How to break into trading? - High quant background?

Heya,

So what different backgrounds do you need? For example, if you want to trade fixed income securities or options, don't you need some type of mathematical background? (In that case, is an MFE a good choice?)

Whereas equities, you don't necessarily need a "highly quant," background?

Correct me if I'm wrong, I'm kind of new to the whole trading scene.

 

It's not required, but for the more complicated FI products you will often see Mathematics, Engineering, Economics or MFE backgrounds.

Jack: They’re all former investment bankers who were laid off from that economic crisis that Nancy Pelosi caused. They have zero real world skills, but God they work hard. -30 Rock
 

So,

I am not 100% if I want to do Ibanking or trading, but feel like my skill-set/interests are more inline with trading. Since I am a Finance/Accounting major at a semi/non target state school, do you guys think it would be a bad idea to take some math classes and apply for MFE programs if I can't get a gig right out of school?

 

I'm currently doing a double major in math and finance. I say you definitely need the quantative background even if you don't want to necessarily become a "quant." Technical skills will get you anywhere. As for me, I'll be applying to MFE programs; however, there are quite a few prerequisites in order to assimilate right into the program. If you are interested in the MFE, go to MFE schools and look at the classes you should take before the program (E.g. Stanford, Chicago, Carnegie, Berkeley, Princeton, NYU, etc.). You'll see math, stats, computer programming (C++, MATLAB), and a few basic finance/accounting things. If you don't want to jump into that program, go for a math or stats minor. That'll boost your resume because you'll get the technical skill set. By the way, look at all the students getting into those programs. You're best bet is to do math, engineering, physics, programming, or some other related major if it's not already too late. However, anyone can become a trader if he/she puts his/her mind to it. There are alumni from my school that were history, elementary education, and musics grads. If you really want to become a trader, you can.

 

depends on your experience, background and drive.

overall, getting a trading job is very difficult for those who haven't really shown interest in finance. If you do have a good background, then I think it's a bit easier getting the interviews, but trading isn't as much a structured interview process like IBD, so it's more personality based when you do get the interviews.

it definitely is easier if you're quantitatively minded, but that is definitely not a requirement (unless ur on a exotics desk or something).

Overall, due to the lack of structured process (at least at my school), it definitely is a lot harder to get into than IBD.

 

I disagree, some of my friends go to a top university for math in the world. They went into either rates or equity derivative trading. You will see alot more math majors, who did like an MFE in that area than you will see engineering grads. CS is another very popular major.

Outside of rates,derivatives and maybe some exotics. The most you need to trade is an understanding of finance/the product (no more than a econ/history major).

 

There is no better major than math. I learned that too late and am now playing catchup in order to get the double degree in math and finance. Look at it this way, if all else fails with your desire to become a trader, you can hit i-banking, corporate finance, information systems, engineering, programming, physicist, or any other job that exists in the world. You can never go wrong with math.

 

I might just be talking out of my ass, but I feel like a PhD has to be overkill. I'm in an Econ PhD right now, and I can't see how this stuff is going to help someone in most practical areas of finance. It's mainly about training you to be an academic teacher and researcher. So much of what you learn is really mathematical and abstract. I don't understand how learning about all these models, game theory, mechanism design, etc. is going to help someone in the real world in most cases. Also, don't forget about the opportunity cost. You could probably get an MBA, MSF, MFE, and MAcc in the amount of time it takes to get the PhD. Now, obviously I'm not saying one should get all these degrees, I'm just trying to point out how much time a PhD program takes. One could easily have a few years of work experience and a solid masters degree in the time it'd take to get the PhD.

 
FXTrader:
an MBA after 2-3 years of trading is an awesome idea if you want to change careers and never trade again.... otherwise it is a royal waste of time if your goal is a long-term career in trading.

Just out of curiosity, why is an MBA a bad idea if you want to continue trading? Are there any grad degrees that would be good after 2-3 years of work experience if someone wanted to stay in trading? Lastly, are any grad degrees good for breaking into trading (for example, suppose you did something outside of finance for 2-3 years and wanted to break into trading)?

 
econ:
Just out of curiosity, why is an MBA a bad idea if you want to continue trading?
Because, if i take 2 equally talented analysts after 2 years, and I send one to do his MBA and keep the other to continue on as an associate.... then 2 years later, the MBA holder comes back to the desk. Which one do you think is the more valuable employee?

as we've said before, MBA programs do not provide skills that the desks are going out of their way to find for a trading role.

econ:
Are there any grad degrees that would be good after 2-3 years of work experience if someone wanted to stay in trading?

The only reason I would take a hiatus from a solid trading role and go out of my way to get a graduate degree (which i did) is because I'm on a fairly quantitative desk and I wanted to be extremely well-versed in the math behind it. Please note, that I did NOT have to go back for my masters, it was a personal choice.

