What Is a Head Trader?
Let me tell you directly: a head trader is the manager running a trading business, handling the positions, risks, and overall profitability. If you're in a registered securities firm, this role means supervising all traders and other staff under your watch, and you might even trade yourself. Most importantly, you're in charge of making sure everyone in the trading operation follows regulatory and internal rules—not just the traders. Sometimes people call this position the 'head of trading.'
Understanding a Head Trader
As a head trader with supervisory or approval duties in a securities operation, you have to be a registered principal. That means holding basic securities licenses plus one of these certifications: Series 4 for registered options principal, Series 9 and 10 for general securities sales supervisor, Series 23 for general securities principal sales supervisor, Series 24 for general securities principal, Series 51 for municipal fund securities limited principal, or Series 53 for municipal securities principal.
The specific exams you need depend on your exact responsibilities. In smaller firms, you might be one of just a couple of head traders, but in big ones, there could be several, each handling a particular market. For instance, if you're overseeing municipal securities, you'd need at least a Series 53 license. Different licenses apply if you're in futures or commodities. A registered options principal, for example, holds a Series 4.
Head Trader Job Description
In places like wealth management firms or money managers, you as a head trader might report to a chief investment officer or chief operating officer. You'll play a central role in handling and executing trade requests. You're also tasked with building and keeping relationships with external brokers and custodians. You need to be one of the top experts in your firm on markets and trading systems.
Your daily work could include managing trades from start to finish, covering building them, pre-trade checks, execution, and settlement. You ensure everything complies with regulations and best execution rules. You might design trading setups, policies, procedures, evaluate brokers, and keep trading records. Plus, you assist portfolio managers with rebalancing and allocating assets.
Head Trader Job Evolution
Regulations are changing fast, and that's shifting what you do as a head trader. Your focus is moving away from hands-on trading toward more supervision and compliance. In Europe, MiFID II rules are pushing you to prioritize market structure and regulatory updates over watching market moves. You still need to be a trading veteran to get this job, but now you might spend only a little time actually trading securities.
Example of Head Trader Order Execution
Imagine you're the head trader at a mid-sized hedge fund, and the portfolio manager hands you an order to buy 100,000 shares of ABC stock 'best way.' You know ABC is thinly traded, averaging 150,000 shares a day, so you place 50,000 shares to buy in a dark pool to avoid moving the price. Then you check dealer indications for a natural seller, which could lead to a cross trade.
You avoid working the order through machines because the size is too big for that stock. This kind of knowledge is key for best execution, and it comes from years in the field.
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