What is a Trading Desk?
A trading desk is a specific place where traders buy and sell securities. The financial institution is home to trading desks where traders conduct business for their accounts. They are the brokers who serve as middlemen between buyers and sellers or a combination of the two.
Do banks have trading desks? Trading desks are in most financial firms that are involved in trading markets such as equities, fixed-income securities, futures, commodities, and currencies. These facilities are crucial to providing market liquidity.
Types of Trading Desks
Modern trading floors are nothing like what you might have seen on television and in movies. Companies arrange innovative trading desks in large open areas, but traders don’t yell over the crowds like portrayed on the big screen. Instead, there is more clicking and clacking on keyboards on the trading floor.
Traders focus on a particular security or market sector and buy and sell securities at trading desks. It is easier when companies divide trading floors by asset class. Large banks assign floors for each security as well a specific trading desk setup. Trading desk examples include:
Commodities trading desks: Traders concentrate on commodities like gold.
Equities trading desks: Traders enable a range of trading, including equity trading.
Fixed-income trading desks: They trade securities based on bonds, which provide investors with a fixed income.
Foreign exchange desks: Traders buy and sell currency pairs or specialize in trading and serve as market markers.
Traders maintain one specific asset class niche on each of the floors. You might join numerous trading desks specializing in interest rate options. They make up the trading floor.
sales vs. Trading
Salespeople and licensed traders keep an eye out for opportunities or supporting agreements between enterprises. Trading desks also assist clients in shaping investments along with participating in trading.
As analysts, they assign interns to a generalist program where they rotate across various classes and roles. Once interns have a desk, the roles and product focus are better defined. Take a look at the sales and trading categories.
On the investment banks behalf, sales retain the client relationship. Most requests for price quotes on purchases or sales are through salespeople. They divide salespeople by product, but they serve as the primary point of contact for the investment banks investor clients.
Trading is not complicated, though it is a high-pressure job. Traders define a market and execute trades on behalf of their clients. Because there is always a possibility of making a wrong decision and losing the client’s money, traders need to know how supply and demand work and focus on those issues. Unlike the other roles on the floor, a trader has a trading book where it is possible to take positions and generate a profit or loss.
Some people merge the functions and act as sales traders. Sales traders work with clients who are high-energy and want to close a lot of deals fast. The sales traders often multitask, going between an overload of phone calls during the day and numerous chat sessions. Because of this, institutional trading desks are capable of long-term profitability.