increasing use of financial products in the United States economy. As investors gain more experience with these products, they will become more comfortable using them, which will drive demand for traders who can find ways to reduce risks associated with trading these products.
Trader Job Requirements
The requirements for a trader are as follows:
Education: Traders should earn a bachelor’s degree in finance, economics or a similar field.
Traders who focus on the macroeconomy may pursue degrees in fields like macroeconomics, international business, international relations or public policy. Those who work on the microeconomy may earn degrees in fields like finance or statistics.
Training: Once they begin working, traders are generally required to complete on-the-job training at their company. This training can last up to two years and includes learning company policies and procedures as well as how to use trading software. During this time, they will also work closely with supervisors who can offer guidance on how to improve their performance within the company. Traders are also required to keep current with industry trends by attending conferences and seminars.
Certifications & Licenses: Some employers may require traders to be licensed or certified by financial institutions before they can engage in trading activities for their clients. This type of licensure ensures that traders meet specific standards regarding customer protection, compliance and regulatory requirements. Some of these certifications include Series 7, Series 63, Series 66 and Series 3 licenses.
The following skills are required for this job:
Analytical skills: Traders must be able to make quick and accurate decisions in a high-pressure work environment.
Time management skills: Traders often have tight deadlines, so they need to manage time well in order to meet them. They also have a lot of control over their own schedules, so they need to be able to balance work with their own needs for leisure time and personal development.
Patience: Trading is a long-term game; investments don’t always pay off right away, so patience is key when evaluating prospective investments.
Communication skills: Traders must be able to communicate effectively with clients and other team members both in person and electronically. They also need to know how to write business correspondence effectively.
Concentration skills: Traders must be able to focus for extended periods of time on market trends, company statements, and other factors that affect trading activity.
Mathematical ability: Traders need strong quantitative analysis abilities in order to conduct financial operations like calculating risk, performing simulations, and modeling market behavior.
Trader Work Environment
Traders work in offices, often in large buildings with other traders. They spend most of their time sitting at desks in front of computer terminals, looking at market data and financial reports. Traders may experience physical problems, such as backaches and eyestrain, due to the long hours they spend sitting. The job can also be stressful because traders work in competitive environments with high-pressure deadlines.
Trader Career Path
First-year traders are on the bottom rung of the career ladder. A regular day for a trader is very busy, with trading, marketing research, and networking all vying for attention. Traders who are successful in this field learn how to put together packages of information that appeal to potential clients, find ways to network with wealthier investors, and begin to develop their own ideas about what types of investments are likely to succeed. The failure rate for new traders is high because of the difficult learning curve involved in trading.
Five Years Out
Traders who have been with a company for five years have reached significant positions within the company. At this point, they can receive significant bonuses. They still work long hours (more than 60 hours per week) but enjoy greater freedom and independence as they make trading decisions that affect the company’s bottom line. At this point, traders will either stay in their current positions or start to move into management positions within the company. Those who leave the industry do so because they do not achieve recognition, feel underpaid, or decide that trading isn’t for them.
Ten Years Out
Ten-year veterans are senior traders who have made a reputation for themselves within the industry. They are sought after by employers and are usually rewarded with higher salaries and perks. They supervise junior or mid-level traders who then carry out the trades that take place on the floor of the exchange. Senior traders often work directly with clients, developing long-term relationships with them that may lead to other business endeavors down the line.
Here are three trends influencing how traders work. Traders will need to stay up-to-date on these developments to keep their skills relevant and maintain a competitive advantage in the workplace.
Increased Value of Quantitative Analysis
The need for financial professionals to have a solid grasp of quantitative analysis has been steadily increasing over the past few years, and many traders are finding themselves having to learn coding skills in order to fully understand and execute algorithmic trading strategies.
This trend is likely to intensify as more financial professionals try to understand the underlying technology behind financial markets by becoming more familiar with basic programming languages, such as C++ and Python.
Improved Understanding of Macroeconomic Trends
Understanding macroeconomic trends can have a big impact on the success of traders in the finance industry.
Some of the most important economic trends to watch are inflation and interest rates. Therefore, traders need to stay updated on monetary policies.
The Impact of Artificial Intelligence on Trading
Trading is the profession that most closely resembles how AI is used in modern business today. Automated trading software has existed for decades, but its current iteration is only a few years old and has already revolutionized the industry.
AI can be used to monitor market trends, screen for potentially lucrative trades, and even place orders based on preset parameters. This has led to increased efficiency in the market and better profits for traders—both amateur and professional alike.
How to Become a Trader
1. Planning Your Career
If you’re thinking about a career as a trader, it’s important to be well-rounded in your knowledge of financial markets. Traders often need to shift their focus between various markets and sectors. It’s best to develop an understanding of the factors that affect different types of securities.
Regardless of what type of trading you want to pursue, taking some classes or completing an internship at a brokerage firm can help you build your skills and secure an entry-level position with little difficulty. You should also keep in mind that many successful traders have developed their own investment philosophies over time. Being able to articulate why you think certain stocks will do well can help set you apart from other candidates.
2. Writing a Resume
The best resumes for traders highlight their ability to analyze markets and make quick, sound decisions. When describing your previous jobs, focus on how you used your skills to be efficient and effective. You can also include instances where you made large or risky trades that turned out well–this will show that you are confident in your abilities.
If possible, mention any specific certifications like the Chartered Financial Analyst (CFA) designation that demonstrate your knowledge of the financial industry. If you’ve contributed to other aspects of the company such as increasing profits or reducing risk, be sure to include this information as well.
3. Applying for Jobs
When searching for a job as a trader, it’s important to not only look at what you want out of your career, but also what the market is currently demanding. Consider industry trends and economic developments that might affect the business you’re hoping to join.
The key to finding a job as a trader is to do your research. If you know of people who are working in the field, ask them about their jobs. Attend events related to trading so that you can meet hiring managers and people currently working in the field. And look out for job listings on LinkedIn, Indeed, Glassdoor, and any other career site that applies.
4. Ace the Interview
For an interview for a trader position, be sure to study up on the market that the company trades in and prepare accordingly. It’s important to show that you can clearly articulate your trading philosophy and approach and how it fits into the company’s larger goals.
During an interview for a trader position, you’ll likely be asked about your experience with risk management and capital allocation. Remember that these questions aren’t just about how well you handle risk on a company level; they’re also asking what you do on a personal level on a day-to-day basis, so be honest and giver specific examples of different investment strategies you use.
Be prepared with questions of your own as well. Think about what interests you about this particular company. You might even want to go further than that and think about what concerns or fears you have about taking on such a high-risk job, especially if those worries are keeping you from applying in the first place. This shows your interviewer how honest and forthright you can be, which is a very valuable trait in a potential employee.