A securities trader, also known as a stock trader, is a person who buys and sells tradable assets, such as stocks or bonds. Successful securities traders are masters at watching macro- and micro-economic trends and predicting the future of their investments.
In this guide, we’ll go over:
- What Securities Traders Do
- Types of Securities Traders
- Securities Trader Salaries
- How to Become a Securities Trader
- Securities Trader Skills
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What Securities Traders Do
Securities traders may work independently, buying or selling on behalf of their personal portfolio or for clients. However, some securities traders will work as part of a larger firm, such as a private equity firm or investment bank.
The goal of a securities trader is to drive profits from strategic purchases and trades. These profits may be for their own portfolio, or a client or company. Oftentimes, securities traders make money on these trades through commission, though it is not uncommon for traders to have a base salary as part of their compensation package.
There are several different styles of securities trading. For example, a day trader makes many trades throughout the day, focusing on short-term profits. On the other hand, buy-and-hold-style traders look for long-term investments, keeping their investments for potentially years.
Types of Securities Traders
The act of buying and selling securities isn’t unique to one profession. Rather, many different careers in finance involve being a securities trader in one fashion or another. Some jobs that involve trading stocks or bonds include:
Stockbroker
Stockbrokers are a type of broker who facilitates the trading of stocks. They help find buyers for securities, and they help potential investors source new investment opportunities in the stock market.
Investment Banker
An investment banker may buy and sell stocks on behalf of their firm in an effort to raise capital. This capital then helps to fund other investment banking activities, such as facilitating mergers and acquisitions.
Investor
Being an investor is a broad term for anyone who invests money into something, but some investors specifically focus on buying and selling stocks for profit. Investors can also use their profits from trading securities to fund other investments, such as real estate or angel investing.
Institutional Trader
Institutional traders often work for a large fund or firm, such as a hedge fund or a private equity firm. This type of trader focuses on making strategic market transactions to boost the profits of the fund or firm they work for.
>>MORE: See the top investment banking companies.
Securities Trader Salaries
How much a securities trader makes depends on how they make these trades and how successful they are at trading. According to the U.S. Bureau of Labor Statistics, registered sales agents of securities, commodities, and financial services have an average annual salary of $93,260.
However, those who trade securities as part of their investment banking career may see much higher salaries. For those who trade securities as self-employed managers of their personal investment portfolio, income is entirely based on how well their investments pay off.
>>MORE: Check out the best paying careers in finance.
How to Become a Securities Trader
Education and Certifications
Professional securities traders typically need a bachelor’s degree in finance, or something similar like accounting or economics. Especially for securities traders working for large firms, having a master’s of business administration (MBA) may be necessary for progression up the corporate ladder.
With the exception of people who trade on open stock markets for personal profits, most securities traders need some sort of certification or registration. The Financial Industry Regulatory Authority (FINRA) oversees regulation for securities agents and administers certifications. Certifications from FINRA typically involve a test, as well as membership and registration fees.
Additionally, many securities traders who work with publicly traded stocks will encounter oversight from the U.S. Securities and Exchange Commission (SEC) and will be required to register with the SEC.
Check out related career paths:
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- Is investment banking a good career path?
- Is mergers and acquisitions a good career path?
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Securities Trader Skills
Being a successful securities trader for yourself or a large firm requires an array of skills, including:
- Knowledge of debt capital markets
- Understanding financial models
- Familiarity with investing concepts, such as common stocks
- Analytical skills
- Attention to detail
If you think a career in finance may be right for you, start building the skills you need with Forage’s finance virtual experience programs.
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