Proprietary Trader Job Description

A proprietary trader uses corporate funds to engage in financial market activities.

A proprietary trader is a financial market specialist who uses a corporation's own funds to engage in securities transactions such as "buy," "hold" or "sell,'' based on economic analysis and risk management techniques. A proprietary trader records all gains made and losses incurred in the company's investment profit and loss (P&L) statement.

Responsibilities

A proprietary trader applies financial acumen and business skills to identify, assess and monitor price levels for securities in which she is interested. A trader may use complex computer tools and algorithms to engage in market transactions and often may supervise a trader's assistant in securities deals. For instance, a bank transfers $100 million at the beginning of the year to a trader's proprietary account. The trader manages the funds, buys stocks and bonds, and grows the portfolio's value to $135 million at the end of the year. The $35 million profit is included in the bank's P&L, and the trader receives a portion of that income as bonus.

Education and Training

A proprietary trader typically does not need formal education in a specific field, but financial institutions and most companies requires traders to have, at a minimum, four-year college degrees in finance. A proprietary trader who has significant managerial duties may hold a master's of business administration (MBA) in financial management or a doctorate in economics or statistics.

Salary

A trader's total compensation's package includes wages as well as performance-based cash and stock bonuses. Bonuses represent substantial portions of traders' annual salaries. The Bureau of Labor Statistics reports that median wages of proprietary traders were $68,680 in 2008, excluding stock and cash bonuses. The same research shows that the middle half of the occupation earned from $40,480 to $122,270, excluding bonuses. Bonuses sometimes may be significant. According to 1440wallstreet.com, a New York-based proprietary trader received at least $350 million in bonuses in 2007.

Career Development

A proprietary trader's career growth opportunities generally depend on performance, business demands, corporate staffing needs and company size. A proprietary trader with a bachelor's degree may improve her chances of promotion by seeking a graduate degree in finance or math. A competent and productive proprietary trader typically moves to a senior role after a few years. Alternatively, he may set up his own trading business or manage investments on behalf of clients.

Working Conditions

A proprietary trader works a typical 8 a.m. to 5 p.m. on weekdays. However, her work schedule depends mostly on financial markets' operating hours. Consequently, a New York-based proprietary trader who focuses on Asian financial markets may have to work at night because of time differences. A trader also may be at the office early in the morning to discuss investment strategies with major clients.

References

• Bureau of Labor Statistics: Securities, Commodities, and Financial Services Sales Agents
• 1440 Wall Street: The Highest Paid People on Wall Street
• CNNMoney.com: Proprietary Trader Jobs