Equity Trader Responsibilities (Trading Types And Skills)

Updated 26 January 2023

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

When an individual buys shares of a company, they own a small part of that company which is called equity in terms of investing. Buying and selling of shares through a stock exchange is equity trading, and an individual involved in this trade is an equity trader. Learning more about equity trading can help you understand its various aspects and decide if you want to pursue a career in this field. In this article, we discover the various equity trader responsibilities, explore the skills they require to be successful and find out what they can earn on average.

Equity Trader Responsibilities

From monitoring the stock market to analysing trading information on a daily basis, here are a few equity trader responsibilities:

Monitoring and analysing the condition of the stock market to prepare profitable financial information
Examining a company's financial reports, including balance sheets and cash flow statements
Making investments that align with the financial position of the organisation
Taking into consideration the company's assets against its liabilities before making investments
Buying and selling shares and securities by employing short-term trading models
Establishing effective trading strategies that result in more income and profits for clients
Ensuring that trading transactions comply with the government laws and policies
Designing market intelligence reports for the trading team to ensure profitable returns
Employing intelligent digital applications to examine data and create accurate market reports
Using data to assess financial risks and taking trading decisions based on that
Liaising with portfolio and fund accounting teams to ensure timely trade processing
Updating data sheets, performance valuation and liquidity reports regularly
Communicating with intermediaries and brokers to solve the discrepancies in trades

What Is Equity?

Equity is a small share or stake in a company. If you possess a stake in a company, you can make a claim on its assets and earnings. The more shares you acquire, the greater your is ownership stake in the company. When you do trading of shares in financial markets, it is called equity trading. You can trade by yourself through a brokerage account or with the assistance of a broker or an agent.

Types Of Equity Trading

Here are some common types of equity trading:

Scalping

The term scalping, also known as micro trading, refers to buying and selling of shares within seconds or minutes. Through scalping, an equity trader aims to make profits through minor changes in the prices of shares. Individuals who do scalping devise a carefully calculated exit strategy since one significant loss can exceed the many small gains made in a day.

Day trading

Day trading refers to the type of trading that is done within the same trading day. You can do this type of trading till the market is open for the day. Day traders monitor stock markets throughout the day and execute short-term and well-planned intra-day strategies to make the maximum profit from changes in the prices of assets.

Swing trading

Swing trading focuses on short-term or medium-term gains rather than long-term gains. Swing traders monitor price fluctuations in the market and buy or sell shares accordingly. Efficient swing trading is about capitalising on momentous price movements and avoiding idle times by earning smaller gains on the same investment over the span of a few days or weeks.

Position trading

Position trading focuses on various trends in macroeconomics and the growth potential of assets. Position traders monitor the macroeconomics trends to determine which assets are likely to increase in their value over time. This type of trading is about long-term gains and depends on when the most valuable options for a trader's assets exist in the market.

Technical trading

In technical trading, a trader uses charts, graphs and other tools to analyse historical trading data. They look for prospective signs of divergence or convergence that may suggest appropriate times to buy or sell assets. In technical trading, the traders make their decisions based on the past because they are of the view that history can repeat itself.

Algorithmic trading

In algorithmic trading, a trader uses computer programmes to place trades for them at the best prices. In this type of trading, the trader may employ high-frequency trading algorithms alongside marking specific instructions to the computer programmes for these trades. This automation can prove to be beneficial for traders who are looking to trade at any time of the day.

Noise trading

In noise trading, a trader buys and sells shares without conducting a fundamental analysis of the companies issuing the securities. These traders may try to make a profit from short-term trades that follow different economic trends. While some may view these traders as impulsive or making uncalculated decisions, this type of trading remains a common option for many traders.

Momentum trading

The aim of momentum trading is to search for those shares that are moving significantly in one direction and purchase them. Momentum traders focus on capitalising on the momentum of the sudden increase. Momentum trading can happen within a few hours or over a period of a few days, depending on how swiftly the stock moves or the direction of the momentum change.

Price action trading

In price action trading, a trader does not take into consideration the fundamental analysis metrics and focuses on technical trading. They plot a specific asset's price movement over a certain period and make subjective decisions about buying and selling based on the price movements and general market activities. Price action is popular among those looking for short-term trades.

How To Become An Equity Trader?

Here are a few steps you may take to become an equity trader:

1. Complete school education

Complete your higher secondary education (12th grade) from a recognised board. Choosing the commerce stream can prove to be rewarding since it includes subjects like economics, mathematics and business studies which can equip you with the know-how of the trading field. If these courses are not part of your core curriculum, then you can also select them as additional subjects if your school has such an arrangement.

2. Earn a bachelor's degree

After school education, you can pursue a bachelor's degree in business administration, finance or economics. Some examples of popular degrees include Bachelor of Business Administration, Bachelor of Science in Finance and Bachelor of Arts in Economics. You can also consider pursuing various bachelor's degree courses in statistics or data science. These courses can offer you a knowledge base that can help you become a successful equity trader.

3. Pursue additional courses

Pursuing additional courses can help you add more knowledge to your educational accomplishments. These courses can offer you lessons on trading strategies, market directions, global capital markets, corporate debts, mutual funds, equities, futures and several other trade options. Enrolling in such courses is often a great way to gain specialised knowledge in your field and turn your equity trading career into a rewarding one.

4. Apply for jobs or become an independent trader

After completing your education, you can choose to take a job. Prepare a resume that highlights your educational achievements. You can search and apply for jobs via online job portals like Indeed or visit the official website of your preferred companies and find out if they are hiring. You can also start working as an independent equity trader by signing up for a brokerage account that can allow you to trade in the stock market.

Important Skills For Equity Traders

Here are some important skills to become a successful equity trader:

Adaptability: Adaptability is a crucial skill in the field of trading where circumstances can change instantly. It is essential for you to change your trading methods or strategies based on the changing market conditions.
Analytical thinking: Traders often monitor markets and analyse trading trends to make their trading decisions. Having strong analytical thinking abilities can help them assess the market, identify trends or learn from past market reviews.
Mathematics: Mathematics can help traders to understand and solve complex problems involving a lot of numbers. Sound knowledge of mathematics can help them understand statistics and conduct a strong quantitative analysis of the market.
Risk management: Risk management is the ability to determine which actions can give maximum benefits and favourable results. This skill is crucial for traders as it helps them avoid making bad trades.