Jobs in and around the trading floor of an investment bank are usually divided into three categories: front office (the outward facing jobs for salespeople and traders that involve dealing with clients and making money); middle office (the risk, compliance, and technology jobs that enable the front office to function and keep a check on what it does); and the back office (the operations jobs that deal with all the administration of buying and selling securities).
Front office jobs in investment banks' markets businesses can be divided up as follows:
Sales: If you work in sales, you'll be on the phone, a lot. As a salesperson, your fundamental purpose is to talk to clients and to encourage them to place their trades through the bank that employs you. Salespeople are usually divided by product (equities, bonds, commodities, foreign exchange, or derivatives) and by client type (asset managers - known as 'institutional investors', companies - known as 'corporates', governments - known as 'sovereigns', and very rich people - known as 'high net worth individuals'). Salespeople are also divided up by language and region.
While all sales jobs involve talking to clients, the precise nature of job will be very determined by the nature of the product you're selling. "If you're in cash equities, you'll be very focused on what's happening to markets day-to-day," says one ex-derivatives salesperson from Goldman Sachs, speaking off the record. "In derivatives, you have much longer time horizons. It's much more about long term economic trends. For example, we would talk to clients about population changes and macroeconomic trends and sell products that would allow them to benefit from those changes."
All sales jobs involve client schmoozing and entertainment. You can usually expect to be out entertaining clients at least two evenings per week.
Trading: If you work as a trader in an investment bank, your job will be all about making markets. Market makers buy and hold quantities of financial products for short periods so that they've got enough to sell to clients who come to them trying to make a purchase. Market making is seen as less exciting than proprietary trading, but it still requires skill. For example, a product that's already been bought by a trader might fall in price before a client buys it. "Sometimes you have to hold the risk. It’s very rare that two clients simultaneously hit your bid and lift your offer,” says David Hesketh, a former Bank of America Merrill Lynch trader who now runs Financial Skills, a company that makes software for trading simulations.
Traders are famed for getting up incredibly early in the morning and arriving in the office a long time before markets open at 9.30am in New York or 8am in London. They usually work shorter hours than M&A bankers and get to go home soon after markets close (at 16.00 in New York and 16.30 in London). However, the precise nature of your trading day will again depend upon the products you trade. "I worked in derivatives in London," says the ex-Goldman Sachs derivatives trader. "We dealt a lot more with the U.S. markets than with the Asian markets, so I came in later - but I didn't leave until 8pm."
He adds that trading fixed income derivatives is very different to trading equities, for example: "You're less sensitive to company earnings releases and more sensitive to the kinds of general economic trends that affect volatility. It's more macro-oriented, which I found more interesting."
Sales trading: Sales trading jobs are a lot like sales jobs, but with more interaction with traders. It's the job of a sales trader to talk to clients not just about market trends and changes in the value of particular stocks, but to discuss trading 'volumes', and exactly how the client would like the product to be traded in order to achieve the best result. In this sense, sales traders need to work out the best way to structure a trade (all at once or in little bits?) and the best time to for a trade to take place.
Sales traders usually work with so-called 'execution traders'. Execution traders are pretty much charged with doing what they're told - they simply 'execute' or implement trades as required. The job does require some skill, however. If you work as an execution trader you'll need to be an expert in timing the market in order to get the best result.
Structuring and quant jobs: Lastly, front office jobs in sales and trading include jobs for structurers and quants. Structurers talk to salespeople and traders about the sorts of derivatives products that clients need to deal with particular market conditions. They then go away and create products as required. "Structuring is a healthy balance between theory and practice," says Hamzah Kahloon, head of structuring for MENA and Turkey at Deutsche Bank. "You spend a lot of time thinking critically about the problem and your team’s ideas for the transaction, and then you implement it."
Finally, quants in investment banks are charged with designing and developing complicated mathematical formulae that allow banks to both price derivative products and to create programs that trade automatically. The equations underpinning these programs are known as 'algorithms.'