Stock market dealers and traders buy and sell shares, bonds and other assets on behalf of investors. They use their knowledge and judgement to invest in a way that will make the highest profits with the least financial risk.
Traders fall into three main categories:
Market traders buy and sell products on behalf of clients.
Sales traders deal directly with clients. They take instructions, place orders and advise clients of market developments and new financial ideas.
Proprietary traders invest on behalf of their employing bank. This role is less prevalent.
They may trade in different products, including:
A trader's working day is likely to include:
Traders must be constantly alert to sudden events that may result in large sums of money being made or lost in minutes. They have to be prepared to make quick, well-informed decisions in this pressurised environment.
To succeed, traders must build strong relationships with others in the market, including brokers, analysts and investors.
A trader's working day starts early, allowing time to catch up with overnight developments and prepare for the 8.00am opening of the London Stock Exchange. Working hours may be from 7.00am to 5.00pm. Longer hours may sometimes be required.
Traders generally work indoors, in a dealing room. They sit by a monitor, which they use to check the markets. A great deal of trading is done by phone.
The constant need to stay ahead of the market makes this a demanding job in a fast-paced environment. The atmosphere is highly pressurised and competitive.
The nature of the sector means that part-time opportunities are rare. Job sharing is becoming more common.
Traders may start on salaries between £30,000 and £45,000 a year. More experienced traders may earn between £45,000 and £75,000 a year.
The top-earning traders may have salaries of well over £200,000 a year.
The above figures are for traders working in London. Traders working outside London tend to earn less.
Many traders receive large bonuses that can be up to 100 per cent of their salaries. Other benefits may include non-contributory pensions and mortgage subsidies.
Stock market dealers and traders are employed by investment banks, fund managers, stockbrokers, commodity broking firms and the stock exchanges.
The majority of work is based in central London. There are smaller dealing desks in other financial centres, such as Edinburgh, Glasgow, Birmingham, Leeds and Manchester.
Periods of recession lead to fewer positions and increased competition for jobs.
Gaining work experience, often unpaid, with an investment bank can be an advantage. Submitting speculative applications, backed up with good research and persistence, can pay off. Many vacancies are filled as a result of effective networking and developing personal contacts.
Some large employers attend graduate career fairs. Employment opportunities are advertised in specialist sector publications, in the national press such as The Times (on Thursdays), and through dedicated recruitment agencies for financial careers and banking positions. Specialist websites such as www.efinancialcareers.com may also advertise vacancies.
Most traders have a degree. Many employers require at least a 2:1 classification. All disciplines are acceptable, although a degree that involves numeracy skills is helpful. Subjects such as economics, business studies, accountancy, maths, science and engineering may be viewed as being particularly relevant.
In addition to academic qualifications, employers look for energy and enthusiasm for the financial markets, as well as interpersonal skills.
Entry to a degree is usually with a minimum of at least two A levels and five GCSE's (A*-C), including English and maths, or equivalent qualifications. Individuals without the relevant qualifications may be able to prepare for entry to a degree by studying an Access course.
The major investment banks recruit graduate trainees and offer internships.
It may be possible to start off in an administrative role and progress to becoming a dealer or trader role by gaining experience and developing contacts.
The following qualifications may be useful:
Traders are trained by their employer. This usually consists of shadowing an experienced trader, and attending seminars and conferences.
Before carrying out any business, traders must gain a qualification that is listed on the 'recommended' or 'appropriate' database on the Financial Services Skills Council (FSSC) website. When a trader passes the qualification, their employer can apply for approval from the Financial Services Authority (FSA).
The Securities & Investment Institute (SII) offers qualifications for traders advising or dealing in securities or derivatives:
- SII Certificate in investments: securities
- SII Certificate in investments: investment management
- SII Certificate in investments: derivatives
- SII Certificate in investments: financial derivatives
- SII Certificate in investments: commodity derivatives
- SII Certificate in investments: investment management.
Traders working for a retail firm may also take the SII Certificate in investments: investment and risk.
The Chartered Financial Analyst (CFA) Society of the UK offers an Investment Management Certificate (IMC). This consists of two units - UK regulation and markets, and investment practice.
Most employers pay for examinations. Traders are usually expected to devote their own time to study.
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You may use life saving skills as part of your day-to-day work.
A dealer or trader must:
The Chartered Financial Analyst Program is a self-study, graduate-level programme for investment professionals. It takes three years and involves three levels of exams. Successful candidates can earn chartered status.
Traders wanting to progress to senior roles may also take the SII Diploma, which usually takes up to two years to complete.
Traders are expected to develop their skills by undertaking continuing professional development (CPD). The SII recommends that its members complete at least 35 hours of CPD each year. CPD can include such activities as attending courses and working for further qualifications.
After gaining qualifications and experience, traders who perform well may be promoted to analyst level. They may also take charge of small teams or take on responsibility for a new trading desk.
It is possible for traders to move up to associate, senior associate and director.
Many investment banks have international offices, so there are opportunities to work abroad.
CFA Society of the UK,
135 Cannon Street, London EC4N 5BP
Tel: 020 7280 9620
Financial Services Skills Council,
51 Gresham Street, London EC2V 7HQ
Tel: 0845 257 3772
IFS School of Finance, IFS House,
4-9 Burgate Lane, Canterbury CT1 2XJ
Tel: 01227 818609
Investment Management Association,
65 Kingsway, London, WC2B 6TD
Tel: 020 7831 0898
London Stock Exchange,
10 Paternoster Square, London EC4M 7LS
Tel: 020 7797 1000
Additional resources for job seekers and those already in a job.