Credit risk:

the risk arises from the likelihood of a company or a government to default on its debt. The treated product is similar to an insurance that protects the buyer of a possible defect, that is to say an event that would make the enterprise or the state would be unable to honor its debt. The trader gives a price for this insurance based on risk.

Interest rate risk or “fixed income”:

the risk arises from movements in interest rates, which are decided by central banks. If you borrow at 5% today to a year and suddenly the central bank decides to lower its rate to 4% per year, you can re-lend money at 4%. You will lose money. This is the second largest market in the world in terms of volume. It is the most technical market, mathematically speaking and where engineers are needed.
The equity risk:

it’s the best known risk. It is related to business activities. This is a small market compared to the debt market. Nominal exchanges of one million dollars is the norm.

Foreign exchange risk (FX):

This is the risk associated with exchange rates. This is the largest market in the world with a daily volume of 2,000 billion, increasing steadily.
The risk of raw materials:

small market compared to foreign exchange and debt, but also growing: it is linked to commodity prices. Horizontally, the room is divided into four main branches that separate the functions between traders.

The “market maker”:

he works on basic products such as spot (currency) the “cash action”, government bonds etc.. The market maker is simply responding to customers by quoting prices in both directions, a price he is willing to buy and another price he is willing to sell. The positions he holds are the result of deals he makes, and must always cover these positions, while trying to make a profit. But the market maker is not supposed to speculate. It must respect strict position limits. In most cases, young recruits start with a position of market maker, which enables them to understand the market by taking small risk.

The trader products vanilla:

vanilla products are those that generate the most revenue in the room. But these profits represent only 60% of the total and are steadily decreasing, with the concurency of structured products. The are very few margins, and much more speculative activities. For example, a deal of 100 million euro swap may bring 5000 euros margin. Profits are generally speculative. The price of gold going to go up or down? Will the U.S. Federal Reserve increase its rates at the next meeting? and so on. Incomes vary widely depending on activity. In what currency he deals with, what market, what part of the world but especially is it a good trader or not? And a priori not need to graduate, recruits are mostly young people aged from 20 to 23 inexperienced but enthusiastic.

The trading of structured products:

structured products are the most fashionable at the moment and their profits are rising sharply in recent years. These products often offer a complex index of profitability of different products vanilla. As it is generally difficult to give a price with some exotic products (since they generally do not yet exist), and there is no liquidity in the market to cover them completely (they are often issued to unit), these margins are important or monumental. They are pure risk managers, they do not speculate as only one deal can yield some 500,000 euros. This branch employs mostly former researchers from the bank or recent graduates for the future and have an inclination for business. Master or engineer degree is the norm.
The “proprietary trader” (or “prop trader”):

preferred by the bank, prop traders have all latitude to speculate with the bank capital in all markets. In contrast to the market maker, it does not rate customers. High-risk occupation, but one of the highest paid in the world, he is entitled to a percentage of earnings. If the trader of structured products can generate 50 million dollars a year, it must share the profits with the team structure, sales and research. The prop trader easily generate that profit sharing but not with anyone. Its position is coveted, but is an exception in terms of age in the room as the prop traders are the most experienced traders. Previous experience of 10 years in trading is the norm. The trader therefore runs the book with a more or less freedom. The prop traders are pure speculators. Traders vanilla products have an intermediate position, since a large share of their profits comes from speculation. Their job is to rate the client as market maker, but also to speculate on their market. Generally their speculative positions, which can be rightly described as prop trading positions, surpass in volume from 5 to 100 times the positions of market making. Traders structured products also occupy the intermediate position but generate profits primarily by the market making (through the margins). Whoever has the least flexibility is the market maker.

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