So if you're going to go back, you do your masters in Financial Engineering/Mathematical Finance, etc.

econ:
Lastly, are any grad degrees good for breaking into trading (for example, suppose you did something outside of finance for 2-3 years and wanted to break into trading)?

If you want to make a career SWITCH TO trading... an MBA can work because firms do recruit from these programs for S&T, just not as heavily as consulting/IB, etc. Of course, the same quantitative degrees I mentioned above can work as well. However, this is for a career switch! Do not leave trading to do your MBA if your only intention is to return to trading

 

Why is it that everyone with a masters in XXXX wants to get into trading? Maybe its just my perception.

You need to show initiative. What have you traded in the past? Do you have any novel theories that can be shown to work?

Even if you don't have a real account, at the very least you should be trading the crap out of several sim accounts, using different methods and testing your skills. Do not be afraid to lose or blow up testing stuff AND most of all, admit to it when interviewed. Say, I had a theory on X, I tried it for 4 months it went kaplooey! or the like. Everyone I know that is successful in trading had to learn somewhere. Admitting your mistakes and learning from your successes will lead you to what you want.

 

Ok do u honestly think it makes any difference if your up against 10,000 or 20,000 similarly skilled applicants?

They are all hard to break into stop worrying about the competition and think why am I different, why should I be hired.

To be honest if your even a little daunted by the odds go and be an accountant

 

The recruiting season is starting up very very soon. Apply online to EVERY bank, and dont be affraid to call smaller shops. That is obviously the first step you need to take. After that, dont be affraid to go back to your campus for a career fair this fall as Im sure if you were a target, they will be there.

 

GPA in Math is 3.9, overall engineering GPA 3.6, Math on GRE is 790.

I've already applied to financial math graduate programs, but I would like to get an internship in the meantime. I have prepped for general finance, but I am wondering how anyone preps for trading.

-Chris

 

I appreciate the comment. I agree it would may be a laughable situation for someone who isn't aware of my achievements, but I only need one true response. Let's pray the statistics of the internet are in my favor.

 

You have heard of the Dodd-Frank Act, haven't you?

So relax dude. You're young. Though you have passion and interest in a specific area, there are many other jobs worth doing and equally, if not more, challenging.

If you have some extra capital you can trade your P/A and that is essentially prop trading. If you happen to manage your P/A well and/or happen to go to a good grad school, and if you happen to get some luck networking, you might happen to end up in prop trading.

Alternatively, you might never get into prop trading. You can have a goal and some plans but all you really can do now is to keep working hard and relax a bit. Most importantly, be open to whatever is available to you.

Invest first, investigate later.
 

Thanks for the honest reply. The new laws are what have me most concerned; do you think someone trading their own account can come across all the info/advice that traders learn on the desk? Can you share some readings/resources essential to a trader (I've completed the intelligent investor for fundamentals and secrets to profiting in bear and bull markets for technicals). I don't want to be a day trader but i want to learn to realize arbitrage ops and hedge strategies if possible.

 
jktecon:
Thanks for the honest reply. The new laws are what have me most concerned; do you think someone trading their own account can come across all the info/advice that traders learn on the desk? .....

Hell. No.

You won't have the same understanding of the markets as a S&T person at a BB, but honestly, that may be a good thing.

 

I don't mean I break the law. Ive just been able to come up with several postulates and followed my first passion of becoming a soccer player despite a majority of people telling me it couldn't be done. After reading the intelligent investor it did appear that being able to go against the grain is also a vital trait for trading. But I see your point it's not something I need to emphasize to get a job.

 

Start learning how to program in Java or C++ and major in computer science in college. Computers are taking over and in 4 years that will be even more of the case. The firms that hire out of college are all market makers. This approach to trading is becoming more rapidly computerized than any other strategy.

Trading firms will teach you their own way of trading so forget technical analysis and all the strategies you can read about on the internet. Learn to program, take a ton of math classes and trading firms will look for you instead of the other way around.

 

Hahahaha "what will the job market be in 4-5 years". I don't think Obama could answer that question, sorry.

I have a suggestion; what if you studied a subject that interests you, enjoyed your life in college and realized that no one can plan your life but you. Stop looking for Siddartha on an internet forum.

 

In my experience its just as competitive, though I've heard more cases of non-target/lower gpa than IBD I guess.

Jack: They’re all former investment bankers who were laid off from that economic crisis that Nancy Pelosi caused. They have zero real world skills, but God they work hard. -30 Rock
 

If you have no contacts that you can take advantage of it becomes a numbers game, the more people you contact the higher your chances, kinda like the lottery in that sense

Follow the shit your fellow monkeys say @shitWSOsays Life is hard, it's even harder when you're stupid - John Wayne
 

Hit up Jim Gorman, a fellow Australian.

