Explanation of a City Trader's Job

'''Stock broker''': A stock broker would deal with '''shares'''. Shares and stocks have the same definition; a share is a section of a company that a stockbroker can buy and sell if he/she has a suitable amount of money. Specifically, a stock is a piece of money – a share of a company – that a few years ago were represented on a document, and nowadays spreadsheets are often used to keep the record. For example, a share can be worth 25p, but can be multiplied by 40 to create the total desired value on the document – in this case it would therefore be worth 1000p. The stockbroker possesses a number of shares; however he or she can choose how many of these he or she wishes to trade, so that perhaps some can be kept for him or her. Keeping an amount is understandable, because stock-broking is a risky business. This is because the prices that shares are worth are constantly increasing and decreasing, depending on how much money the company you are dealing with, is producing. For example, say a stockbroker buys a share from a dealer, for $1, and then sells it to a client for x sum of money. The next day, the price for that same share value, decreases (the company is not producing as much money), so that it’s now worth 50p. The stockbroker had spent $1, however, which was 50p too much: he or she has just lost 50p. That’s how stockbrokers lose money. They then continue trading at what they think are suitable times – when it is unlikely for the price of a share to alter (to start with he or she could buy that share back for 50p and sell it again, to another client).

'''Foreign Exchange Members''': These city traders deal with '''currencies'''. Their clients are usually called "market makers" (literally makers of markets: shopkeepers are a common example) and are the people they use to earn money. Currencies are traded, for example: the stock broker can give his/her client $1, and the client can give him/her £1 in return, as long as such a deal was discussed and agreed to (as mentioned previously, the person who makes the final decision as to what the deal is going to be depends on the position of the stockbroker - in Advisory dealing, for example, the investor makes the concluding decision.) In this case the city trader gains profit (because he/she gains £1, that is worth more than what he/she gave [$1]), but indeed often the market maker does too (that's how they earn their money). For example, it would be perfectly possible for the city trader to hand over £1 and let his/her client give back only $1. N.B: You have to bear in mind that very large sums of money - NOT the example of $1 and £1 above - are exchanged.

'''Bond-dealers''':A bond-dealer is a city trader who lends a sum of money to a stock (section of a company). If a company owns £1,000,000, and this was due to a million bondholders each lending £1 to the stock, than each bondholder lends a '''bond''' of £1.

In such ways, city traders trade via market makers, but they are also trading ''for'' a group of people - the investors. These are people of a higher status than city traders, for example: chartered accountants. An investor has the right to use money from his brokerage firm if there is a crisis involving him/her losing a sum of money. This doesn't change the fact that city can at the same time be allowing the usual currency/stock deals to take place, enabling them to gain money while providing the investor with money.

You have to bear in mind that these city traders do not have clients at their desk(s) to perform the deal - the Foreign Exchange (for example) keep aware of the various money-exchanges through softwares on the computer, a particular and more popular one being known as "CREST". Other methods of dealing include using the phone.

There are other occupations within the title of being a "city trader", but these are the main three, in order of which is most common, the most common being the first in the list.

Stock Broker > Explanation of a City Traders Job

Explanation of a City Trader's Job