Junior traders generally work for large hedge funds or brokerage firms. There are no education requirements to become a junior trader. Junior traders often assist a senior trader in the hedge fund or brokerage firm. The senior trader teaches the junior trader the specifics of the job.
Although there are no education requirements to become a junior trader, most have college degrees. However, many junior traders do not have any financial experience, let alone stock market experience. Thus, brokerage firms and hedge funds occasionally hire applicants with years of experience with no college degree. Even college degrees in unrelated fields, such as biology or psychology, may help improve an applicant's probability in being hired. However, applicants with years of experience are usually preferred over an applicant with an unrelated degree. College degrees in finance, business and accounting are preferred.
Junior traders assist senior traders in executing orders and daily routines. Junior traders may act as a representative for the firm and explain the firm's investment strategy to potential investors. Furthermore, junior traders are often given access to a small account to trade with. The senior trader monitors the actions of the junior trader's investments and may provide financial advice or insight. While the senior trader is sick or on vacation, a junior trader may trade on their behalf. In addition, junior traders may act as a representative in meetings for the senior trader if he is too busy to attend.
Junior traders learn an array of trading strategies during their training. Many hedge funds and brokerage firms have multiple investment departments, such as an in-house research team, an options trading branch and a commodity trading branch. Options are legal contracts that provide the buyer of the contract with the ability to buy or sell at a specific price. Commodities are basic goods that are interchangeable with each other. This experience allows junior traders to leave the firm and trade for themselves for a living using the trading strategies they have learned. Hedge funds and brokerage firms have insight and research about securities, which is unavailable to the public. Junior traders are also able to use this knowledge to invest in securities while they continue to work for the hedge fund or brokerage firm. There are no ethical conflicts in investing in securities from the information learned while training, unless the junior trade provides the information to others outside of the hedge fund or brokerage firm.
Junior traders work extremely long hours. Stock markets open at 9:30 a.m. and close at 3:30 p.m., however, traders must arrive earlier to prepare for the trading day and typically stay after the closing bell for meetings and financial work. Preparing for the trading day entails making a list of potential stocks to trade, emailing clients and analyzing any news released by a companies the firm is invested in. Furthermore, junior traders perform tedious tasks, such as filing documents.
Most junior traders begin earning $40,000 to $55,000 a year. A junior trader's salary is dependent upon experience. After years of experience, junior traders may receive bonuses or raises. Junior traders are often promoted to branch manager or senior trader when positions become available. Many firms promote a junior trader based on the work they have done and interaction with clients. If a junior trader successfully manages smaller trades for a senior trader and receives positive reviews from clients, then they sometimes are promoted after five to 10 years of working as a junior trader. Some junior traders become floor traders who represent their brokerage firm on the floor of a stock exchange. Other junior traders quit their job and begin trading on their own for a living.