"Major in economics; use your economics degree to get an analyst job on Wall Street; use your analyst job to get into Harvard or Stanford Business School; and worry about the rest of your life later"
 

Look at small firms that have a decent amount of AUM. You might be able to network your way into a junior/assistant/food delivery guy type role and go from there. There are many many routes to trading so just keep your eye on the prize.

If I had asked people what they wanted, they would have said faster horses - Henry Ford
 

Well, the first step is to know whether you are a trader or an investor. Big difference.

If it's investing you are interested in, the best book to read on investing is probably Seth Klarman's Margin of Safety; a lot of people will recommend classics like Intelligent Investor (Ben Graham) and that is a good one, but Margin of Safety covers the key points of Graham's philosophy in addition to other things. And you can easily find a PDF of Margin of Safety online and not even feel bad about downloading it [it's out of print]. It's not a book that is appropriate for someone who knows nothing about finance, but it's perfect if you've been through some undergrad finance or an internship.

When it comes to actually practicing investing with real money, the best advice I got was to open an investment account and put 90% of your money in an index or a security like Berkshire Hathaway. Then find one or two ideas that you have done a lot of research on and feel are outstanding opportunities, and buy them with your other 10%. This alleviates the need for you to try to learn how to construct and run a portfolio while you are just learning to analyze stocks. Trying to construct a portfolio that is even mildly diversified (let's say 10+ stocks) is going to be impossible for someone who isn't doing this as a full time job, and you dont want to start buying things that you haven't done your homework on. Warren Buffett has his "20 punches" idea; invest as if you were given a punch card, and every time you make an investment you punch a hole, and after you reach 20, you're done for life. If you have that in the back of your mind, you're going to only invest when you find something really special that you know well.

 

Hi Igor,

The honours in investment management program is very hard to get-in. From what I've been told you need atleast a 3.7 GPA.

As for trading in montreal, what type of trading are you referring to? Sell-side or buy side? Prop/Institutional?

I'm guessing you are referring to prop, in that case, employers just want to see passion. Also I suggest reading elitetrader.com (only the 5-star threads).

 

you shouldn't get into trading bc you can't man up to your mistake I mean really you are a college student blaming your high school for you not getting "taught" how to study? if you make a bad trade are you going to blame your college for not teaching you how to think? you can kiss getting a 3.5 away if you can't be responsible for your own actions

 

Thanks zeeshan_13, that's exactly what I needed. However, I still haven't decide which kind of trading I would prefer and what is the difference between prop and institutional trading? Also, I'm definitly not settling in MTL. I'm thinking more about Toronto, NY, HK, London, Moscow (should be the easiest one to get into, I'm Russian) =)

To squirtlez, for blind ppl I'll quote myself once again, "my school didn't prepare me well for university (but IT IS STILL MY FAULT)". What I mean by that, when I took polisci class, for the first paper I got D+, when back in high school I would get an A+ for the same paper. I was 17 when i came to university, didn't took it that seriously. Looking back, I seriously regret that I wasn't concentrating on my studies that much.

Yeah, honours in investment mgmt is tough to get into, but I still would try my best, since qualification is not only GPA based (I won't go into detail about it) . If not, I'll just do Major in Finance and minor in Math.

 

If you do not know the difference between prop and institutional it's time you browse around this forum, and start reading trading forums. Prop trading is when you trade using firm's capital. Institutional is when you trade for a major bank and you are trading their inventory on hand.

You can be English speaking and get trading jobs just don't apply to the french banks.

Don't worry about your past; however you apply to honours in your 2nd year no? So I'm guessing that it is too late to bring up your GPA. I was going to say to hit 4.0 in all your classes to at-least show that you are a serious student. if applications are in winter, try doing that..

You McGillians should stop worrying about what country to trade in, and should first worry about your bread and butter, that is, grades, and work experience (lol)

 

I am going to assume you cannot get a job through campus recruiting. I was in the same spot when i was in college...here's what i would do:

1)first of all if you have a year of shool left start trading now. Fund an account with $5k and start trading 1 lots of equity or commodity futures. Read extensively about risk management, trade with tight stops, and generally be very discplined. If you have classes during the day pick an asian market to trade at night...in fact asian markets are preferable. Become expert in the market/country you trade. I did this when i was in college so dont tell me its ridiculous. In fat if u honestly do this wholeheartedly i would get u an interview.

2) Once you are doing that start working your alumni network. Cold call/email people who currently trade. In fact cold call or email everybody...find friends who work at banks and figure out the email format each firm uses... ie [email protected], then watch CNBC and send an email to every person who is interviewed whose email you can figure out. Somebody will eventually meet you...if u go to an ivy you might get 10 "informational interviews" just by being aggressive.

