Trading can be a very demanding and tedious role within a firm. You’re dealing with millions of dollars and all kinds of different client situations, custom strategies, taxes, strategy changes, and market volatility. On top of all of that, you have your daily responsibilities and tasks, and you are getting pinged with many emails about different things and situations. I actually believe trading is the most difficult job at a firm, more so than being a portfolio manager. With equities, the consequences of making an error are immediate. If you buy the wrong number of shares or input the wrong ticker, you’ve just made an error. At that point, you’d want to notify your manager immediately or, if you’re running your own firm, contact your custodian. With mutual funds, on the other hand, you could purchase the wrong amount or wrong ticker and still be fine so long as you catch the mistake before market close or before the fund calculates its NAV. Mutual funds are more forgiving than other securities when it comes to trading. Trading qualified accounts is easy because you don’t have to worry about taxes. You just have to make sure you are trading to the correct strategy and the allocations are where they need to be. Sure, there are custom strategies, but if you take your time and research the account and client, everything is pretty straightforward. Trading non-qualified accounts is another beast entirely. With non-qualified accounts, you have to worry about taxes, allocations, strategy changes, capital gains distributions for mutual funds, placeholders, margin calls, and wash sales when tax-loss harvesting. It’s a real beast when trading taxable accounts. Conversations with clients, upper management, and your immediate team are crucial both before and during trading so that no trade errors get made. Even when everything goes right, things can still fall through the cracks. Attention to detail and good communication are important in every job, but especially in trading.
