How to become a trader in an investment firm as I see people making a lot of money like Brian. Clearly, most of the people who've answered this question have never worked in the industry. WIth all due respect, I think I know what I am talking about. I have been a trader.
Here are the key roles at a brokerage/investment firm:
"Sell Side" (aka Brokerage)
Trader
Sales/Trader
Sales
Research
Corporate Finance
Analyst
"Buy Side" (aka Hedge Fund, Mutual Fund, Insurance, etc).
Trader
Analyst
CIO
A "trader" on the sell-side is one who gets an order to buy or sell a stock. If it is a large order, they send it off to "Block Trades" to try and match it to another buyer over-the-counter rather than depress the stock by showing to much volume on the Ask. If it is a normal trade, then they execute the trade as ordered. If it's a market order, then they execute market (hit bid or take the ask). If it is a VWAP order, they try and match the VWAP. If it is a limit price, they put the order at the limit. If it is a "best effort" order, they have some flexibility what they can do. You don't take a lot of risk for clients. I don't know where the previous answers came up with that. That's wrong. They don't manage anybody's money. They don't determine portfolio strategy. They rarely look for new clients (they just booze up their best paying clients). They only do trade execution and don't do marketing. They go home once the market is closed, but they generally get paid less.
If they are a "buy-side" trader, they give orders, essentially making sure that the brokers are executing well and selectively resetting their orders. They usually act as an earpiece, getting information from sales-traders.
"Sell-side sales traders". Sales traders act as a salesmen by notifying their clients of the house research calls and also taking trade orders. These guys generally do much more marketing (i.e. booze and schmooze) as they take out buy-side traders and CIOs.
This is how you become a trader. You join a brokerage firm by being a grunt. You start off by being a sales assistant - punching tickets, filling out back-office stuff, fetching coffee and doing pretty crap work. But it's cutting your teeth and doing your time. You take your Series 7 (bank rep), Series 55 (equity trading), Series 62 (IPOs). You then often get promoted up the sales, sales/trading or trading team. It is usually much, much easier to get a job as a trader once you're in house - because they won't hire you unless you know how to be a trader, have taken the Series test (where you need to be employed by a bank) and know the people on the desk.
Sales does pure sales, calling up clients and giving them ideas on your own and from the research team.
You don't need your CFA. That's mostly for research analysts, to a much lesser extent sales. Trading doesn't need it. I'm not putting CFA charters down - I have a CFA charter. It's just not required to be a trader. You just need a patient demeanor, have lots of dilligence and tons of determination to work your way up.
Also, burnout really doesn't happen for traders. These are some of the happiest, mellowest guys (and ladies) that I know. They don't have the stress of marketing like sales/trading, looking for new clients, trying to fortell the future like research, kiss butt like sales or worry about stock performance like analysts/CIOs. Some of the oldest guys I know are all traders. When I would go to the local chapter convention (mine was the San Francisco Traders Association) - the old battle axes would always be there. These guys were in their 50 and 60s. Frankly, four of the traders I've known have died of old age because they were around since they were doing chalkboards at the Pacific Exchange. My mentor - the one who taught me to be a trader - was twice the President of SFTA. He was the happiest, funniest dude I know. Happy retirement Jimmy Keegan!
Good luck to you. That is not a good reason to do it. Have you researched anything about the job, for example 60-80 hr weeks are the norm, not exception. The are a lot of out of office tasks, like dinners etc, which go into the night, which sounds good, but does your free time allow this, wife's/husbands etc to not agree with this lifestyle. Also the average time a person spends doing this is approx 7 yrs because of burnout.
So, after considering all of this, and you think u want to do it, u can prob get in one of two ways, personal connection, which I assume u dont have, or two, apply directly to the firms, but I would suggest starting somewhere small, as you cannot just become a trader, u have to work from within to get a promotion and it takes time.
Good luck, u will need it! brian who?
CFA is pretty much the minimum requirement to become a trader, and then you will have to be licensed (CSC, CPH etc). If you have no experience, expect to start at the bottom.
As a trader, you will assume a lot of risk on behalf of your clients and the brokerage, so its not a job you can just walk into. Try and get an 'information' interview with someone in the business to learn more about the position as well as other areas in the business that might be interesting.
There are lots of ways to make money in the investment business besides trading. Good luck! There is a difference between a Trader and a Stockbroker. A trader is usually one who is experienced at managing money, fundamental and technical analysis of stocks, options, foreign currencies or futures markets. A Trader usually closes all positions by the end of the day and makes money using systems and methodologies learned over many years. It is a fast paced and very competitive.
A stockbroker is basically a salesman for an investment or financial company. Often he is not technically an employee, but a private contractor. He is paid on commission for everything he sells. Usually these brokers are not very savvy investors or skilled at trading. They often are told what stocks to push based on the company's research team and relationships with other companies. Stockbrokers are hired from all walks of life. You simply have to pass the Series 7 test after you are sponsered by a company.
Trader's are interested in making money through the trades that they place.
Stockbrokers don't necessarily care if their trades make money for the customer. They make a commission on the trade no matter. The more trades, the better. Be persistent and study.
Have you seen the movie " The pursuit of Happyness"?
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