Brokers and Traders

October 18, 2018

investment

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If you are knowledgeable in the field of finance perhaps you already know the differences between a broker and a trader, but for many, the two terms sort of all roll into one job description. Yes, it is true that both brokers and traders sell and buy securities, but one is also a sales agent while the other works for a large firm and takes orders from a portfolio manager from that firm.

Lets start with brokers. They have direct contact with their own clients, and they then buy, sell or trade securities based on what their clients specifically want. They also have to maintain and manage their client roster as they are working on behalf of their clients all day every day.

Brokers have to watch the markets each day like a hawk, since they have to keep their clients informed of which stocks are doing what throughout the day. If they have a specific client who only wants to buy a stock if it dips under an agreed upon price or only wants to sell a stock it goes over a certain price they need to know what the market is doing throughout the business day in order to know when to buy and when to sell. They also have to do their homework and research the market so they can make recommendations based on their expertise as well as the market trends to then relay this information to their clients.

Traders on the other hand work for a company and they sell, buy or trade those same securities on behalf of the firm and the assets managed by that firm. They will buy and sell or trade depending on what their portfolio manager tells them to do rather than go on a client by client basis.

They too have to know what’s going on with the market throughout the business trading day and they can also use their expertise to recommend buying and/or selling at certain times to their managers. The big difference is if you are a trader you aren’t dealing with clients of your own, though you are still influential in what happens to their money.

The financial markets are forever changing; what is good one day isn’t necessarily good the next, so working in the field can be stressful. A successful broker or trader can work under pressure, is a great communicator and is also a great negotiator. Could a job in the markets be the right fit for you?