Equity traders buy and sell ownership stakes or stocks in publicly traded companies. Many equity trader jobs are found at investment firms and brokerage houses. Some equity brokers specialize in marketing new stock offerings while others exclusively deal with previously issued securities. Typically, traders receive sales based commission but individuals employed in certain types of equity trader jobs also receive base salaries.
Financial institutions employ equity traders to buy and sell stocks and other types of securities on behalf of consumer and business clients. In most nations, an equity trader or broker must possess a securities license and traders can only apply for this license after they successfully pass a licensing examination. Existing clients of a financial firm are normally assigned to a particular trader and that individual may provide them with investment advice as well conducting trades on their behalf. Generally, a trader can only buy and sell stocks that are listed on a particular market index although some traders hold licenses to conduct transactions on multiple markets.
In addition to brokers who work directly with the public, investment firms also employ brokers in behind-the-scenes equity trader jobs. These individuals have no direct contact with clients, but receive computer based or paper trade orders that are accepted through online investment websites that offer discount brokerage services. The traders receive a fee for each trade they process even though they have no role in soliciting trades. Aside from employing equity traders to process client requests, investment firms also employ traders to process transactions involving the firm's own assets.
Mutual funds are investment companies that create portfolios of securities. Investors can buy shares in these pools of investments. While a mutual fund must have a stated investment strategy, traders employed by the firm are responsible for deciding when to buy and sell stocks on behalf of the fund. These equity trader jobs are normally reserved for experienced brokers who are more able to make investment decisions than newly hired traders. Some funds employ a team of traders and all investment decisions are based upon collective decisions rather than the opinion of a single broker.
When the owners of a privately held enterprise decide to list the firm on a public exchange, the company must employ an equity trader to arrange the firm's Initial Public Offering (IPO). Generally, firms contract an investment firm to facilitate the IPO and the investment firm assigns a team of brokers to oversee the process. These traders review the company's financial information prior to determining the initial asking price for the shares. Once the terms of the IPO have been agreed, these traders must sell stocks to institutions and individual investors. Equity traders who organize IPO’s are normally paid a consultancy fee, but they also receive a commission for the stock trades.
