As we all know, in the investment and financial industries, traders play an important role. They execute both buy and sell orders. These people often time deal with high volume trading, thus they provide liquidity in the market.
There are various areas of industries for these professionals. That ranges from day traders, swing traders, commodity traders, and fixed income traders. In this article, we will discuss the details of fixed income traders.
What do Fixed Income Traders Do?
A fixed income trader is a financial professional who deals with security trades on behalf of retail clients or institutional clients. They work based on the result of the research about fixed-income investment.
Generally, these people work for broker-dealers and also banks. Or else, these people may also work for other similar institutions that attract investment.
These people gather knowledge of specific markets. After that, they develop a trading strategy to respond to trends in the current market to create trades on the sell and buy-side.
Other than those, they also work with several different instruments like loans and bonds. However, fixed income traders may not hold the responsibility for developing a strategy for a company with the different departments that handles trading strategies.
To be a fixed income trader, someone needs to have knowledge of specific fixed income instruments, like bonds or corporate bonds. Besides, traders need to also conduct research on mortgage-backed securities (MBSs) in order to make a successful trade.
They have to know the ways that those securities work from pools, use the prepayment, and also respond to liquidity. Other than that, they need to also do trades on the asset-backed securities or commercial MBSs.
These people should also grasp the future movements of the prices through shifting trends of supply and demand. To stay in the sector, the trader has to maintain or develop a relationship with a research analyst.