Trading
Discover what trading is, how market makers and proprietary trading firms price and manage risk, what the work involves and how students can prepare for internships and junior trading roles.
Introduction
What is trading?
Trading firms buy and sell financial instruments, such as options, ETFs, futures and equities, on exchanges around the world. Market makers quote a buy price and a sell price continuously, earning the small difference between the two, the bid-ask spread, while managing the risk of the positions they end up holding. Other traders take directional or statistical positions based on research and models, aiming to profit from where prices move. This is different from investment banking, where the bank advises companies on deals and earns a fee, rather than putting its own capital directly at risk in the market.
The instruments traded shape the job in practice. An equity market maker quoting a liquid stock mainly worries about inventory: how much of that stock it has bought or sold and how quickly it can offset that position. An options market maker has a harder problem, because an option's fair value depends on several inputs at once, the price of the underlying asset, time to expiry, interest rates and, above all, implied volatility, so the desk is really managing a portfolio of sensitivities rather than a single position. Futures and other exchange-traded derivatives sit somewhere between the two: relatively simple to price but often used by desks to hedge the risk built up elsewhere in the book. That is also why the term trading covers such different day-to-day jobs, from a market maker who quotes thousands of instruments in parallel through automated systems, to a discretionary trader who holds a small number of larger positions based on a specific view.
What they do
What trading firms do
Behind every quote on a screen sits a chain of work that is easy to miss from the outside: a model that estimates fair value, a system that turns that value into a live price, a risk framework that limits how much can go wrong, and people who watch all of it and step in when something looks off. The list below breaks that chain into its main parts.
Step by step
How a trading strategy comes to life
Lifecycle
How the trading day and strategy lifecycle works
A trading day usually starts before the market opens, with a review of overnight news, positions carried from the previous day and any changes to models or strategies. Once the market opens, a market maker's core job is to keep quotes accurate and competitive across many instruments at once, while a directional trader watches for the conditions that match their strategy.
Throughout the day, positions build up as trades are filled, and traders continuously manage the resulting risk, sometimes hedging it with other instruments. After the close, the desk reviews what happened: which trades were profitable, where models were off, and what needs adjusting before the next session. This loop of research, live trading and post-trade analysis repeats every day and is how strategies and pricing models are gradually improved.
Hedging is worth explaining, because it is what separates deliberate risk-taking from simply hoping the market moves your way. When a market maker sells an option, it does not want its profit to depend on which direction the underlying stock happens to move next. Instead, it typically buys or sells a calculated amount of the underlying stock so that small moves in the stock price no longer affect the value of the combined position, a technique known as delta hedging. That hedge has to be adjusted repeatedly as the stock price and time to expiry change, which is part of why options market making is systems-intensive: the desk needs to recalculate its hedges continuously, not just once at the start of the day. Directional traders use hedging differently, often to strip out a risk they are not trying to take a view on, such as hedging out broad market moves so that only the specific mispricing they identified drives the result.
Types
Types of trading firms
These categories overlap in practice, a single firm can act as a market maker in one product and run a directional strategy in another, but they are useful for understanding how a firm is exposed to the market and where it sits in the trading ecosystem.
Roles
Roles in trading
Intern
A student who shadows a desk and works on small, well-defined tasks.
Junior Trader / Trading Assistant
A starter who supports a desk with pricing, monitoring and small positions under supervision.
Trader
Owns pricing and risk for a set of products and makes the day-to-day trading decisions.
Senior Trader
Handles larger, more complex risk and often mentors junior traders on the desk.
Desk Head / Portfolio Manager
Sets strategy and risk appetite for a desk or a group of strategies.
Career timeline
How long each step tends to take
Trading has less of a fixed ladder than banking or private equity, and timing depends heavily on the firm and how quickly someone develops. As a rough guide, the path from intern to senior trader tends to look something like this.
Most people who join full-time start as a junior trader or trading assistant, often two to three years, learning the products and building the intuition needed to take on real risk. Becoming a trader with your own book typically follows after that, and traders often spend several years developing a track record before being trusted with larger, more complex risk as a senior trader.
Reaching desk head or portfolio manager, the most senior level, generally takes many years of consistent performance. Because so much depends on individual results, careers in trading progress less predictably than in advisory roles, and some people move on to other paths along the way.
| Level | Typical time in role |
|---|---|
| Junior Trader / Trading Assistant | often 2 to 3 years |
| Trader | 2 to 4 years |
| Senior Trader | several years |
| Desk Head / Portfolio Manager | most senior, many years in total |
The business model
How trading firms make money
The most basic source of profit for a market maker is the bid-ask spread: the small difference between the price at which it buys and the price at which it sells. Multiplied across huge volumes and many instruments, that spread adds up. Exchanges also sometimes pay rebates to firms that provide liquidity, since a market with active quotes is more attractive to other participants.
