Head Trader

What is a head trader?

A head trader (also called head of trading) manages a trading business and is ultimately responsible for its positions, risk profile, and profitability. In registered securities firms, the head trader supervises traders and other trading personnel, may execute trades personally, and ensures regulatory and internal compliance across the trading operation.

Key takeaways

• The head trader oversees trade execution, risk management, and the trading desk’s profitability.
• They typically report to senior investment or operations leaders and assist portfolio managers with trade requests.
• The role requires deep market knowledge and familiarity with trading systems, brokers, and settlement processes.

Licensing and qualifications

Head traders with supervisory or approval responsibilities must be registered principals and hold the appropriate securities licenses. Required exams depend on the market and responsibilities; common examples include:
* Series 24 — General Securities Principal
Series 4 — Registered Options Principal (for options desks)
Series 53 — Municipal Securities Principal (for municipal securities)
* Series 9 & 10 — General Securities Sales Supervisor (alternative path for supervision)

Different exams apply for futures and commodities trading. The exact credential mix varies by firm and desk.

Core responsibilities

Typical duties of a head trader include:
* Managing trade lifecycle: pre-trade analysis, execution strategy, trade building, and post-trade settlement and review.
Ensuring compliance with regulations and firm best-execution policies.
Designing trading architecture, policies, procedures, and record-keeping systems.
Evaluating and maintaining broker and custodian relationships.
Assisting portfolio managers with rebalancing, asset allocation, and trade implementation.

How the role has evolved

Regulatory changes and greater emphasis on market structure have shifted the head trader role away from day-to-day manual trading toward supervision, compliance, and systems oversight. In many firms, head traders now spend more time on policy, market structure analysis, and oversight, leaving a smaller portion of their time for direct trading.

Example: order execution decision

A portfolio manager hands a head trader an order to buy 100,000 shares of a thinly traded stock that averages 150,000 shares daily. To avoid moving the market, the head trader might:
* Place part of the order in a dark pool to conceal size,
Check dealer indications of interest to locate natural sellers, and
Avoid executing all shares through public order books where the size would likely push the price.

Such execution choices rely on desk experience and market knowledge and are central to achieving best execution for clients.

Skills and experience

Effective head traders combine:
* Extensive market and product knowledge,
Strong risk-management and compliance awareness,
Leadership and communication skills for managing teams and external relationships, and
* Technical familiarity with trading platforms and execution algorithms.

A head trader’s judgment—which instruments to use, which venues to access, and how to size and pace trades—depends on experience and a firm’s risk and compliance framework.