What Do Traders Do?
Traders are at the top of the food chain – entire teams in the back and middle office support all their trades and fix annoying IT issues for them.
They analyze equities, derivatives, fixed income, forex, commodities, and anything else they might be trading and decide on what to trade, what strategies to pursue, and how to invest the firm’s money.
If the trading floor were a jungle, traders would be gorillas who pound their chest constantly while stealing bananas from everyone else.
Brokers – Support Staff?
After a trader decides what to buy or sell, he would call the broker and say, “I want to buy/sell XX of XX – can you make it happen?”
Technically, brokers “support” the traders but they’re completely different from the back and middle office crew.
Unlike the back and middle office, brokers generate revenue – they connect buyers and sellers and make a commission on each successful transaction.
The more shares that a trader trades through the broker, the more money the broker makes – and the more traders the broker services, the more money he makes.
Personalities – Traders
Traders spend most of the day in front of their 8 or so computer screens – they might discuss ideas and market news with other traders, but overall there’s less teamwork than in management consulting or investment banking.
So the trading profession attracts more introverted individuals who are good at math and great at working independently.
Brokers: Got Extrovert?
For brokers, it’s all about relationships and networking: you’re judged based on your ability to bring in traders and keep them on board.
If a client really liked Turkish food, a broker would know all the best Turkish restaurants within a 5 km radius.
The traders are like lone wolves who go in and make tons of money by making quick decisions…
But supporting every successful trader is his/her broker – the one who actually connects buyers and sellers and makes trades go through.
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