Stock traders buy and sell shares for investment firms, brokerage firms, and financial institutions. They must hold a securities license and may receive commission or base salaries. Traders also work for mutual funds and arrange IPOs for privately held companies.
Stock traders buy and sell shares or shares owned by publicly traded companies. Many trading jobs are found at investment firms and brokerage firms. Some brokers specialize in trading new stock offerings, while others deal exclusively with previously issued securities. Typically, traders receive commission based on sales, but individuals employed in certain types of stock market jobs also receive base salaries.
Financial institutions employ stock traders to buy and sell stocks and other types of securities on behalf of consumers and commercial clients. In most countries, a stockbroker or stock dealer must hold a securities license, and traders can apply for such a license only after passing a licensing exam. A financial firm’s existing customers are typically assigned to a particular trader, and that individual may provide investment advice and transact trades on their behalf. Generally, a trader can only buy and sell stocks listed on a specific market index, although some traders have licenses to transact on multiple markets.
In addition to brokers who work directly with the public, investment firms also employ brokers in behind-the-scenes trader jobs. These individuals have no direct contact with clients, but receive paper or paper trade orders, which are accepted through online investment sites that offer discounted brokerage services. Traders are paid a fee for every trade they process, although they have no role in requesting trades. In addition to employing equity traders to process client requests, investment firms also employ traders to process transactions involving the firm’s own assets.
Mutual funds are investment companies that create portfolios of securities. Investors can buy shares in these investment pools. While a mutual fund must have a stated investment strategy, traders employed by the company are responsible for deciding when to buy and sell stocks on the fund’s behalf. These stock trader jobs are typically reserved for experienced stock traders who are more capable of making investment decisions than newly hired traders. Some funds employ a team of traders and all investment decisions are based on collective decisions rather than the opinion of a single broker.
When the owners of a privately held company decide to list the company on a public exchange, the company must hire a stock trader to arrange the Initial Public Offering (IPO) of the company. Generally, companies hire an investment firm to facilitate the IPO and the investment firm assigns a team of brokers to oversee the process. These traders review the company’s financial information before determining the initial asking price for the stock. Once the terms of the IPO are agreed, these traders must sell shares to institutions and individual investors. Equity traders who arrange IPOs typically receive an advisory fee, but they also receive a commission for equity trades.
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