Let's dive into the main differences between traders & researchers so you know what you're signing up for!
We'll cover how they differ in:
The main difference between these roles is researchers focus on coming up with trading strategies while traders focus on carrying them out. Here's a simplified comparison:
| Researcher | Trader | |
| What they do | come up with trading strategies | carry out trading strategies |
| What they're expected to output | trading strategies | $$$ |
| How they're judged | how successful their strategies are | how much $$$ they make for the firm |
📚 Learn the lingo
Now we know the main way in which traders and researchers differ, let's hone in on their day-to-day responsibilities.
| Researcher | Trader |
|---|---|
|
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Traders generally face higher stress levels than researchers, who tend to enjoy a more structured, predictable working environment. This is because:
Both roles require a solid foundation in mathematics, analytical thinking, and programming skills. Here are some differences.
| Skills | Traders | Researchers |
|---|---|---|
| Programming Languages | Familiarity with languages like Python or Java for trading algorithms – or the ability to pick these up on the job | Strong skills in languages like Python, R, C++, or Java for data analysis and model development |
| Analytical Skills | Ability to analyze real-time market data and make quick decisions | Deep skills in statistical analysis, machine learning, and data mining |
| Risk Management | Strong ability to assess and manage financial risks in real-time | Focus on developing models that account for risk but may not manage it in real-time |
| Communication Skills | Must be able to communicate strategies and risks clearly to team members and stakeholders | Need to present complex findings in an understandable way, often to non-technical stakeholders |
| Decision-Making | Quick, sound decisions based on real-time data | More time to make decisions based on comprehensive analysis |
| Market Understanding | Deep understanding of market mechanisms and how different factors influence trading | Strong focus on the underlying mathematical principles that govern market behaviour |
| Technical Tools | Trading platforms, risk management software, and other financial tools | Statistical software, data visualization tools, and research databases |
| Speed & Adaptability | Quick to adapt to market changes, often making decisions in split seconds | May work on longer-term projects and have more time to adapt models to new data |
Our data shows that:
The main reason for this distinction is that PhDs generally have significant research experience, which makes them more qualified for researcher roles.
However, this doesn't mean you need a PhD to be a researcher and vice versa.
It really boils down to your individual preferences (Do you like the quick, real-time nature of trading or the slow, methodical nature of research?) and experiences (Did you pursue quantitative research projects as part of your undergraduate studies?).
Both trader & researcher roles pay handsomely. Whether one pays more depends on the firm.
🎓 Hear from a grad
General rule: the closer you are to the money the bigger cut you get. At some firms, QR [quantitative research] is closer to the money and traders are relegated to a somewhat menial role. At others, traders are closer to the money and can earn significantly more than researchers. – Anonymous trader
For more salary intel, check out How Much Do Grads Make at Trading Firms in Australia?
Excited to give trading a try? Search our site for trading jobs & internships and apply away!