What Are Sales and Trading? (With Duties and Types)
By Indeed Editorial Team
Published April 20, 2022
The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.
A career in trading and sales is exciting for individuals who have an interest in financial securities. This field typically involves the buying and selling of securities and financial instruments between large institutional clients. Learning about trading and sales can enable you to successfully sell a firm's security to make a profit. In this article, we explain sales and trading, discuss the duties of its professionals, explore the types, and list the various securities with careers in the investment market.
What is sales and trading in investment banking?
A sales and trading (S&T) department typically refers to the division of an investment bank. It comprises salespeople who sell recommendations to clients and execute those trades. This department is usually responsible for making markets in derivatives, bonds, and stocks. The purpose of S&T is to facilitate the exchange of securities between clients. These clients often include hedge funds, asset managers, pension funds, and mutual funds.
Traders in this department often advise clients on when to enter and exit financial positions. S&T in investment bans often serves as an intermediary between companies and investors. It's essential to note that trading and sales are typically on the sell-side and facilitate trade between various individuals on the buy-side.
What does a trading and sales professional do?
An S&T professional primarily buys and sells securities on behalf of their clients and firms. The following are the essential activities of an S&T professional:
Manages risk and capital
S&T professionals usually help companies to manage their capital and risk for security analysis. Most investment firms employ them to specialize in investment areas, such as bonds, stocks, and commodities. They often gauge a company's capital and recommend the best time a company can enter the stock market. These individuals also search for investment options with minimal risks for their clients.
Performs investment sales
A salesperson at an investment firm typically communicates information about financial securities to investors. They work alongside an investment company trading employee to monitor investment trends, such as acquisition/merger information and quarterly earning reports. By doing this, they can easily pitch investment opportunities to potential clients.
Recruits new investors
Professionals in this department usually search for new investors for investment firms. They spend their time recruiting clients that can buy a company's security. This requires that they follow up leads, work through referrals, and perform cold calls to find potential investors. A sales staff typically develops a relationship with security buyers, such as mutual funds, portfolio managers and pension funds. They also maintain a cordial relationship with other trading employees and portfolio managers to get recent market information. This often enables them to know the investment potential clients want.
Executes security trades
S&T professionals are primarily responsible for helping an investment firm execute its trade. They often use quotes from financial software and conduct trades with electronic platforms. On behalf of their clients, these individuals take and place orders in the stock market. S&T professionals can commit to selling a specified number of bonds or shares at a minimum price. These individuals often help an investment make a profit by selling its securities efficiently.
Related: How Much Do Investment Bankers Make?
Researches the market and investment
Trading and sales professionals usually analyze and interpret financial data. They constantly research the commodities, securities, and firms associated with the market. It's essential that they have an in-depth understanding of the market to understand its trends and make accurate predictions. By performing research, they can calculate and analyze the market using trading charts.
4 careers in trading and sales
A career in both trading and sales career offers you several opportunities in the financial field. The following are professions you can get in trading and sales:
National average salary: $49,559 per year
Primary duties: A stockbroker is an individual who sells and buys stocks and other securities for institutional and retail clients through a stock exchange. These professionals often work with fund managers and are also retail investors. Stockbrokers typically know the exchange market and advice their clients on the best times to buy and sell. In exchange for giving advice to clients and making trades, they usually receive a commission in form of a flat fee or the percentage of the value of the transaction.
National average salary: $52,189 per year
Primary duties: Retail investors are non-professional investors who typically buy and sell securities or funds, such as exchange-traded funds and mutual funds. These professionals can use loans or margins to buy assets and stocks. They often execute their trades through online or traditional brokerage firms. Retail investors typically buy securities for their personal accounts and trade them in smaller amounts.
National average salary: $57,375 per year
Primary duties: Hedge fund analysts are typically responsible for making investment decisions for investors. They're responsible for conducting a hedge fund's daily operation, such as rebalancing investments to maintain a reward ratio/risk, cash flow forecasting, and raising investment capital. The job requires that they work alongside traders and analysts who conduct research on trade execution. At a higher level, these individuals can help investors manage investments and track liquidity.
National average salary: $66,630 per year
Primary duties: Investment analysts usually provide research and information to help traders, stockbrokers, and fund managers decide about investments. The job requires that they analyze assets and collect information on a specific asset class. They also interpret data, such as price developments, company financial statements, and currency adjustments. Most investment banks employ investment analysts to provide data to in-house fund managers.
What are the types of trading?
The following are the basic types of trading in the stock market:
These traders typically act as trading agents for institutional clients. They transfer and search for securities between various brokerages and clients. Agency traders often spread their buying to acquire a particular number of shares at a favourable price for their clients. This agent usually charges its client a predominant fee for its services. In agency trading, the trader takes a client's transaction request and finds another party who wants a similar transaction on the opposite end.
For example, if their client's request is to sell shares at $50,000, agent traders seek a buyer willing to buy shares at $50,000. Managers of mutual funds and hedge funds are typically agency traders because they invest on behalf of clients.
Proprietary trading (prop trading)
Proprietor traders don't trade on behalf of investment clients. These individuals are often in charge of trading a financial firm's money. Prop trading can occur when a brokerage buys a security in the secondary market and holds it for a period before selling them. The goal of this trading is to enable stockbroking firms to benefit from price appreciation and create profit for their portfolio. For example, a principal trader at a mortgage bank can engage in trading in the forex market to maximize the value of the bank's capital.
Before individuals engage in principal trading, they often inform the exchange at which a stock transaction may take place. This can help the process of trade regulation for large orders and ensure that regular investors are free from unethical trading practices.
Flow traders are a hybrid between a principal and an agent trader. They typically buy and sell securities on behalf of a firm's client, and for the firm itself. For example, if a client wants to buy shares of the stock a company wishes to sell, the flow trader can make the buy on behalf of the client. By helping a company sell its shares, flow traders can also act as its agent.
What securities do trading and sales professionals sell?
Investment banks usually differentiate trading and sales professionals with the securities they trade. Here are the various securities that these professionals trade:
Financial derivatives include option call-put, future contracts, collateral debt obligations, and debt securities. The value of another asset usually determines the price of these financial instruments. This means that the underlying asset can, in principle, be any other product, such as interest rate, commodity, or foreign currency. Traders typically trade these derivatives separately. They often break down the stock data of financial derivatives into assets and liabilities.
Related: Guide: How to Become a Stockbroker
This is a debt instrument issued by a government, firm, or entity to finance and expand its operations. Fixed-income securities typically offer investors a return as fixed periodic payments and the eventual return of their principal at maturity. For most investors, this security is a low-risk way to generate a steady flow of income.
Equity security is a share of ownership in a company, trust, or partnership. They're usually shares of common stock. This security often entitles the holder to some control of the firm via voting rights. It also entitles its holders to dividends. This means the holders can make a profit from capital gains when they sell it.
Salary figures reflect data listed on Indeed Salaries at time of writing. Salaries may vary depending on the hiring organization and a candidate's experience, academic background, and location.
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