What exactly does the trader do ?

There have been different theories floating around as to what actually does the trader do on a daily basis ?

1) Trading stocks himself based on his feelings about a particular stock

2) Trading for clients and receive the commission based on the profit they make

3) Is the yearly bonus based on : a) Individual performance b) Overall performance of the desk

Any replies would be appreciated.

Thanks.

 

1) generally not. it's just taking the other side of the client's trade...he arrives a the trade on his own research or possibly discussions with sales. 2) yes and no. it depends on the way he manages the risk associated with customer biz

 

market making does not involve advising clients on what stocks to buy and sell..occassionally the buy-side will ask for some colour on a stock to find out hows its trading. The ides come from the buy-side analyst, PM, or the Sales guy who pitched them the idea. BB traders generally trade client flow, make markets, provide liquidity. Individual traders P&L does not really involve commissions. If buyside wants to sell a position, the BB trader will buy the shares from them. They then try to unload them to another client, or sell them in the open market. If the shares happen to have gone up a few bps, then they make a proft. Thats where the daily P&L comes in. On BB equity desks, traders do not take to much risk.

Its a different story on the prop desk though. Those guys take a ton of risk, don't trade client flow etc.

 

Flow? Prop? You need to be a bit more specific :) CFA won't really help you get in to trading in the typical sense of the word. If you include hedge-fund style investing as trading then it may help. Programming is pretty damn useful as a trader and will probably become almost a necessity. Don't quote me but I believe C, Java and Python are all useful languages.

Asatar:
Flow? Prop? You need to be a bit more specific :) CFA won't really help you get in to trading in the typical sense of the word. If you include hedge-fund style investing as trading then it may help. Programming is pretty damn useful as a trader and will probably become almost a necessity. Don't quote me but I believe C, Java and Python are all useful languages.

Hi thank you for your reply. I mean, does that really matter if I want to be a flow trader or prop trader? I thought the only difference is that one is trading using clients money and the other is trading using the firm's money.Do they have different duties to perform?

 

CFA is for being an analyst. There are generally two different categories of trading that you have to decide which one you want to be: discretionary trading (manual) or sytematic trading (which is trading based on algos and computer programs)

If you are going to be a systematic trader you need computer/math skills, and more prop firms are moving into systematic.

 
tradewell12:
CFA is for being an analyst. There are generally two different categories of trading that you have to decide which one you want to be: discretionary trading (manual) or sytematic trading (which is trading based on algos and computer programs)

If you are going to be a systematic trader you need computer/math skills, and more prop firms are moving into systematic.

so C++ and matlab enough as computer skills?
 

Most quantitative programmers will need to be knowledgeable in languages like C/C++, Excel, Python, Matlab, and Perl. Programmers regularly use these languages in order to create new systematic trading programs that scour huge amounts of financial data in order to conduct profitable trades for the benefit of the financial firm using the software. Many of the programs are used in a high-frequency trading model, and programmer must give the software the ability to make multiple trades in the course of seconds.

http://www.wisegeek.com/how-do-i-become-a-quantitative-programmer.htm

hope this helps

 
tradewell12:
Most quantitative programmers will need to be knowledgeable in languages like C/C++, Excel, Python, Matlab, and Perl. Programmers regularly use these languages in order to create new systematic trading programs that scour huge amounts of financial data in order to conduct profitable trades for the benefit of the financial firm using the software. Many of the programs are used in a high-frequency trading model, and programmer must give the software the ability to make multiple trades in the course of seconds.

http://www.wisegeek.com/how-do-i-become-a-quantitative-programmer.htm

hope this helps

Great! Thank you very much!

 

get coffee, balance book, set hedges, field interbank broker calls and identify good relative value. maybe if you are good a section of the book is pieced off for you. then you trade your own small book. then take over larger books. and grow your position until you can generate good bonuses off of your p/l.

try to identify whether your sr trader is honest and whether there is any risk at all he/she will blame you for losses he/she created, to save his/her own career if risk/head of trading starts snooping around the book.

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