What is the difference between a trader and an investment banker?

Question

I am interested in majoring in Business Finance and I am trying to find out about some jobs I could get after college. The two jobs that I am interested in are investment banking or trading (possibly stock trader). So, what are the major differences between the two? Also, are these jobs ones that you could get an internship and do you really have to be in the top schools to get into a good job in these fields?

Answer 1

I have done one and am in the other industry.  

A trader is someone who... errr...  trades.  I hate to be so non-descript, but that's what they do.  There are two types of traders, those that trade for their own 'book' and other that do not.  Typical traders trade for the company they work for, either a brokerage, investment firm, bank, or other company that needs to deal with securities. You buy and sell according to orders given to you.  So if you are given an order to buy 123 S&P 500 S&P 500 contracts, you call up a brokerage and you arrange with them how to sell.  If you work for the brokerage, you arrange a counter-party if the security is traded over-the-counter (not listed).  Otherwise, you place an order on the system if it is publicly listed, either through the specialist or electronically (if it's an automated market).

An investment banker is like saying you're in the aviation industry.  It's a broad industry that includes lots of different roles, from origination (ie, relationship management), capital market (ie, execution of deals), M&A, sales, research, private equity and other portions.  However, the entire industry revolves around turning money into securities, servicing securities and/or buying/selling/advising about securities.

Yes.  You need to be from a top school.  It is EXTREMELY competitive to get into the field. I had to beat out over 2,000 applicant to get into my entry level job way-back-when. Good luck... and careful what you wish for. You might get it.