Difference Between a Trader & Stock Broker

Stock brokers and traders both buy and sell stocks and other securities.

The jobs or careers of stock trader and stock broker are both ways to make a living from the investment markets and trading securities. The job duties of brokers and traders are very different and require different sets of skills. Both careers require extensive knowledge of the stock market, but the personality types that are most successful can be quite different.

Function

A stock broker buys and sells stocks for a brokerage firm's customers. Most stock brokers will have a list of customers and the stock trading a broker does is for those customers. A trader who works for an investment firm will work under a portfolio manager and make trades at the direction of the portfolio manager.

Considerations

A stock broker is primarily a sales position. The broker has to find new clients and work with them to meet their financial goals. The broker must be expert in a wide range of investments and securities as well has having sales skills. A trader needs to be an expert in his type of trading and understand the detailed facts of the market he trades. A trader is expected to get the best prices available for the securities the portfolio manage directs to be purchased and sold.

Identification

Both stock brokers and traders must be registered with the Financial Industry Regulatory Authority--FINRA. The registration process involves passing in-depth examinations and a background check. Brokers and traders need to have a high level of knowledge about investment markets and a college degree. Traders usually start with an investment firm out of college and work their way up to a trading position, and possibly on to portfolio manager. Stock brokers often come from other sales fields before entering a financial sales career.

Features

A stock broker has extensive interaction with clients and prospective customers. A large portion of a new broker's time is spent cold calling, prospecting for additional clients. An established stock broker will work with a client base, generating commissions from the buying and selling of the customers' investments. A stock trader will have little or no contact with the public. A trader in a large investment firm will have a daily routine that is fast-paced and requires constant monitoring of security prices and completing buy and sell orders for the investment firm.

Significance

Both traders and stock brokers have fast-paced and demanding jobs. The stock broker position requires sales skills and the ability to effectively interact with customers as well as complete the functions of trading securities. A broker's salary will be primarily based on commissions earned from selling investment products. A trader will be focused on the securities he is responsible for trading and will work to achieve the best possible prices for his employer. The trader at a large firm will receive a salary with the opportunity for bonuses.

References

• Investopedia: Broker or Trader: Which Career is Right?