thebondking
Revered Member
- Messages
- 23
How do you deal with stress?
I'm a Former Equity Derivatives Trader on the Sell-side. Ask me anything
- Thread starter derivstrading
- Start date
- Messages
- 4
1. How big was algorithmic/HF trading in your BB, and how successful were they? In your opinion, could your job be replaced in a few years by computers?
There were two seperate desks. One that focused on pure direct market access electronic trading, so essentially running the execution platform that clients used, and the other was a sort of prop-like quant group that would take down large portfolio of trades from clients.
But the replacement question is a very good one, and probably one of the most misunderstood topics. I dont think computers will ever replace traders in most of the non-cash like products. Computers can replace traders really only in liquid and homogenous products, i.e. stocks. You cannot really have computers replace traders in anything that is either illiquid or non homogenous. If anything if you are trading anything but the cash products, the algo's make your life easier. For example on the derivs desk it was much easier for me to delta hedge using the in house algo's rather than having to go through an actual trader.
So until there is a computer that can manage risk better than a human, I dont think that traders will be replaced.
2. How common is it for grads to start out as an options trader right away (rather than spending a year on the spot market of the product)?
That actually isnt that common from my experience. I was on the derivs desk and i started on that desk from day 1. Thats not to say it isnt important to build a relationship with the guys on the spot market, but from my experience you start in the actual options team. Although I dont think it would actually be a bad idea, and even if you are on the options desk or any desk really, Id strongly advise work shadowing the guys that trade the spot product. Having that communication channel is extremely useful.
There were two seperate desks. One that focused on pure direct market access electronic trading, so essentially running the execution platform that clients used, and the other was a sort of prop-like quant group that would take down large portfolio of trades from clients.
But the replacement question is a very good one, and probably one of the most misunderstood topics. I dont think computers will ever replace traders in most of the non-cash like products. Computers can replace traders really only in liquid and homogenous products, i.e. stocks. You cannot really have computers replace traders in anything that is either illiquid or non homogenous. If anything if you are trading anything but the cash products, the algo's make your life easier. For example on the derivs desk it was much easier for me to delta hedge using the in house algo's rather than having to go through an actual trader.
So until there is a computer that can manage risk better than a human, I dont think that traders will be replaced.
2. How common is it for grads to start out as an options trader right away (rather than spending a year on the spot market of the product)?
That actually isnt that common from my experience. I was on the derivs desk and i started on that desk from day 1. Thats not to say it isnt important to build a relationship with the guys on the spot market, but from my experience you start in the actual options team. Although I dont think it would actually be a bad idea, and even if you are on the options desk or any desk really, Id strongly advise work shadowing the guys that trade the spot product. Having that communication channel is extremely useful.
drop2trash
New Member
- Messages
- 1
How common is it for grads to start out as an options trader right away (rather than spending a year on the spot market of the product)? Thanks
a non knee moose
New Member
- Messages
- 1
Thanks for doing this!
How big was algorithmic/HF trading in your BB, and how successful were they? In your opinion, could your job be replaced in a few years by computers? Note: I don't mean any disrespect with this question! I just heard alot about banks placing alot more emphasis on Technology graduates at the expense of Trading desks now and am curious as to if Tech guys can ever be considered revenue generators.
How big was algorithmic/HF trading in your BB, and how successful were they? In your opinion, could your job be replaced in a few years by computers? Note: I don't mean any disrespect with this question! I just heard alot about banks placing alot more emphasis on Technology graduates at the expense of Trading desks now and am curious as to if Tech guys can ever be considered revenue generators.
- Messages
- 4
1. could you elaborate a bit more on how to successfully 'network' here in london?
I am assuming you are asking as someone who has no contacts in the industry. In that case the best way I found was to try and find people who went to your school and just write an introductory email. Most people will tend to be helpful if you are considerate of their time etc. Also just keep your eye out wherever you are, if you live in London its quite easy to come across people who work in finance randomly, and if you do then just make an introduction and ask if you could email them at some point with any questions you may have. There is no right or wrong way to network, the most important thing is that you are likeable and dont come off as a tool. Sadly some people are unable to do this.
