Trading Analyst Job Description

Being a trade analyst has its pros and cons.

Trade analysts focus on fundamental and technical analysis to assess the future price movement of securities. Fundamental analysis is assessing a company's intrinsic value through inspecting its quarterly earnings, company reports and management. Technical analysis evaluates the company's chart to determine future price movements.

Function

Trade analysts evaluate the future price movement of several securities at a time. The analysis ultimately provides other investors with more insight to decide how to trade a security. Trade analysts usually provide their research to brokerage firms, trading firms, hedge funds or personal investors.

Features

Individual investors hire trade analysts to write public reviews of their companies. These third parties typically pay sums from thousands to hundreds of thousands. However, these reports are sometimes controversial, because the reports can appear misleading. For example, some trade analysts have overindulged in details while omitting fundamentals, which can make the company look more appealing to potential investors. For example, an analyst may spend pages reporting how a company is creating new medication, but omits the company is near bankruptcy. That latter fact is far more important, because a bankruptcy filing will negatively impact company stock. Another element of controversy is that the trade analyst's employer often owns a large portion of the company under review; thus, the trade analyst can be pressured to provide a positive review.

Time Frame

Trade analyst reports are usually done within a day for technical analysis. However, fundamental analysis reports may take weeks or months to complete. Fundamental analysis reports take significantly longer because the analysts must review many documents, whereas technical analysis only requires different company charts. These charts are usually yearly, monthly, weekly, daily and one-minute.

Benefits

Trade analysts are able to work anywhere as long as they have a computer. In addition, they are able to benefit from their own research. They can also own shares in the company they are reviewing, as long as the information is disclosed to all readers. Moreover, many trade analysts are rewarded based on their work. Firms provide bonuses to analysts whose work is particularly helpful. Thus, if an analysis report is insightful and helps earn the firm money, then the firm may share a percentage of the gain with the analyst.

Warning

Analyst reports can influence billions of dollars. Thus, if a report in a trading or brokerage firm is incorrect or misleading, a trade analyst could lose his job. In addition, creating an analyst report without disclosing all company holdings could result in jail time or a serious fine.

Education and Salary

Trade analysts must have a college education, and they usually get them in business administration; however, many analysts have degrees in other subjects. Their median annual salary is $61,910.

References

• SEC: Beginners' Guide to Financial Statements
• Investopedia: Technical Analysis: Introduction
• Investopedia: Fundamental Analysis: Introduction
• State University: Financial Analyst Job Description