You might find it quite difficult to choose a career in the financial sector, especially if you narrowed your list down to trading and investment banking. They might look the same, but they are unique and offer different advantages.
How do you know which career is the best for you? Let’s take a look at what trading and investment banking are and what are the pros and cons of both.
What Does a Trader Do?
A trader is someone who connects financial securities sellers and buyers. More specifically, they can sell or buy different capital market financial instruments for their clients. Most of the time, a trader will specialize in one specific financial market segment, such as stocks, bonds, as well as commodity and currency markets.
There are different trader types, with some of the most common ones being agency traders and flow traders. The former are intermediaries who make trades for their clients, while the latter use client funds.
In some cases, traders may or may not have any academic degrees. Some companies want their day traders to have mathematics, accounting, and financing undergraduate degrees, yet one can become a trader even without having these diplomas.
While traders are still needed today, technological progress has made computers replace many of these specialists.
What Does an Investment Banker Do?
An investment banker has to connect sellers and buyers, just like traders. They aid clients in making investments and raising capital/money. But their responsibilities are a bit different from those of traders.
For instance, they use mergers and acquisitions to connect buyers and sellers. Not only that but they might also raise capital amounts when they sell a firm to the public during an IPO.
Most times, an investment banker will only specialize in a particular segment of the market. Because of what they do, they are often hired by companies who want to raise money.
Someone who has been a financial trader for a while can earn nice sums of money. For instance, being a trader for at least 10 years may allow you to earn at least $1 million annually.
Meanwhile, an investment banker will not only receive their annual salary, but also some bonuses. How much they get in bonuses will be influenced by the performance of the bank and how much business the banker makes.
When trading, you must be mentally strong and not let emotions take over – something that can be very difficult. It’s easy to feel greedy or afraid, but you must learn not to act on these emotions.
Besides, there is always a risk of losing money due to how unpredictable the financial markets can be.
As an investment banker, you have to always be available for your clients. Therefore, you’ll put in more work compared to a typical full-time worker. As a result, you may deal with periods of stress.
Whether you’ll be a trader or investment banker depends on what you want to achieve. If you can control your emotions and you want to do this career for a long time, a trading job can help you earn a nice profit. So, you can start looking for jobs for offshore forex brokers for Canadians. However, if you’re after the bonuses and don’t mind working extra, you can become an investment banker instead.