What does a trading analyst do? (With duties and skills)

Updated 19 January 2023

Working as a trading analyst can be a versatile and exciting job. There are countless duties and skills that make trade analyst jobs engaging and bring fresh challenges each day. Learning what a trading analyst does helps you decide whether pursuing this career is the right choice for you. In this article, we answer the question 'What does a trading analyst do?' by reviewing the different types of trading analysts and outlining their main responsibilities before discussing their qualifications and key skills.

What does a trading analyst do?

To answer 'What does a trading analyst do?', a trade analyst analyses the market to determine whether it's a good time to buy or sell shares in a company. A trade analyst is also known as an equity analyst or equity research analyst and commonly works for an investment bank or hedge fund. Many also work independently as freelance consultants or as part of an online trading services team. They advise people on when to buy or sell assets, what currencies they ought to invest in and how much they might invest. Their role may also include:

  • analysing and interpreting market data, such as price fluctuations, interest rate changes, economic indicators and tax policy changes

  • measuring the impact of these factors on the financial markets and making predictions about future performance based on this information

  • recommending which investments to buy or sell based on their analysis

The role of a trade analyst is to research, develop and maintain an understanding of the market dynamics and characteristics of specific products. The analyst uses this knowledge to advise clients on a good strategy for their trading activity. A trader analyst is responsible for developing trading strategies and analysing the performance of traders. They also evaluate market conditions and trends to help guide traders in their decision-making process. A trader analyst may work with traders at all levels, from junior through to senior management.

Related: What is trading? A definitive guide, types and tips

The different types of trading analyst

There are two main types of trading analysts with slightly different sets of primary duties. The two types of trading analysts are:

  • Sell-side analysts: Sell-side analysts work for investment banks, and their role is to provide research and advice to their institutional clients. These are usually people who manage large sums of money.

  • Buy-side analysts: Buy-side analysts work for private investment firms, hedge funds, pension funds and other large investors such as sovereign wealth funds. Buy-side analysts are typically responsible for making decisions on behalf of their clients about what stocks they want to buy or sell and how much they ought to invest in each stock.

Related: What is a financial market? Definition, types and careers

Trading analyst job responsibilities

The job of a trade analyst covers many areas. To give you a better idea of what it entails, here are some of the most important tasks that make up this position:

Using technical analysis methods

Most trade analysts use technical analysis techniques when making decisions about buying or selling assets. These include studying past prices, volumes and other indicators to predict future asset value changes. These methods may be bespoke to their employer, so it's important for them to be adaptable to new software.

Related: What does a sell-side analyst do? (With salary and skills)

Developing strategies for investors

Trade analysts create strategies for investors based on their knowledge of current market conditions and potential future trends. For example, they may recommend that investors sell a particular stock because they believe it might decline significantly over time. Alternatively, they might recommend that they ought to buy another asset because they expect its price to increase significantly over the next few years.

Providing financial advice

A trade analyst's job often involves giving financial advice. This is generally for clients who have hired them as investment advisors. This may involve answering questions about how much money someone ought to put into stocks versus bonds.

Monitoring the market

Trading analysts monitor the performance of individual stocks, bonds and currencies via computer systems or other tools. They use these tools to detect trends in market movements that affect their organisation's bottom line. For example, if they see that interest rates are going up while stock prices are going down, they might recommend that their employer sell some bonds before they lose value.

Interpreting data

Trading analysts analyse financial statements and company news releases to assess how much risk each security poses for investors who hold it. They also monitor macroeconomic factors such as unemployment rates, inflation rates and interest rates. This is so they can determine whether certain securities might be profitable.

Qualifications to be a graduate trading analyst

A graduate trading analyst typically has a bachelor's degree in finance or economics. Some organisations may require them to have a postgraduate degree, but this isn't always the case. Hiring managers may consider graduates from a number of different disciplines, including mathematics, statistics and business studies. Often, as long as the degree includes modules on macroeconomics, microeconomics and statistics, it's acceptable. Trade analysts may also take modules on quantitative methods, corporate finance and international finance.

A degree in economics or business studies gives candidates an excellent grounding in the theory of economics, finance, statistics and accounting for the role of trade analyst. In these degrees, they might study mathematics, which is essential for understanding how markets work and stand them in good stead for their role in future. They also develop analytical and communication skills, which are both desirable for the job.

Related: Why study economics at A-Level? (With skills and careers)

Skills for trade analyst jobs

A trade analyst analyses data relating to financial markets. They use their knowledge of the market and their ability to analyse large amounts of data quickly and accurately to make predictions about future trends. To be successful at this job, they have good analytical skills and an understanding of how financial markets work. They can interpret complex information and make sense of it. They also have excellent communication skills to clearly explain their findings and recommendations to other people within their organisation. Their key skills include:

Ability to analyse large amounts of data quickly and accurately

An analyst collects information from different sources. They then collate them into one place before making an informed decision as to whether they ought to buy or sell a particular commodity. This includes gathering information on supply and demand trends and any news relating to the market in question.

Excellent communication skills

A good trade analyst has strong communication skills because they handle clients on a daily basis. They can explain complex concepts in simple terms so that everyone understands what they mean. They also answer questions quickly without losing their temper or sounding condescending towards clients who may not have initially understood what they were trying to say.

Related: Why is communication important? (And how to improve it)

Strong mathematical skills

Trade analysts use statistics and other techniques to make sense of large amounts of data. They think logically to find patterns in numbers and figures. Through this, they understand how different variables influence each other.

Good problem-solving skills

Trade analysts often apply their training in problem-solving techniques. This includes statistical methods such as regression analysis, time series analysis and forecasting techniques. They also have good summarising and teaching skills to present their findings to non-experts.

Understanding of technical analysis

A good analyst uses technical analysis tools such as charts and graphs when deciding whether to buy or sell a particular commodity. These tools allow them to see how prices have behaved in the past and how they might behave in future based on historical trends. Financial analysts use these techniques all the time when making decisions about what stocks or bonds they ought to invest in.

Related: What is an equity trader? (Plus responsibilities and skills)

Good written communication

The ability to write clearly and concisely is also important. This is one of the main ways in which a trade analyst communicates with other people in their organisation. Trade analysts also communicate well with others to get their points across effectively.

Strong research skills

A trade analyst requires strong research skills. This is to gather all the necessary information for their job from a range of different sources. These may include industry reports, interviews with experts and regulators and news articles.

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