Ways to define a trader

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jg1996business

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I work for a mutual fund company and when I think of a trader, I think of the guys that are taking the orders from the fund managers and then attempting to get the best execution for them.

That is my definition of a trader but it seems that there are many different descriptions of the work. A bond trader may be a guy that is selling bonds institutionally, or it may be some guy working on arbitrage opportunities.

I would be interested in knowing what comes to mind when you all think of the job title, "trader".



Edited 1 time(s). Last edit at Thursday, September 7, 2006 at 11:46AM by jg1996business.
 
depends on whether they trade prop, flow or institutional...
 
Propietary traders are traders that get a certain amount of capital from the bank and trade that capital in order to make money for the bank.

My understanding of flow traders is that they are the people that buy/sell securities for the bank's clients. For example, a client calls GS and says, "buy 100,000 shares of MSFT" - the flow traders will be the ones responsible for buying the shares for the client.

Traders on the buyside will buy and sell securities for the fund managers (as you noted).
 
prop trader actually takes positions with the company's money and tries to make a profit. Also will usually help out the coverage traders by taking the other side of clients' orders to help facilitate the trade. Overall, they are expected to lose a bit on the facilitating trades, but if they can lose very little, or even make a profit at it, they are doing well. The non-facilitating trades are striclty for profit.

Coverage trader takes client orders and tries to get best execution (I am guessing this is the "flow trader" mentioned before though I've not heard them referred to that way before.) Best case scenario is that the trader can match up the client with another client and get both commissions, but they can always just work it on the boards failing that.

Both prop and coverage traders are institutional, so I don't know what "institutional trader" refers to. Maybe buyside?
 
"Also will usually help out the coverage traders by taking the other side of clients' orders to help facilitate the trade."

I've always heard of this referred to as a liability trader.
 
It's my understanding that prop trader=liability trader. I've heard them referred to that way as well. They might be separate jobs in bigger markets with one trader working with the coverage guys and one doing strictly house trades, but most shops that I know of (admittedly smallish shops in a smallish market) have just one guy to do both.
 
institutional is institutional vs. retail.

For example, Fidelity is a largely retail shop, and it created Pyramis to try to get more institutional clients.

On the sell-side, instutional is flow from - you guessed it - institutions rather than retail. I'm not sure wher advisor flow falls into the mix - I think as retail as well...
 
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