2. What would you say are the biggest Do Nots as a summer intern in S&T? Is it true that basically you are a chaiwala and do very little actual work?
If you do very little actual work then chances are you never got trusted to do any actual work and your chances of an offer are slim. I have an entire guide on how to convert the internship into a summer offer so I cant really summarize it in a short paragraph, but in general the Do Not's can be summed up by Dwight Schrute: "Whenever I am about to do somethign, I ask myself, would an idiot do this? If he would, I dont do that thing".
In terms of work, you will do a fair bit of shadowing, but also you should aim to complete some kind of project work for each desk you are on. And a lot of time this will have to be self initiated, so while shadowing you need to be thinking what could make the traders lives easier. I go through all of this in mcuh more detail in my guide: http://salesandtradingcareers.com/#/internship-guide/4584167754
I am assuming you are asking as someone who has no contacts in the industry. In that case the best way I found was to try and find people who went to your school and just write an introductory email. Most people will tend to be helpful if you are considerate of their time etc. Also just keep your eye out wherever you are, if you live in London its quite easy to come across people who work in finance randomly, and if you do then just make an introduction and ask if you could email them at some point with any questions you may have. There is no right or wrong way to network, the most important thing is that you are likeable and dont come off as a tool. Sadly some people are unable to do this.
2. What would you say are the biggest Do Nots as a summer intern in S&T? Is it true that basically you are a chaiwala and do very little actual work?
If you do very little actual work then chances are you never got trusted to do any actual work and your chances of an offer are slim. I have an entire guide on how to convert the internship into a summer offer so I cant really summarize it in a short paragraph, but in general the Do Not's can be summed up by Dwight Schrute: "Whenever I am about to do somethign, I ask myself, would an idiot do this? If he would, I dont do that thing".
In terms of work, you will do a fair bit of shadowing, but also you should aim to complete some kind of project work for each desk you are on. And a lot of time this will have to be self initiated, so while shadowing you need to be thinking what could make the traders lives easier. I go through all of this in mcuh more detail in my guide: http://salesandtradingcareers.com/#/internship-guide/4584167754
- Messages
- 4
Taking these in order:
1. What do you think does it take to be successful trader in derivatives?
If you are asking what it takes to become the next legendary trader that pulls in millions then the dissappointing answer is that it probably takes a lot of work (which is fine because you can control), but to a huge extent and more depressingly it also takes a lot of right place/right time. Theres nothing wrong with shooting for the stars, but dont stake your sanity on getting there.
Now, I think the more appropriate answer is to talk about what a person can do to make an excellent living as a trader on the sell side, and I think it comes down to a couple of high level concepts to keep in mind:
Depends how you define good. Its a bit hard to say in trading because if its just PNL, well you probably have tons of people who are bad "traders" but get lucky (but then does that mean they are good traders?). But the one thing you can judge is whether you will enjoy trading, and if you enjoy it then chances are you will do all you can to be the best you can be. Sometimes chips will fall into place, sometimes they wont, but in the end you dont have control of everything as a trader, and you need to accept that. But as long as you enjoy it then you will do it with a passion and that usually leads to success. If it leads to millions in the bank is anyones guess.
3. How did you get a job on the buy-side?
Funnily enough it was a day when a chunk of my team got let go on the desk I was on, and so I began looking and found a couple online postings on the companies website. Sent off a CV and then couple months later handed in my notice. I got really lucky in the end, but then again, better to be lucky than good (or again is lucky actually good in this business? who knows)
But the take away is that you wont catch any fish if you dont throw out a net. Most of my career breaks came from what seems like chance occurences, but thats how life works, and if your net is out there then you will come across these. You only need 1 life changing occurence...