3) When you go on these interviews with traders have informed opinions about the market you trade and listen to what they have to say about theirs. They will actually learn something from you during the interview and even if you don't get a job you will learn something that makes you a better trader.

4) Generally start behaving like a trader...eat, drink, and sleep markets 24/7.

...Take this approach and i gaurantee you will get a job...

 

Bondarb, thanks for the advice! Though I hope my chances with campus recruiting aren't as bleak as you suggest (I would be happy to email my resume to you if you wanted to see it).

But I do have $5k, I'm going to try to start trading right now actually. Also, most of my campus has wireless internet, so if I want to do daytrading during the school year, I can just carry my laptop around. Like the previous poster, I would also love to know if you recommend any texts or sites on risk management.

Thanks again for the help

 

You asked if S&T departments hire out of IBD.

Answer--not likely. Anything can happen, obviously, but as a general rule the skill set required is very different. For starts, the work bankers do is far less quant than what you do on the trading floor in sales, structuring, or trading, on any of the heavy derivatives and structured products desks.

Next, the pace of life is different, the focus is different. I mean, anyone in IBD is obivously smart, but so is anyone who is a lawyer at a top firm. Totally different skills sets, and few transferable skills, especially as you get later on in your career. My point is, don't think you can go into one division of a bank and then easily switch if you don't like it.....

 

You don't have to prop trade at night with 5k to get an interview. Learn the markets, learn the products.

Trading equities, commodities, futures is nice because it forces you to keep up to date about the markets. But I'd be more impressed by someone that understands delta/gamma hedging, duration hedging, correlation and volatility plays...

Being able to bet or protect yourself against more than just the underlying moving up or down shows a maturity in the candidate. There is more to life than prop trading.

 

You need to show them that you are very analytical. A BB trading FT might be out of the question if you don't have a strong alumni connection because you don't have an internship, but you can probably get smaller shops. You need to start contacting alumni immediately and try to find some kind of internship on the trading floor of a smaller bank or prop shop (anything!). Your goal is not to get a FT offer, but to show employers that you did not just jump into finance within the last three months (like you did) and that this is something you may have been getting into for a year or two. If you can't get a trading related internship then try to get something business related for the summer, even if its something bad like F500 company finance department. We need to get you away from engineering and get business related stuff on your resume the more analytical/trading oriented the better. I also recommend that you start trading a demo account in whatever you want....this prepares you for interviews when you can speak with people about the market and what's going on. I always wanted to get into FX, and its great when you speak with FX traders for 45 minutes on things that are affecting all the major currencies. I have heard of people getting MFin degrees to delay graduation and using the better recruiting connections, the problem is that you have no business internships to begin with and MFin degrees start in the Summer so it might not be worth it.

"Greed, in all of its forms; greed for life, for money, for love, for knowledge has marked the upward surge of mankind. And greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA."
 

Gekko covered everything. Just one thing to add - depends a lot on the school you're at as well - target v nontarget for S&T recruiting? How is the alumni network? Without OCR recruiting it'll be very tough to go to BB FT without an internship considering how late you are in the game with networking.

Agree with Gekko, get whatever you can and honestly as an SA in S&T you don't do a whole lot, it's more about building relationships with traders who like you and are willing to take the time to bring you under their wing. So you could potentially learn much more at a smaller HF or trading shop. If you're in Boston, Chicago or NY go knock on doors.

 

The biggest thing that’s going to kill you is how far behind you are time-wise. You’ve missed the formal SA recruiting, but given that you have no prior experience your chances were virtually zero anyway. Another thing that you are going to have to learn to do is network – most non-business majors have no idea what this really means and if you want to be successful it is crucial to network as much as possible. Your best bet right now is to get on the phone and start calling firms that have trading desks and try to get yourself an interview for an unpaid summer internship. Obviously unpaid sucks but it’s the price you’re going to have to pay for being so far behind. Also, as a junior you should begin looking during the summer for a winter break internship. While only 3 or 4 weeks, it still fills up the space on your resume with some relevant experience and gives you more to talk about during interviews.

Don’t rule out MFE programs just because you have a 3.7 (and falling) and you think you can’t get into the top 10. I have a friend that graduated from the Florida State MFE program (definitely not top anything by a longshot)and now trades prop at a very reputable firm in Chicago – he had no prior trading experience either before the program. If you can get into an MFE and network, you should have no problem getting into trading.

----------------------------------------------------------------------------------------- I tend to think of myself as a one-man wolfpack Buyside strongside
 
FreezePops:
halfstep:

Then progress into more senior trading roles like prop trading for BB.

I take it you don't read the news all that much?

To the OP: because of wall street regulation reform, BBs are spinning off/closing their prop trading desks. If you want to do prop trading it most likely would be at a specialized prop trading firm and not a BB.