Alongside pure market making, many firms also run proprietary directional strategies, taking a view on where prices are heading, and statistical arbitrage strategies that look for temporary mispricings between related instruments. Technology and speed are a real competitive edge in this world: faster, more accurate pricing and execution mean better quotes and fewer losing trades, which is why trading firms invest heavily in their systems.
Risk management sits underneath all of this, and it works differently from the way it is often imagined. A trading desk does not simply try to avoid losses on individual trades, since some losing trades are inevitable even with a sound strategy. Instead, risk is managed at the level of the whole book: position limits cap how much exposure any single trader or strategy can build up, loss limits force a review or a reduction in size once losses reach a certain point, and independent risk teams monitor exposure across the firm so that no single desk's problems can threaten the business as a whole. Stress testing, checking how the book would perform in a sharp market move, is a routine part of that process rather than something reserved for crisis moments.
Compensation
Compensation in trading
Compensation in trading typically has two parts: a base salary and a bonus. What sets trading apart from many other finance paths is how directly that bonus tends to be linked to performance, either the trader's own trading result or the performance of the desk or firm as a whole, rather than following a fixed structure.
Because of that link to performance, compensation in trading can vary more from year to year, and between individuals, than in roles built around advisory fees. Junior roles tend to have a larger fixed component, while more senior traders who manage their own risk usually see a bigger share of their total pay determined by results.
Exact figures vary widely by firm, product, seniority and market conditions, and are not something we publish as fixed numbers. The most reliable way to understand what a specific role pays is to ask directly during the recruitment process.
Juniors
What interns and juniors do
Junior team members build the intuition and habits that trading later depends on.
- Shadowing traders on the desk
- Running risk checks
- Building small pieces of tooling
- Supporting data analysis
- Learning pricing intuition
- Monitoring live positions
- Reviewing trades after the close
- Learning the firm's products
Skills
Skills you need
Routes
Best routes into trading
Compare
Trading versus other finance paths
Trading vs investment banking
Investment banking advises companies on deals and is paid a fee for that advice. Trading involves putting the firm's own capital at risk in the market, so results depend directly on trading performance rather than closing an advisory mandate.
Trading vs asset management
Asset management makes longer-horizon portfolio decisions for clients. Trading generally operates on a much shorter horizon, taking and unwinding risk within a day or over a few days.
Trading vs quantitative research
Quant research focuses on building and testing models. Trading is the decision role that actually takes the risk based on those models, and can be a natural next step for a researcher.
Trading vs risk management
A risk manager sets and enforces the limits within which trading happens and is deliberately independent from the desks it oversees, so its incentives are not tied to trading performance. A trader operates inside those limits and is judged on results, which is why the two functions are kept organisationally separate even though they work closely together every day.
Employers
Trading employers in the Netherlands
A selection of well-known trading firms active in the Netherlands, grouped by type. We only list firms we have verified and expand this over time.
Dutch-founded market makers
International firms with an Amsterdam office
Vacancies
Trading vacancies
We only show real, current openings with a link to the employer. Internships, working-student roles and junior trader positions appear here. In the meantime, browse all current vacancies.
View all vacanciesPreparation
How to prepare as a student
Resources
Recommended resources
FAQ
Frequently asked questions
What is trading?
Trading means buying and selling financial instruments such as options, ETFs, futures and equities, either by quoting prices continuously as a market maker or by taking directional positions based on research and models.
What is the difference between market making and directional trading?
A market maker quotes both a buy and a sell price on an exchange and earns the spread between them while managing the risk of the resulting inventory. A directional or quantitative trader instead takes a view on where prices are heading and profits if that view turns out to be correct.
Do you need a finance degree to become a trader?
Not necessarily. Many trading firms hire strong candidates from mathematics, physics, engineering, computer science and econometrics, and place more weight on numerical reasoning and problem-solving than on a specific degree title.
How is trading different from investment banking?
Investment bankers advise companies on deals and are paid a fee for that advice. Traders put a firm's own capital at risk in the market and their result depends directly on trading performance rather than on closing an advisory mandate.
What does a typical trading interview process look like?
Processes generally combine numerical and probability tests, trading or brain-teaser style interviews, and sometimes a trading simulation or assessment day, on top of standard interviews about motivation and fit.
Is coding required for a trading role?
Programming, especially Python and sometimes C++, is increasingly expected, since traders often build or adjust their own tools and pricing models rather than relying only on spreadsheets.
What is the work-life balance like in trading?
Trading days are generally tied to market hours rather than open-ended, but the work can be intense and requires sustained concentration while markets are open, with research and preparation happening around those hours.
Can you move from trading into other career paths?
Yes. Traders sometimes move into quantitative research, portfolio management at asset managers, risk management or technology and start-up roles, since the analytical and decision-making skills transfer well.
Related
Related finance paths
Start your trading journey
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