4. What is the most common myth that students have who want to pursue a career in this field?
6. What were the top three credentials that you looked for in a candidate interviewing at your BB firm?
Tbh the main thing I looked for was that they demonstrated they are really interested in the subject matter. I always looked for a candidate to have an idea of what are of trading they are actually interested in (even for summer internships) and then be able to prove to me that they have done research into that area. If a kid says they want to be in equity derivatives trading but then cant have a conversation about greeks then its not a good sign. And then the next step is to see if this person can use the knowledge learned and apply it to a slightly different situation. Id always test the candidates knowledge as far as it would go, and then would ask a question that he hasnt come across but can be answered using the knowledge he already demonstrated.
7. What made you change to the buy-side after several years?
More interesting work (in terms of diversity), more upside, better working environment
8. Was it more difficult to make the switch given you were in a BB for >2 years?
Not really, I was in that sweetspot where I had experience running a book but was still considered cheap labor. You are right you dont want to wait too long, but you need some good experience to be able to be considered.
9. Any general tips for us trying to break in (both to banking and to the buy-side)?
Sort of impossible to answer in just a few sentences, but I would say that the main thing is to explore as many opportunities as possible. For my first internship after freshmen year I sent out a CV and cover letter to 65 firms in my home city to see if they would take an unpaid intern for the summer. I got one response for interview at a PE shop. Arguably that stint led to my BB internship the following summer. When you only need one, it does come down to a numbers game.
10. Could you describe your craziest night out with clients?
As a sell side trader I thankfully never had to go out with clients, cant think of anything worse than taking someone out and needing to show them a good time even if I dont fully like them. IMO sales people have the worst job in the industry, but to each their own.
11. How should I improve my CV and cover letters to cover the fact I have no relevant work experience?
If you cant get work experience, try to get as much self experience as you can. By that I mean try really starting a business, just do something where you show you can succeed in a tangible way.
Apologies the answers got shorter as I went along, so if anyone has clarifying questions feel free.
1. What do you think does it take to be successful trader in derivatives?
If you are asking what it takes to become the next legendary trader that pulls in millions then the dissappointing answer is that it probably takes a lot of work (which is fine because you can control), but to a huge extent and more depressingly it also takes a lot of right place/right time. Theres nothing wrong with shooting for the stars, but dont stake your sanity on getting there.
Now, I think the more appropriate answer is to talk about what a person can do to make an excellent living as a trader on the sell side, and I think it comes down to a couple of high level concepts to keep in mind:
- Always watch your back: never trust too much in this business, always remember that not everyone is your friend, even if they act like it, always think about what incentives people have. I remember as a sellside trader id have 20 brokers trying to be my friend, once I moved to the buyside and changed products I talk to 2 guys. When you stop being an asset for people you quickly find out who your friends are, and therefore never divulge more than you have to to anyone because there will maybe come a time when they will want to get you out of the way.
- Network = net worth: this is cliche, but im adding it because many people think that as a trader it doesnt really matter because its all about that PNL. Well think again, because some of the best PNL opportunities come from relationships. Even little things like having very close relationships with the brokers (yes the same ones that arent your real friends) can make a career for a trader. Notice how you both pretend to be each others friends, that is sort of the underlying theme of the financial world
- Never do something you cant explain afterwards: this is a bit abstract, but in essence as long as all your decisions are defendable then you will do alright
- You cannot play the game without chips: translated to do not risk your career on a single trade
Depends how you define good. Its a bit hard to say in trading because if its just PNL, well you probably have tons of people who are bad "traders" but get lucky (but then does that mean they are good traders?). But the one thing you can judge is whether you will enjoy trading, and if you enjoy it then chances are you will do all you can to be the best you can be. Sometimes chips will fall into place, sometimes they wont, but in the end you dont have control of everything as a trader, and you need to accept that. But as long as you enjoy it then you will do it with a passion and that usually leads to success. If it leads to millions in the bank is anyones guess.
3. How did you get a job on the buy-side?
Funnily enough it was a day when a chunk of my team got let go on the desk I was on, and so I began looking and found a couple online postings on the companies website. Sent off a CV and then couple months later handed in my notice. I got really lucky in the end, but then again, better to be lucky than good (or again is lucky actually good in this business? who knows)
But the take away is that you wont catch any fish if you dont throw out a net. Most of my career breaks came from what seems like chance occurences, but thats how life works, and if your net is out there then you will come across these. You only need 1 life changing occurence...
