Q&A: 1st year BB London Rates Trader Taking Your Questions

RichardPennybags:

Thanks for doing this! What are your top 3 tips for assessment centres? How do you stand out in a group of 20 people who are just as good on paper and have read the same guides as you?

I have been to 5+ assessment centres and always got an offer, so hopefully I'm doing something right. Honestly I think narrowing it down to 3 is pretty much impossible, so I'll write a long post based on personal tips and things and mistakes I hear from people at my desk. Each bank does a quite different assessment centre, so I'll divide this based on the different activities you'll have to do.

Trading game Generally this will be done in groups. There are turns. Each turn a group makes a market and the others buy/sell from them. In each turn more information is revealed so you can adjust your position and prices. - Who wins or loses is of no importance. It does have a strong luck component. Make sure you do the right things and you will be in the clear. - Make sure your group ALWAYS knows EXACTLY what your positions are and what your PnL is. If the others don't listen to you and you have to do it yourself and not interact much with the market making process do it anyway. You will be asked this and it looks extremely bad if you say something like your PnL is $400 when it's actually $12. And this happens much more often than you would think. People just focus on whether they are long or short and whether they want to be longer shorter. Your exact position matters a lot (see next point) - Don't take ridiculous risks. This is a serious game to assess your abilities for a market making desk at a bank. Our job is not to take a punt and see if we are right. If you decide to always buy in lots as big as you can and think something like "I'll either be first or last" people won't appreciate it. It's fine to cut losses and change your mind. It's fine to trade small lots if you are unsure. Risk management is key. - Write down what the other people are buying and selling. At any point in time you should be able to tell what the exact positions of the rest are. This will help a lot when you have to make a market. - Pay attention to the details. Try to avoid things like trying to buy at the dealers bid price. - Don't behave like an asshole. Yes, you need a type A personality, but if you keep bulldozing your ideas through, being pushy and not listening to anyone you will be dinged. You need to show you have the perfect balance between putting your ideas forward and being flexible and able to recognize when other people have better ones or are just not willing to go along. Make sure when you disagree you say it though. - Don't try to push the market. There's always the team that makes a ridiculously high market because they are long. It doesn't work and it will make you look like an idiot.

Group Dynamic + Presentation This will mean something like having to pick an investment or two among 8 or 10 for an investor profile and then present it to the people watching. - There's not a right answer. Never. All of them have pros and cons. Don't be adamant about having to go with one. Make sure you are the one to always point out the merits and disadvantages of every one of them and keep an open mind. The key here is to pick something quickly (doesn't really matter what) so you can prepare the pitch in depth and address all the problems of the product and find a way of "beautifying" them since you can pretty much predict the questions you'll get. They WILL ask you and they WILL be very hard on you. If you do the pitch in 3 minutes and don't think of a way of answering the questions you'll be fucked. You can openly say it, like "Guys, I believe there is no right answer here, so I believe we should choose something quickly and focus on making a good pitch" - The "don't behave like an asshole" point from above becomes even more important. Watch your body language, the way you talk to people, the volume of your voice, your face when someone else is talking. Always have a respectful smile and look relaxed. - Only talk when you have something to say. Don't be the guy who sits in the corner and says nothing, but don't be the guy who keeps on talking without adding anything useful. Again, balance is key. - Write things down and manage the time. This will make you look like you are in charge. You'll be the one to say "So we have agreed on X", "There's 6 of us vs 2 who agree on Y", "The remaining questions to answer are Z" "We have been talking about this 2 minutes over our time and we still need to discuss alternative A so let's make a decision". - When presenting make sure you always go first or second and you exactly stick to your time. You will generally have a very short time, something like 3 minutes for 6 people to speak, so everyone gets 30 secs. People will always go a bit above their time and there will always be an asshole who talks for like 1 minute. If you are the last one you won't be able to speak, which means the people who talked too much will look bad and the ones who didn't talk will miss a chance for shining. - Avoid being in a conflict at all costs. There will likely be one, profit from it. Instead of being the one involved be the one who acts as a referee, proposes compromise and solutions.

Individual Presentation You are given market info and research and you have to propose a trade idea. - Some people try to make very long presentations to get fewer questions. I think you should do the opposite. Keep it as short as possible, no matter how much time they give you, even if part of that time goes to questions. The more you say the more likely it is you'll say something stupid or you'll say something that will give them a chance to poke a hole in your thesis. Be brief and then answer their questions the best you can. - Be flexible. If someone asks a question that basically sinks your idea it's OK, just propose a solution, say something like "You are right, however that could be solved hedging/buying/ XYZ in addition to the original proposal" - Remember general presenting rules like voice inflection, volume, hand moves, etc... Don't forget everything just because you are nervous.