 
FlakieBear:
Be a bigger person. Just tell the guy that he is out of the loop instead of trying to be a smart Alec.

While this is certainly the more mature thing to do, it really raises questions when someone declares that this is something they want to do, yet doesn't know the absolute basics about the industry.

Judging by his response to the post about Bear and Lehman, he doesn't really appear to be a serious poster.

 

Thanks for the responses guys, melvvvwar, i have PMed you. asiamoney, I keep hearing suggestions to apply to Private wealth management, do you mean investment advisor or personal financial advisor roles, where you talk to customers about their risk tolerance and introduce products to them etc? I am finding it hard to believe in getting into PWM because it is hard for undergrads to get into wealth management in canada.

 

Do you have any internship this summer? If so what is it? I'm in a very similar boat as you except as a freshman so I'll provide what advice I can.

The two main types of trading are S&T at a bank or Prop at a firm. A lot of these programs will recruit heavily from intern classes but that's not to say you can't land something full time. The main thing to do now is to start networking your ass off, especially with alumni. Use alumni databases, LinkedIN etc, whatever it takes to start connections now. And go for informational interviews first. I would also suggest looking at middle market IBs as some that OCR at my school have trading floors as well.

Anyway in terms of prepping for interviews next year, start practicing mental math and brain teasers. I have some books I can share if you PM me. Also post your resume here in the resume review forum for feedback.

Good luck!

 
Best Response

Starting NOW, go to your school's career services and look at the alumni database that lists alumni and where they work/what they do. Every college has one. You can use this to find an internship in the Summer, but use this to start networking for junior year. Make a well crafted email (three paragraphs, similar format to cover letter) First paragraph will always change depending on who you are emailing/what they do/you interests in what they do. Second paragraph stays the same and says your skills and what you have done to date. Third paragraph is closing...please contact me, thank you for time and consideration, ect... Ask for informational interviews (even if its an area that your not really interested in) You need to spread your net wide. I have also had an MD in one area forward my resume to his friend who was an MD in S&T and get me an interview. Talk about their experiences and what they have done. Why they like their job, whats the internship like, ect? Sine you want trading..the best way to network with traders and get them to like you is to talk about the market..ask their opinion, and while their talking show that you know what your talking about as well.......I have literally had 45 minute conversations with traders and after they hang up, get a text asking to "re-send" them your resume.

Sales and Trading is divided into 2 divisions Equities and FICC (Fixed Income, Currencies, Commodities)

Equities is normal stocks and Equity Derivatives

FICC All sorts of debt--High Yield,Convertible, Corporates, Treasuries, Munis, Asset Backed Securities (ABS), Credit Derivatives (CDS, ect), ect.

Rates--Interest rate derivatives (divided into G10, EM, HY, ect,)

FX--divided into G10 and EM (spot and derivatives are also separated into those to categories)

Commodities--separated by area and commodities...Ex. Energy is oil, natural gas, electricity, ect. Also, Metals and Softs.

Use JP Morgan website and wikipedia to learn more about the different products:

http://www.JPMorgan.com/pages/jpmorgan/investbk/solutions/fixedincome

Watch this video: (author does not mind if you give him silver banana for video, and vote on it) //www.wallstreetoasis.com/forums/trader-documentary-paul-tudor-jones-must…

Read: Come into my trading room by Alex Elder Read both Market Wizard's books by Jack Schwager Read John Murphy's Technical Analysis Book, Read general book about product you want to trade. If its Fixed Income, Fabozzi. If its FX I recommend Currency Trading for Dummies to get a strong background.

Also, noticed you were University of Washington. Is it Seattle and do you know a kid that had a GS Investment Management or BAML IBD offer?

"Greed, in all of its forms; greed for life, for money, for love, for knowledge has marked the upward surge of mankind. And greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA."
 

Is it true that trading and ER are the "easiest" to break into (compared to banking/consulting) from a non-target? Sorry to highjack the thread a bit, but I'm just curious because I've heard that a couple of times here and I want to see how much truth there is to it.

 

"Easier" in a loose sense of the word. You need great networking skills, a good GPA, a passion for trading, ect.---BB and top tier trading jobs are just as hard as IBD.

The difference between trading and IBD (and what makes it slightly easier to break into) is the fact that trading is much more of a meritocracy and will accept those that have the passion, focus, and skill to be traders. Where as IBD is much more concerned about "status" and will accept as many target school kids as possible before they accept non-target school kids.

"Greed, in all of its forms; greed for life, for money, for love, for knowledge has marked the upward surge of mankind. And greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA."
 

No it is not. That is absolute garbage.

To the OP: Try to get as relevant an internship as possible, and get on it now because time is definitely running out. Given your high GPA, if you play your cards right you should be able to get something, and then leverage that into an FT opportunity.

