What Does an Equity Trader Do? (With Job Duties and FAQs)
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Equity traders have an important role in the capital market because they help their clients make sound investments. The work they do contributes to company growth, the financial success of their clients and a healthy market. By learning more about being an equity trader, you can make an informed decision about whether this career would help you reach your professional goals. In this article, we explain what an equity trader does, explore their job duties and answer frequently asked questions about working as an equity trader.
What does an equity trader do?
The answer to the question 'what does an equity trader do' is that they buy and sell company shares on the equity market for their clients. These shares, or equity securities, are the stocks of publicly traded companies. The companies issue securities so investors can buy them, which makes them partial owners of the company. Investors then earn a portion of the company's profit. Some investments can lead to losses if the company performs poorly in the market, while others lead to financial gain. Investors often rely on equity traders to evaluate the market and choose investments on their behalf.
Also known as a stock trader or share trader, equity traders perform research on the financial status of companies before deciding which shares to buy and which to sell. You use data, statistics and past market performance to assess the current and potential value of shares, which allows you to identify opportunities that could be financially beneficial to your clients. As an, equity trader, you have an important role in ensuring market liquidity, which occurs when there are enough people buying and selling equities in the market that they can do so easily.
Equity trader job duties
The responsibilities of an equity trader vary based on their experience, the size of their client base and the value of the investments they manage. Regardless of these factors, there are some general tasks you're likely to perform at work. They include:
Buy and sell securities
The primary duty of an equity trader is to buy and sell equity securities for their clients. You choose stocks based on your client's requests and the amount of money they're willing to invest. For example, a client may decide to invest $1,000 per month and they may prefer high-risk stocks. This may involve a greater potential for loss than low-risk stocks but can also provide a greater return on investment (ROI). You use your clients' resources and preferences as a framework when deciding which securities you buy and sell on their behalf.
Equity traders develop customised strategies for investing each of their client's funds. You track market trends and conduct research to determine potential investment opportunities that may provide a high ROI. You also create methods for evaluating currently owned shares and identifying those you can sell to prevent loss. After selling shares, you assess the market and reinvest your clients' funds in securities you think may yield a high profit.
When you sell your clients' shares, you create trade reports to announce the sale of stock to the market. This practice encourages transparency in the market and helps prevent fraud by ensuring the public knows about all financial transactions involving publicly traded companies. You create trade reports immediately after the sale of stock. You may also draft reports for your clients to inform them about investment activities for the month, quarter or year.
Monitor market activity
Monitoring capital market activity is critical for making good investment decisions for clients. You examine market activity using different methods at regular intervals. You follow commodity trends or fluctuations in stock prices each day. On a monthly or quarterly basis, you monitor market trends or the general direction in which the market is heading. You also review corporate financial statements to evaluate their financial health.
Equity traders use the knowledge they have of the capital market and their research on its performance to advise investors about how much to invest and where. You inform your clients about companies you expect to experience growth and your predictions about market behaviour. You may also discuss a plan for choosing stocks based on risk and help clients determine the balance of low-risk and high-risk securities they'd like to pursue.
Build business relationships
Equity traders often work with their clients for many years, so it's important to establish trust with their clients to build relationships. Handling another person's finances is a major responsibility, and you have an obligation to manage your clients' investment portfolios with discretion. When your clients feel confident in the knowledge, skills and methods you use to help them with their investments, your business relationship may continue to benefit both parties.
Abide by relevant laws
The Monetary Authority of Singapore (MAS) maintains legal regulations and licensing guidelines for professionals who work within the capital market. You abide by legislation such as the Securities and Futures Act (SFA), Trust Companies Act (TCA) and Financial Advisers Act (FAA) to ensure you conduct your business legally. You also follow specific requirements for security trading, reporting and professional licensure.
FAQs about working as an equity trader
Here are some frequently asked questions and answers about working as an equity trader:
How much do equity traders earn?
The actual salary you might earn as an equity trader depends on your education, how much experience you have in the field, how many clients you have and how much your clients typically invest. The average base salary for all traders in Singapore is $8,065 per month. Equity traders may also earn a commission on their clients' investments and an annual bonus, which often increases with seniority.
What are the educational requirements to become an equity trader?
Equity traders earn at least a bachelor's degree before pursuing a job in the field. Common educational paths include finance, business and economics. Some equity traders choose to earn a postgraduate diploma or master's degree in the same discipline or a related one to expand on their knowledge and skills. This may increase their chances of getting a higher-paying job and help them better serve their clients.
How do I increase my career opportunities as an equity trader?
If you're just starting your career as an equity trader or you're still at university, you can take part in trading internships. They can provide you with experience, knowledge and skills that may help you get the attention of hiring managers when you enter the workforce. You might also consider joining professional finance organisations, which often hold conferences, webinars and lectures about trends and emerging technologies in the field. When you're looking for a job, consider consulting your network on professional social media pages to see if any of your contacts know about potential job openings.
What are some career options that are related to equity trader?
If you're interested in a career as an equity trader but want to explore your options, there are many jobs for you to consider in finance. Many have similar educational requirements, so you might consider these roles if you're new to the finance industry or want to explore other finance-related careers. Here are some related career options:
What are the risks associated with being an equity trader?
Equity trading can be lucrative for the trader and their clients, but there are some risks involved. You use risk management techniques to prevent and minimise losses. Here are some of the primary risks associated with being an equity trader:
Systematic: Systematic risks are those that are part of the market and faced by everyone who deals in stocks.
Unsystematic: Unsystematic risks are unique to a single company or stock.
Regulatory: Regulatory risks involve the potential for a government regulation to impact a company's profit.
Political: Political risks are political events that can affect companies or investors.
Interest rate: Interest rate risks are those a company and investors may experience if interest rates rise.
Please note that none of the companies or certifications mentioned in this article are affiliated with Indeed.
Salary figures reflect data listed on Indeed Salaries at time of writing. Salaries may vary depending on the hiring organisation and a candidate's experience, academic background and location.
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