Sheet Sets

The trade of trader maintains an aura and a part of mystery which holds for much of the fantasy . Traders are sometimes perceived as golden boys, mathematical geniuses or shameless characters, however it is impossible to draw generalities or draw a typical portrait of the trader.

Indeed, there are dozens of different types of traders with different backgrounds and personalities, often the opposite. If you ask active traders which sector has been recommended to them by their guidance counselor or ONISEP, there is very little chance that they will answer you that it is trading.

Whatever his specialty, a funded forex trading account beginners is above all a trader , capable of carrying out his transactions at prices allowing him to generate a margin. The first traders are historically the agricultural owners marketing their current or future harvests. Depending on the complexity of the products, the profiles vary enormously, that's why there is no typical profile of a trader. The seller side (sales) and the speed of reflection and execution will take precedence over the simplest products, on the other hand for complex derivatives, it is the capacities of analysis and mathematical reflection which will be essential. In proprietary trading, anticipation and speculation associated with risk management will make the difference.

Equity trader

Traders on equities are specialized on shares of companies listed on the stock exchange . There are equity traders in investment funds, brokers and banks. These are advised by analysts, both for fundamental analysis (that of a company's health) and for technical analysis (that of stock market prices). Working together with the sellers, they must manage the position of their clients, execute their orders or even follow the loans in the event of short sales of securities.

Some equity traders have the role of market maker, also called market-maker, so they offer a buy and sell price on the securities in order to generate a margin (a spread). This requires a very rapid ability to adapt since volatility in equities can vary enormously in a very short time.

Since equity trading has been highly automated and computerized since the 1990s, computer and programming knowledge is a significant asset. Of course, many individuals also devote a greater or lesser amount of time to the practice of stock trading, some of them doing a quasi-professional occupation.

If you want to start trading stocks in a simple form like the protected CFD (upwards or downwards), we recommend one of the best French brokers eToro which offers a free demo.

Rate and forex trading

If there are equity traders everywhere, those on rates and forex are more concentrated in banks and some very large hedge funds . The interest rate and foreign exchange markets are highly correlated because the decision of a central bank to raise its key interest rates will impact both universes.

As with equities, there is a whole range of profiles between short-term and spot traders who play movements of a few hundredths of a hundredths of a euro (pips) on the price of a currency and long-term traders who take more credit risk on their counterparties.

Precisely, on credit, bond traders have the ability to analyze a company's balance sheets and profit and loss accounts to gauge their creditworthiness. They can then arbitrate the debt of a company or subscribe to derivatives such as credit default swaps to speculate on the bankruptcy or the good health of this company.

Trade in structured products

Unlike short-term traders known for their responsiveness and sales-traders with rather commercial arguments, traders on structured products play on their mathematical abilities and their anticipation of risks. Indeed, they market complex derivatives which are complicated to replicate with stocks and standard derivatives. They must therefore both have an engineer profile capable of building original concepts meeting the needs of their customers as well as solid mathematical knowledge to properly assess the risks they take if the market situation turns sour.

What prospects for traders?

Trading is a profession that probably reached its peak in the 80s, the era of the golden boys. In banks and investment funds, mergers and acquisitions financed with rotten loans have enriched a whole generation of investment bankers and traders in a climate mixing cocaine, insider trading and busty blondes. Since then, the profession has calmed down, the bonuses are no longer as staggering and wages, although very comfortable, have dropped considerably.

Wages

Trading salaries have the specificity of being drawn mainly by a very comfortable fixed part and a disproportionate variable part which is found nowhere else. A novice trader will earn between 60,000 and 80,000 euros per year in fixed income and a bonus of between six months and one year of salary. The progression is then meteoric since, if he performs well, his remuneration will double on average every three years. Before the subprime financial crisis, the best traders could receive a significant part of the profits which they generated, touching checks amounting to millions of dollars.

From now on, a larger part of the bonus is spread over time so as not to encourage excessive risk taking in the short term. Nevertheless, despite a relative decline in these benefits, wages and the progression of trading earnings remain well above what other industries can offer, with the possible exception of a few giants of Silicon Valley for very specific IT positions.

These figures must be weighed against stressful living conditions and the lack of job security. It is difficult to reconcile a career as a bank trader with a family life, even if some succeed, because trading involves constant attention and significant emotional leaps.

For example, some funds do not give the right to make mistakes by dismissing their employees from the 10% loss. Overall, a trading career is therefore very competitive and reserved for strong characters.

Freelance traders operating out of their own equity receive most of the income from their activities, but they also assume all of the risks and costs. They can set up a company or exercise in a particular capacity depending on the products they treat, the possible services they can render to other investors and the most attractive taxation.

Contrary to what certain aggressive advertisements advertise, one does not become a trader by spending a few minutes a day placing orders, this profession requires rigor and significant research work in order to become and remain profitable.

reconversion

The average lifespan of a trader in a highly exposed position in investment banking is less than ten years. Retraining is therefore an integral part of a trader's career and the progression is much less linear than in other industries, fluctuating according to economic cycles.

The most frequent route is that of the transition to the buy side, that is to say portfolio management in an investment fund or a private bank. Traders having a very good knowledge of the markets, they adapt quickly to this change thanks to their recognized technical qualities.

Traders have the opportunity to accumulate wealth and significant capital during their first years of career, which opens up unique possibilities in terms of business creation for example.

So we find traders who have bought vineyards in Bordeaux, set up a restaurant on a Thai beach or taken over from small local businesses to bring them their expertise in terms of finance and management.

Even within banks, ascents in the hierarchy are minority and very competitive, there are very few golden cupboards for former traders and this can be understood in view of the salary they demand. Consequently, there are more and more conversions to the fields of analysis and risk management.

Experienced traders are most able to identify the risks generated by positions in complex structured products. In this case, they will have to make a concession on their remuneration, but they will find a balance between their private and professional lives.