The Macro View http://themacroview.wordpress.com
 

Your optimal strategy will differ depending on your bankroll and risk tolerance. What actual advice are you looking for?

You're kind of vague and it sounds like you've got a lot of learning to do.

I'll do what I can to help ya'll. But, the game's out there, and it's play or get played.
 

Well I believe I do have alot to learn. I think what I am looking for would be some ways I could get into it. Could I start with options, should I trade futures at night, stocks. I am still learning patterns and studing different support and resistance methods but I want to get hands on but in a way that I dont completly get screwed without learning some type of lesson. I understand the risk into this field as I said before I am being mentored by someone that is very profitable and is willing to help me with me picking my trades. I just like to get others views on how they got into the field.

 

You need to read all the standard books (all of the Market Wizards, How to be a stock market Genius, perhaps How I made 2 million in the stock market, Reminiscences of a Stock Operator, Security Analysis, Intelligent Investor.

Other than that you need to just start trading. Don't use stock market games or simulated trading or whatever you may call it because it is too easy. Learn about using stops and risk control which is hard to actually learn because you have to fail really hard before you understand why it's important. Some people don't use stops but I do because I can't be there 930-4. I also think technical analysis is a stupid way to trade. It has its benefits but it should only be used for entry points(in my opinion, don't hate). Find a good research source and learn as much about companies as possible. Create a best of breed list. A best of breed list is basically a list of stocks that you think are the best in their particular niche. So maybe Nike for athletic clothing or Amazon for shopping or Apple for phones,computers,etc. From there keep an eye on all of those stocks and put together a little document that states where you would be willing or what you would be willing to buy or pay for the stock. A lot of the time these stocks are fairly valued and I don't like fairly valued stocks, I like undervalued stocks. Also don't churn(I make this mistake). If the stock ever drops to a reasonable entrance point buy it and walk it down from there if you are confident in the stock.

One way to not churn is to make sure you really evaluate your trades. If you are investing make sure you have a damn good reason for it and ask other people what they think. Think about the historical evidence behind choosing the trade and think about the catalysts of the trade. I bought oil last week but sold it because I didn't think about the fact that there really were no catalysts for it to go over 100$ and that there are better potential trades out there.

Don't let emotions get in the way. If I had not let emotions get in the way I would have shorted Facebook and Sears last year. I've learned that you just gotta do the trade sometimes. Trade now Ask questions later is sometimes a pretty viable option. Take profits early too That's all I got for ya man.

 
mailman12:
Hey hows it going guys. I am new to the site, but I am 21 years old and I am trying to get into day trading. I have been doing my research for some time now and I know a pretty wealthy trader who has pointed me in the right direction as to what to study. I understand technical analysis, support and resistance and candlesticks, so I think i can be profitable in trading. I currently have a 9-5, and I want to quit to just trade but I want to get my feet wet first and build up a small account to grab some leverage. I just wanted to know how you guys got into it. I live on my own so I have bills to pay. It seems like this website is the place to get some sure advise thanks.
I'm going to give you some real advice and you're not going to like it. You are insane if you quit your job to day trade. Do you honestly believe that reading a couple of books on technical analysis is going to give you an advantage over all of the professionals who have been doing this for years applying substantially more sophisticated techniques than you? Technical analysis is overwhelmingly garbage. If the trades were so profitable, why would someone publish them in a book so you and others could crowd out this guy's amazing trading ideas? Not happening.

If you want to lose all of your money, I can give you a shortcut...you can just send it directly to me instead of losing it to the market.

 

Well I have to disagree with you on wanting to quit my job for day trading. I witness someone do it and make great money doing so. Im not on here looking for a short cut and I totally understand the risks that come with it. I also understand that experience is the best teacher which I am willing to put myself through to become a better trader, but I have witnessed a guy on plenty occasions make money trading daily. So if what he was doing wasnt real or was a scam or something, then I dont see how you can be profitable. He has his down periods sometimes, and i think these people who write these books do that for another source of income. Im not stupid enough to sit there and read alot of books and expect to just be a great trader. They are just tools to help me become analysis different situations. The purpose of this forum was to get peoples outlook on what they trade. Not to pursuade me to not trade, I hear enough of that on the regular basis with people who prob really dont know what they are doing and just are not good at trading. So with that being said I dont think its a unrealistic goal to day trade primarily for money, because I witness it first hand.

 

Sometimes I wish I had the misplaced arrogance again of a 21 year old.

How do you know this guy is making a lot of money? What do you even consider a lot of money? Have you thought about what return you need to maintain your spending? Let's say you kill it and get 20% per year. You need $500,000 in capital just to make $100,000 per year. Do you have that? Not to mention that because you will be spending money out of the portfolio, your outcomes will be highly path dependent. One down month and you need to do that much better just to make the same amount of money each month. I've been in the investment business for almost 15 years and I'm telling you that this is a mistake.

