Pros and Cons of a Career as an Equity Trader
Equity traders are financial professionals who sell and trade equity securities, commonly called stocks, on behalf of firms. They are typically employed in large metropolitan areas, such as New York, Los Angeles and Chicago. Find out more about this career by reviewing the pros and cons outlined below.
|Pros of an Equity Trading Career|
|Above-average pay (securities and commodities agents earned a median annual salary of about $72,000 in 2014)*|
|Rapidly synthesizing an enormous amount of diverse information can be intellectually stimulating**|
|Independence when it comes to decision-making*|
|Opportunities to travel internationally*|
|Cons of an Equity Trading Career|
|Working more than 40 hours each week is common, including evenings, weekends and on-call shifts*|
|Living choices can be somewhat limited because the vast majority of jobs are located in a handful of major cities*|
|Often required to make tough decisions on very short notice*|
|Constantly expected to maintain a high volume and frequency of sales*|
Source: U.S. Bureau of Labor Statistics* University of Michigan-Ross School of Business**
Job Description and Duties
As an equity trader, you'll be required to make a range of transactions for clients on behalf of a financial firm. Despite the title, equity traders may do more than trade stocks. They may also be required to buy and sell other securitized instruments, such as commodity futures and currencies. They could be required to create trading strategies, process option purchases, communicate market conditions to other traders and manage customer relations.
Although the bulk of equity trading jobs are concentrated in a handful of metro areas, this reality is changing due to the advancement of internet technology. Now, with internet access and a computer, traders may conduct their work online and may not be required to be physically present on exchange floors. Equity traders may be differentiated by their professional emphasis, or the kinds of securities that they choose to deal in.
Job Prospects and Salary Info
According to the U.S. Bureau of Labor Statistics (BLS), the employment outlook for securities, commodities and financial services sales agents is projected to be fast as average with all other occupations, with a growth of about 11% from 2012-2022. The BLS also noted that prospects for commodities traders in particular were expected to be good because of an increase in trading in recent years. The median annual wages for all securities and commodities agents was about $72,000 in 2014, according to the BLS.
Career Skills and Requirements
Equity traders are typically required to hold at least a bachelor's degree. Although no specific major or field is required, areas such as finance, business, economics and accounting may provide the best training. Brokers and investment bankers are required to register with the Financial Industry Regulatory Authority (FINRA). As a trader, you may also be required to register with the FINRA as a representative for your employer. The specific license that you are required to obtain depend on which securities you work with and the firm you work for. Traders who are highly motivated, intellectually curious, assertive, clever and knowledgeable of industry trends are more likely to thrive in the stressful, fast-paced world of finance.
Job Postings from Real Employers
For equity trader positions, experience requirements will vary with each employer. Most will require candidates with strong analytical, technological and mathematical abilities. The following list summarizes several real job postings that were advertised in March 2012:
- A New York trading firm advertised for an equities trader with an interest in capital markets. The successful applicant would be able work from home.
- A financial capital company in New York advertised for an experienced equities trader who would work from its customized trading platform. The job would require analyzing financial information, conducting financial risk assessments and maintaining data files.
- An investment firm in New York advertised for an equities trader interested in proprietary trading who would conduct research. The employer would sponsor the successful applicant in the licensing process.
How to Stand Out
Equity traders who have attained an MBA may be better qualified for advancement in the field, according to the BLS. An MBA program provides you with training in the fundamental aspects of the business process, such as operations management, accounting, finance and business strategy. Most degree programs also allow you to concentrate in a topic that's intimately connected to your career, such as finance or international business.
While licensing is mandatory for various trader positions, certification is typically voluntary. As an equity trader, you could earn certification through the CFA Institute as a Certified Financial Analyst. This certification can help you demonstrate knowledge of subjects like corporate finance, securities analysis, portfolio management and asset valuation. A bachelor's degree and four years of experience is necessary to qualify for this certification.
Other Careers to Consider
If you are interested in working with people and finances but want a career with better job growth, you may consider becoming a financial analyst. According to the BLS, these professionals were expected to see an above-average job growth rate of 23% from 2010-2020, and earned a median annual salary of about $76,000 in 2011. They are required to evaluate the market performance of stocks, bonds, derivatives and other investment instruments.
Real Estate Broker
If you are interested in a job that requires less education but still deals primarily in assisting clients to buy and sell, you may consider becoming a real estate broker. These professionals help clients buy and sell property rather than stocks. According to the BLS, real estate brokers were expected to see an 11% growth in employment rates from 2010-2020, which is about as fast as average. Also, while licensure and some courses are required, only a high school diploma is necessary to become a real estate broker. These professionals made a median annual salary of about $59,000 in 2011, according to the BLS.