Interviews General rules still apply, there is plenty of advice on the site, but I would like to add one thing. If it is a program where they make desk specific offers you still will be interviewed by all the desks with spots. Make sure you perform in all of them! Many people just focus on the one they really like. Yes, you need the desk you like to pick you specifically, but you also need good reviews from everybody else because they all talk about all the candidates. So if 3 EDs from other desks didn't like you, you won't get a job no matter how much your perfect desk loved you. This doesn't mean you have to tell each of them their desk is your first choice either, you'll be fucked if you do that too. However say something nice about all of them and say you are open (you can't really be picky in this market) If you want to do sales and it's a structuring desk say something like "I have always wanted to do sales because of.... but I think I would also be open to a structuring desk because I would be able to do longer-term projects, go really in depth into products and develop my technical knowledge, and I would still be able to see clients and participate in the sales process".

f4tality:

Day in a life :) ? Also, what's your interaction with Sales and Structuring like and what's your take on your job and their's (like it / hate it etc)?

Interaction varies a lot depending on what you trade exactly and how your firm is structured. In rates for example, Govies people have way less interaction with structurers than the exotics desk. In general products with a high flow (Govvies and Swaps in rates) will interact a lot with the sales force, providing prices and asking for feedback. So for example if a sales guy asks for a price in XYZ bond and we don't close the trade the trader will ask the sales guy to try and find out what price did the client get. This helps to read the market and how other people in the street are marking their books. They will talk to structurers from time to time to give them market comment and maybe participate in the pricing of something, but not that much. The exotic desk will work quite closely with the structurers in coming up with new ideas and pricing stuff. Then the trader will trade it and keep managing the risks in the book (which tend to be quite large and for a very long time on these products). The people trading the more vanilla stuff provide prices for the sales force, but since the flow is way lower you talk to them less. They also price more complex stuff for the sales force, but this isn't a 2 second process like giving a price on a bond, it's fine if you take minutes to give a price. Sales and structuring interact a lot between themselves, since sales people handle the relationship with clients that want very complex bespoke solutions or just the people the structurers want to sell their new idea to. The structurers will come up with it, price it with the traders and then go along to the meetings with the sales guys to pitch the product. My take on their job is that every job is different, has it's pros and cons and they are all suited for a different personality. Interns are sometimes very closed-minded (guys want to trade, girls want to sell, no one wants to structure) when many times there are better fits and opportunities for them. I am hugely generalizing here because the roles vary a lot depending on bank, product, etc.. Trading is probably the worst job in many aspects, it's the one that has more downsides in my opinion. It's exciting, you are the only one who manages risk and that is very appealing for some people. You are in close contact with the market and it's a constant challenge. The downside is you specialize way too much (as in you will trade the Euro Swap curve between 5y and 10y and that's your whole world) so it can get repetitive and boring after a while if you don't love it. There's a lot of pressure, specially in market making, sometimes you get stuck with a position you can't get out of but if you lose money you still have to explain yourself, even if it wasn't your fault which can be very frustrating. There's pretty much no exit opportunities, unless maybe trade something similar or trade at another firm. There are also certain politics involved with the sales force and big clients when giving prices, and some times you can either take some risk on your books that you really don't want or spend an hour on the phone explaining yourself, which drives some traders crazy. Sales allows you to meet clients and develop relationships with them. For some people client contact is everything. You are also following the markets closely, so there is the excitement component. You will see many more products than in trading which is cool. You make presentations and pitches, which some people love. Downsides are you are not a decision maker, just an intermediary. You don't know products and risk in depth. You have to be a good politician, because you have 2 clients, the firms clients and your traders. If you keep fucking your traders over they won't give you good prices. On the other hand, if you help them when you can, then chances are that when you need a favour to score points with an unhappy client the traders will do it, so it's a difficult balance. Structurers are the more quanty people. They see a lot of different products in depth, which makes them experts in pretty much everything, so it's the best education you can get on the floor, and can be very useful to move to trading or sales. Many people at my firm have done those moves. You also get to work on longer projects and analyze things in depth if you like that, and that gives you more flexibility (as in you can leave the office and go for lunch with a friend if you want to) You also get some client interaction, so it's a good balance with a sales role. Downside is you tend to be very removed from the markets and the day to day minute to minute excitement, which makes the transition to other roles harder for some people. There are also a lot of mixed roles and overlap, for example trading structured products is very different from govvies, but as a generalization I guess this works.

Day in my life is a bit difficult because work varies a lot and what we do is pretty much give prices all day, but I'll try. I wake up at 5:30-45, shower and get something to eat and drink (I have breakfast in the tube to optimize my time). I get in at 6:45 or so. First thing I do is send the risk out to the desk so everyone knows what we have in the books. Then send our axes to the sales force. Afterwards, I read all the market commentaries from our traders in Asia and news in newspapers, BBG, email, etc... Sometimes I go to the morning meeting if the desk has something special to say or there is anything particularly important that day. I generally have another breakfast at around 8 or 9. By this point markets are already active so from then on is more about following the markets, booking trades, solving problems about spreadsheets and settlements and shit like that with the back office, helping the senior traders in whatever they want me to and making some small trades on my own. When I get a bit of free time I read internal research on our markets and work on some long term projects (like improving spreadsheets and stuff like that) and ideas I have. I have lunch between 12 and 2 depending on how busy I am. At around 5 I start doing the daily PnL, and writing market commentary for the firm. When I finish I'm pretty much free to go home. I generally spend some time working on those long term projects or go straight home/gym/beers, depending how tired I am. I generally get out between 6 and 7.