Nobody here is going to give you advice that will change how much you make in any significant way. People do not give their best investment ideas out for free, unless the ideas are worthless.

 

OP should listen to sirtradesalot...

OP, take this example... A firm has $10B AUM. They are willing to spend 2.5% find abnormal returns equal to or greater than that 2.5%. So they have a pot of $250mm to spend to find these opportunities. That will buy them about a thousand MBAs do to this work.

What makes you think you (alone, or with the help of your one guy) can find more alpha than this firm can??? I mean, they have a thousand guys who have studied finance doing the same thing you're trying to do by yourself. A quick Google search shows the largest fund AUM is ~$60B. Keep in mind our example was a single firm - not the entire market and they're only looking to make 2.5%...

Assuming you could find these opportunities by yourself, how much would 2.5% be to you?

If people actually made money day-trading, more people would do it.

I'll do what I can to help ya'll. But, the game's out there, and it's play or get played.
 
pplstuff:
OP should listen to sirtradesalot...

OP, take this example... A firm has $10B AUM. They are willing to spend 2.5% find abnormal returns equal to or greater than that 2.5%. So they have a pot of $250mm to spend to find these opportunities. That will buy them about a thousand MBAs do to this work.

What makes you think you (alone, or with the help of your one guy) can find more alpha than this firm can??? I mean, they have a thousand guys who have studied finance doing the same thing you're trying to do by yourself. A quick Google search shows the largest fund AUM is ~$60B. Keep in mind our example was a single firm - not the entire market and they're only looking to make 2.5%...

Assuming you could find these opportunities by yourself, how much would 2.5% be to you?

If people actually made money day-trading, more people would do it.

I am not saying the OP is going to be succesful, but this bullshit about not being able to make money on your own is just wrong. Hiring a bunch of MBAs doesnt generate any returns and some of the best and most successful traders ever started on their own. I work someplace where we have a ton of analysts and for the most part I consider them worthless to my trading process...too many cooks in the kitchen are not helpful and it only takes one person to manage risk and trade properly....as Jesse livermore said, "I've always played a lone hand".

 

Yes keep your job and study some more.

Out of 10 traders 9 will fail for every 1 that succeeds... yes that 1 guy probably makes a great living at some point... but keep in mind to keep a consistent high income is not easy even for the best of traders.

 

CFA does not hold any weight in trading. Trying to use computer skills as your selling point to get into quant/algo trading without a Phd is folly. If I were in your shoes I would use some of my capital, doesnt matter how much, to start actively trading an account on my own and use this to show how interested I actually was. In terms of actuarial work I guess you could draw on the correlations between that and risk managment/probabalities as a selling point.

You here it all the time on this board, but NETWORK your balls off. Send emails to every one of your alumi involved in trading (after trading hours if you want to hear back) and ask for to talk to them about "Career Advice" Im sure they would be willing to help. You are right about the salary part. I have a few friends working at the pure commission prop shops trading in the overly efficient equity markets and it blows my mind.

What facet of trading are you interested in? I know a lot of commodity desks are hiring. Here is a list of commodity trading firms via monty09...

//www.wallstreetoasis.com/forums/energy-trading-list

Enjoy

 
MikeMoney:
CFA does not hold any weight in trading. Trying to use computer skills as your selling point to get into quant/algo trading without a Phd is folly. If I were in your shoes I would use some of my capital, doesnt matter how much, to start actively trading an account on my own and use this to show how interested I actually was. In terms of actuarial work I guess you could draw on the correlations between that and risk managment/probabalities as a selling point.

You here it all the time on this board, but NETWORK your balls off. Send emails to every one of your alumi involved in trading (after trading hours if you want to hear back) and ask for to talk to them about "Career Advice" Im sure they would be willing to help. You are right about the salary part. I have a few friends working at the pure commission prop shops trading in the overly efficient equity markets and it blows my mind.

What facet of trading are you interested in? I know a lot of commodity desks are hiring. Here is a list of commodity trading firms via monty09...

//www.wallstreetoasis.com/forums/energy-trading-list

Enjoy

thanks for the love

 

are you trying to get into prop trading or ST at BB?

If the former, your background is fine, just know that you won't get any special treatment for your experience. You'll probably start as a junior trader with low salary and 0% of pnl for 18 mo.-2years. Not saying that its not worth it.

From what I have seen (prop trading for 2+ years now) CFA is not really of any use. biggest thing people are looking for are programming skills. My shop is a medium size prop shop and the only resumes we're even looking at are with heavy programming backgrounds. either to develop scalable automated trades that these candidates have brought from other shops or to figure out how to automate the strategies that they are currently using.