4. What is the most common myth that students have who want to pursue a career in this field?
- That its easy to get paid a lot of money (its not)
- That its a very exciting and sexy job. Just like any job it becomes repetitive and you do have to find the subject matter interesting. People forget that to master something requires repetition
- Biz related: ft.com, businessinsider.com, zerohedge.com
- Non Biz related: espn.com
6. What were the top three credentials that you looked for in a candidate interviewing at your BB firm?
Tbh the main thing I looked for was that they demonstrated they are really interested in the subject matter. I always looked for a candidate to have an idea of what are of trading they are actually interested in (even for summer internships) and then be able to prove to me that they have done research into that area. If a kid says they want to be in equity derivatives trading but then cant have a conversation about greeks then its not a good sign. And then the next step is to see if this person can use the knowledge learned and apply it to a slightly different situation. Id always test the candidates knowledge as far as it would go, and then would ask a question that he hasnt come across but can be answered using the knowledge he already demonstrated.
7. What made you change to the buy-side after several years?
More interesting work (in terms of diversity), more upside, better working environment
8. Was it more difficult to make the switch given you were in a BB for >2 years?
Not really, I was in that sweetspot where I had experience running a book but was still considered cheap labor. You are right you dont want to wait too long, but you need some good experience to be able to be considered.
9. Any general tips for us trying to break in (both to banking and to the buy-side)?
Sort of impossible to answer in just a few sentences, but I would say that the main thing is to explore as many opportunities as possible. For my first internship after freshmen year I sent out a CV and cover letter to 65 firms in my home city to see if they would take an unpaid intern for the summer. I got one response for interview at a PE shop. Arguably that stint led to my BB internship the following summer. When you only need one, it does come down to a numbers game.
10. Could you describe your craziest night out with clients?
As a sell side trader I thankfully never had to go out with clients, cant think of anything worse than taking someone out and needing to show them a good time even if I dont fully like them. IMO sales people have the worst job in the industry, but to each their own.
11. How should I improve my CV and cover letters to cover the fact I have no relevant work experience?
If you cant get work experience, try to get as much self experience as you can. By that I mean try really starting a business, just do something where you show you can succeed in a tangible way.
Apologies the answers got shorter as I went along, so if anyone has clarifying questions feel free.
hitchensism
Resident
- Messages
- 35
- Alumni
- UCL
Your university will host insight programmes from banks (boosts your CL), and there will likely be events, such as trading games and M&A simulations, hosted by banks to give practical insights. If you rack up a few of those you'll be fine.
Experience isn't a necessity at this stage, but a demonstrable interest is.
Kiranjeet Kapoor
New Member
- Messages
- 1
Starting applications for spring weeks, no financial experience whatsoever, will be studying economics at Cambridge university. How should i improve my cv and cover letters to cover the fact I have no relevant work experience?
hitchensism
Resident
- Messages
- 35
- Alumni
- UCL
- What made you change to the buy-side after several years?
- Was it more difficult to make the switch given you were in a BB for >2 years?
- Any general tips for us trying to break in (both to banking and to the buy-side)?
Thanks
- Was it more difficult to make the switch given you were in a BB for >2 years?
- Any general tips for us trying to break in (both to banking and to the buy-side)?
Thanks
Canary Wharfian
Administration
- Messages
- 23
What is the most common myth about a career in trading?
Which web sites do you visit regularly?
What were the top three credentials in a candidate that you looked for when you interviewed them?
Thanks for doing this.
Which web sites do you visit regularly?
What were the top three credentials in a candidate that you looked for when you interviewed them?
Thanks for doing this.
- Messages
- 4
As the title says, worked for several years as an equity derivatives trader and now work on the buyside in a more credit derivatives oriented role. Happy to answer questions about anything to do with regards to getting into the industry, trading technicals etc.
Similar threads
