This craft, theoretically accessible to anyone, however, requires strong skills to be effective, usually acquired through training, and sometimes through prior experience in a financial institution or self-taught.
Training in financial mathematics, based on probabilities, and more specifically on stochastic calculus, is increasingly common. It allows to better understand the financial derivatives and management risks.
It’s a job that requires a good resistance to stress, strong analytical and adaptive capacity.
Since the financial crisis of 2008, and a recommendation made at the G20 Summit in Washington this year, the countries with the activities of the most developed market have introduced legislation or bank regulation featuring new restrictions as regards remuneration for traders.
The following general principles apply:
the share of operating results of market transactions paid to traders as part of their variable remuneration must come down.
variable remuneration can not be guaranteed beyond one year in any new contract.
part of the variable remuneration allocated to each trader should be postponed in time, at least one year, this part is likely to be reduced or canceled if further losses related to an activity can be charged
part of the deferred compensation should preferably be provided in the form of equity security of the Company or subject to purchase shares in the period by the trader.
Sources of information
To achieve its objectives, the trader should be able to use the right information at the right time.
The information comes to him, in addition to traditional media (television, newspapers …), through news agencies, such Reuters, Bloomberg, Dow Jones, Agence France-Presse, with specialized terminals. These companies provide real-time news, analysis, reports, usually in text, on what is happening. The trader is the second person on earth to receive information after the journalists.
These agencies also provide access to market data, either by sending quotes, volumes, etc.. scholarships or interviewing market participants OTC and making this information public.
The trader must sort and compile this information to learn what he considers relevant for the market to which he is interested. He will try to develop its own expectations.