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InvestingStocksBondsCryptoPersonal FinanceFundamental AnalysisTechnical AnalysisTradingBankingTaxes
Disclaimer Terms of Use Privacy Policy Cookie Policy

Head Trader

Head Trader
Careers

What Is a Head Trader?

A head trader is the manager of a trading business, responsible for the positions, risk, and at last, the profitability of that business. In a registered securities firm, the head trader regulates all traders and other faculty inside their domain and may likewise trade themselves. Most prominently, the head trader is charged with guaranteeing regulatory and internal compliance for each employee who is part of the trading operation (for example not just traders). A head trader may likewise be alluded to as a "head of trading."

Grasping a Head Trader

Any head trader in a securities operation with supervisory or potentially endorsement obligations must be a registered principal, meaning they must hold each of the fundamental securities licenses and have one of the accompanying certifications:

  • Series 4: Registered Options Principal Exam (OP)
  • Series 9 and 10: General Securities Sales Supervisor Examination
  • Series 23: General Securities Principal Exam - Sales Supervisor (GP)
  • Series 24: General Securities Principal Exam (GP)
  • Series 51: Municipal Fund Securities Limited Principal Examination
  • Series 53: Municipal Securities Principal Examination (MP)

The specific principal exams required rely upon the head trader's liabilities. In smaller firms, there may just be a couple of head traders, yet in large firms there can be many head traders, each in charge of a specific market. The head trader for municipal securities, for example, would have at the very least a Series 53 license. Various licenses apply for futures and commodities trading operations. A registered options principal, for example, will hold a Series 4 license.

Head Trader Job Description

In numerous conditions, for example, wealth management companies or money managers, a head trader might report to a chief investment officer and a chief operating officer and will play a key part in satisfying and executing individual trade demands. Head traders may likewise be responsible for making and keeping up with associations with outside brokers and caretakers. A head trader ought to be among the most educated individuals at a firm with respect to the markets and trading architecture/climate. Some specific head trader job liabilities might include:

  • Overseeing trades from origin to post-trade analysis, including building trades, pre-trade analysis, execution, and settlement.
  • Guaranteeing compliance with regulations and that best execution policies are complied with.
  • Planning trade architecture, trading policies and procedures, as well as broker evaluation and trading record keeping.
  • Helping portfolio managers with rebalancing and asset allocation tasks.

Head Trader Job Evolution

As quickly changing regulations modify the everyday obligations of head traders, their job has moved away from actively trading and toward all the more a compliance and supervisory job. In Europe in particular, the MiFID II regulations are shifting head traders' daily needs from trading and toward market structure and regulation changes as opposed to keeping side by side of what the markets are doing. While being a seasoned trading expert is essential to turning into a head trader, the job currently may consider just a small amount of time really trading securities.

Example of Head Trader Order Execution

Suppose the head trader of a moderate sized hedge fund is given a stock order from the portfolio manager. The order is to buy 100,000 shares of ABC stock "best way." Because the head trader realizes that ABC is a thinly traded stock and regularly trades 150,000 a day on average, they choose to put 50,000 shares to buy in a dark pool to not impact the stock price. From here, they may likewise take a gander at dealer indications of interest in the ticker to check whether there is a natural seller accessible. This transaction would be a cross trade.

Since the head trader knows all about how ABC stock trades, they realize that it isn't the best plan to work the order in the machines in light of the fact that the order size is too large. Realizing this data is critical to best execution and accompanies long periods of experience.

Features

  • A head trader ought to be among the most proficient individuals at a firm in regards to the markets and trading architecture/climate.
  • A head trader might report to a chief investment officer or portfolio manager and will play a key part in satisfying and executing individual trade demands.
  • A head trader is the manager of a trading business, responsible for the positions, risk, and at last, the profitability of that business.