Job Functions and Skills
People, who work on trading floors, work in an environment unlike any other in American business. Generally, trading floors are large open rooms with many people packed closely together with a myriad of computer screens, tickers and televisions pumping out information to the salespeople and traders. In a sense, the floor itself is a processing center, where information and capital are fused into trades. Each floor is one small part of an enormous global market.
Your first visit to a trading floor may be overwhelming. Traders and salespeople may be yelling back and forth, sometimes nearly incomprehensible orders. Here you will see teamwork, stress management, communication, client management and strategy in action. Salespeople and traders must be able to understand current events, economic indicators and financial data, formulate opinions and then make split second decisions upon which millions of dollars may rest.
Like any market, there are buyers and sellers. Sellers, a.k.a. sell-side firms, are typically the Wall Street investment firms like Goldman Sachs, Merrill Lynch and JP Morgan Chase. These firms originate securities, buy and sell secondary securities for themselves and for clients and generally provide liquidity to the market. On the buy-side, there are a wide range of firms, hedge funds, retirement vehicles, insurance companies and mutual funds to name a few. Typically, these firms manage assets for clients and make investing decisions based on market movements, the economy or individual stock stories. Much of the advice and information on this site is directed towards sell-side firms.
What are the attributes of someone who is successful in sales & trading?
- Analytical and quantitative
- Attentive to detail
- Quick to process information and make decisions
- Interested in current events, financial news and economic fluctuations
- Interested, no, passionate about finance and investing
- Understanding of the economic movements and trends
- Ability to communicate quickly, carefully
- Ability to sell an idea
- Fun to be around
So what do you want to do once you reach a trading floor?
Salespeople act as the liaison between the firm and the investor. Salespeople are tasked with building strong relationships with their clients in order to develop and grow business. Salespeople must remain up to date on current events, the economy and market trends, because clients are constantly interested in hearing new perspectives as to what is happening in the market. The daily routine for a salesperson changes from desk to desk, depending on the products and the market with which the salesperson is involved. Some sales people may be responsible for providing clients with access to research and research analysts. Some salespeople may be more transactional, helping clients more in and out of trades all day long.
Most salespeople will spend most of their day on the phone. On many desks, the day begins with a morning call where research analysts provide insight that could be valuable for the day ahead. Sometimes, the salesperson will have client meetings or have conferences to attend with clients. Some sales positions will require traveling while other positions may be less travel-related. In New York, the mornings are very busy. Most clients are anxious to hear what is going on in the markets. Sometimes, the announcement of an economic indicator can move markets drastically in one direct or another and clients will be pounding the phones to get in or out of an investment decision. The salesperson must work with the client and the trader in order to execute any new decisions that the client may make.
Like the role of a salesperson, the role of a trader can vary greatly depending on the market in which the trader trades. Some traders are market making, i.e. providing liquidity to the market. Some traders are taking proprietary positions, essentially risking their firm's capital in order to generate revenue. Some traders are using financial models and other software applications in order to price complex financial instruments such as derivatives. Again, a sound and intuitive feel for the markets, the economy, current events and how they are all intertwined are crucial traits of a successful trader.
Traders don't typically leave their desks. They are working the phones and the computer screens all day long. Slight fluctuations in the market can have a serious impact on a trader's P/L and therefore most traders keep their eyes glued to the screens all day long. On a trading floor, traders typically dictate the prices that salespeople may release to clients. Once a trade has been made, a trader manages risk in order to ensure the trade is profitable. When the markets are quiet, traders may be calling salespeople and other traders to get a feel for what is going on. When they are busy, traders must react rapidly and explosively in order benefit from market movements.