What Is Stock Jobbing?
Stock jobbing is a term that means making quick profits on small moves of a stock. The term is mostly out of date now and comes from a British slang term for certain financial market participants. The more common terms for the a similar kind of activity in the markets nowadays might be scalping, or more generally, day-trading or even high-frequency trading. All of these terms refer to behavior that is similar in principle to what stock jobbers did on the London Stock Exchange before 1986. Computerized and other modern trading practices have obscured this similarity.
- This term is a British slang for the roles market makers played in London before 1986.
- The term is less frequently used now, but refers more generally to day trading.
- High-frequency trading, in many ways, is analogous to what stock jobbers did, though technology has changed the dynamics of this process greatly.
Understanding Stock Jobbing
Stock jobbing is a British slang term for short-term day trading where the trader tries to make frequent small profits. The term comes as a generalization in reference to the work done by stock jobbers. These individuals were actually market makers on the London Stock Exchange before October 1986 when London's financial sector was deregulated.
Up until that time stock jobbers (or simply jobbers) were in the business of taking the opposite side of investors or traders orders, and matching them up to similar investors or trades wanting to take the opposite position. The regulations and protections afforded these workers during most of the 20th century and before, made this a fairly lucrative business since all they had to do was process orders and capture a substantial spread (based on fractions instead of decimals). The market eliminated this kind of work in favor of more efficient transaction mechanisms enabled by computers and electronic trading.
But the term stock jobbing lived on as a way of describing any market participant who is seeking for a quick turn of a profit in small fluctuations of price. Floor traders, proprietary day traders, and even high-frequency traders would be the target of a broad application of the term stock jobbers today.
While most investors assume it is better to seek value through long-term investments, stock jobbing (day trading) takes on a more speculative short-term goal. As opposed to using fundamental analysis and selecting investments that professionals believe are likely to grow in price over time, the short-term trader seeks to identify and take opportunities to make quick, small profits and replicate that procedure with as great a frequency as possible.
Stock jobbing types will often use technical analysis to generate short-term gains. High-frequency traders are the most modern version of stock jobbers because they seek to identify, fill and match orders in tiny fractions of a second. The profits made by these firms might be extremely small for any given trade, but this kind of trading is based on the premise that one can identify markets with such high volume that many trades can be done within a single minute.