Equity sales and trading definition
Just remember that everything that is desk-specific can be learned at the desk. First of all, why do we call this sales and trading? Because there are sales people and traders. As a sales person, you will be in touch with your clients and try to facilitate the trades. Once the sales person got in touch with the client, it will try to coordinate the trade with the trader.
The trader will then either buy or sell the security take a position , and try to mitigate avoid the risk as best as possible. One common misconception about trading is that people think traders make money by buying low and selling high. This is not true. This happens on the buy side. On the sell side of the business, traders are market makers, meaning that almost all the time they have to take positions that will cost them money.
What does market-making mean? It means that the trader has to take the position in a certain security in order to facilitate trading of that security. They have to understand how the market is moving and what price they can offer. If you have ever heard of a bid and ask price, this is what traders do all the time.
Even though the trader would lose money by selling it for the lower price, it has to do it in order to keep money moving in the market. However, this is not all that bad for the trader. Rarely are securities traded in extremely big blocks.
In market making , traders will buy and sell financial products primarily to facilitate the investment and trading activities of its clients with the goal of making an incremental amount of money on each trade. The Sales component refers to the investment bank's sales force, whose primary job is to call on institutional and high-net-worth investors to suggest trading ideas and take orders.
Sales desks then communicate their clients' orders to the appropriate trading desks , who can price and execute trades, or structure new products that fit a specific need. The sales and trading function will also typically employ financial analysts that provide trading strategy advice to external as well as internal clients to support sales and trading. This strategy often affects the way the firm will operate in the market, the direction it would like to take in terms of its proprietary and flow positions, the suggestions salespersons give to clients, as well as the way structurers create new products.
Banks seek to maximize profitability for a given amount of risk on their balance sheet. The necessity for numerical ability in sales and trading has created jobs for physics, math and engineering Ph.
From Wikipedia, the free encyclopedia. The Investment banking handbook: John Wiley and Sons, Corporate finance and investment banking. At-the-market offering Book building Bookrunner Corporate spin-off Equity carve-out Follow-on offering Greenshoe Reverse Initial public offering Private placement Public offering Rights issue Seasoned equity offering Secondary market offering Underwriting.