To be honest, you don't really want to be in a prop shop without any programming knowledge. You will have a definite short shelf life. Unless you are learning how to speculate on curve or have intuition on position, you will probably be at a firm that simply market makes, which is already and becoming increasingly automated.

How can you be a better candidate? get familiar with Perl or speak to a CIO/trade developer/recruiter and ask them what languages they like and see in competitive candidates/existing traders.

Math/Stats helps obviously. emphasize that on your resume

Applying online without an introduction is, as you might already know, as good as cold calling. especially since your resume does not really scream out.

first post

 

Thanks to both for your posts. I'm leaning towards prop shops at the moment since the entrance opportunities seem easier.

Networking is a weakness of mine. I didn't even know these types of careers existed until 6 months after I graduated, or I would have majored in computer science/finance. The only traders I know are out of coincidence.

Is there another way to approach firms besides cold calling/emailing a resume? I've considered going to career fairs at my alma mater, but I wasn't sure if that would look bad or not considering I graduated in December of '08.

Also am considering getting a masters in computer science from U of Chicago. Would this be worthwhile, or are the MIT PhDs completely saturating the market?

ab62008, how did you find your current position?

 
Aelf:
Thanks to both for your posts. I'm leaning towards prop shops at the moment since the entrance opportunities seem easier.

Networking is a weakness of mine. I didn't even know these types of careers existed until 6 months after I graduated, or I would have majored in computer science/finance. The only traders I know are out of coincidence.

Is there another way to approach firms besides cold calling/emailing a resume? I've considered going to career fairs at my alma mater, but I wasn't sure if that would look bad or not considering I graduated in December of '08.

Also am considering getting a masters in computer science from U of Chicago. Would this be worthwhile, or are the MIT PhDs completely saturating the market?

ab62008, how did you find your current position?

I found out that a random alumn from my univ. worked at this company so I spoke to him and got my resume through that way. I think you'll have luck if you find a company that is hiring and see if you can contact anyone there through any network. Whether it is school, frat, common interest. Have them hand in your resume. if the company is looking to hire and your resume comes in from an existing employee, you'll have an interview with a definite leg up.

As far as your masters goes, if you can get a degree from UChicago you are in pretty good shape. Make sure you get into a legit prop shop though. Read through the forums and see what people are saying about that. You should try to talk to a few different traders, who trade different products. Approach them and say that you just want to learn about what they trade, how they make their decisions, how long their company has been around, why they do what they do. Having even 3-5 meaningful 15-20 minute conversations even with these people will teach you a lot about this industry and since you are already switching your industry, you dont want to get into something you're not sure you want. this will also let you know what specific products you want to trade (rates, options, futures, grains, energy, equities, etc). The more you know about all that the better your story will be come interview/application time.

 

I didn't say I was looking for an easy way in, it just appeared to me that there were more prop trading firms, many of which were less selective than the BBs.

Monty, could you elaborate on what you meant by 'lots of hard work'? I want to do trading badly, and I'm willing to work extremely hard to get in. I'm looking for advice on what to do.

At the moment I'm considering masters programs in either computer science or MFE.

 
Aelf:
I didn't say I was looking for an easy way in, it just appeared to me that there were more prop trading firms, many of which were less selective than the BBs.

Monty, could you elaborate on what you meant by 'lots of hard work'? I want to do trading badly, and I'm willing to work extremely hard to get in. I'm looking for advice on what to do.

At the moment I'm considering masters programs in either computer science or MFE.

grades, networking, meeting folks, applying, interviewing etc etc

 

^Turtle Trading.

Realistically, most foreign emerging markets (namely India) aren't automated yet.

Aelf, try posting your inquiries on actuarialoutpost.com. They have some ex-derivative traders who transitioned into the actuarial career. I'd reckon they'd be able to give you some advice as well (you'd need all the help you can get). I'm considering passing exam P and FM regardless of whether I decide to fully pursue the actuarial career as I'm certain that those two exams would provide optimal preparation for technical prop interviews.

I win here, I win there...
 

I wouldn't worry so much about not being able to find a non-algo spot in trading. There is still a big need for human market makers in exchange traded stuff, and OTC, specifically derivatives, is nowhere close to being automated.

Jack: They’re all former investment bankers who were laid off from that economic crisis that Nancy Pelosi caused. They have zero real world skills, but God they work hard. -30 Rock
 

Most options aren't automated whatsoever. It will be a verrrrry long time before most of that process is automated. A lot of products still have most of their volume trade through the floor (ie grains and the soft commoditie), so it is going to be a pretty long time before you see those markets automated. I think, at least in our lifetimes, that there will likely always be a need for a human manager of some kind for those types of products.

 

Spot on about the options, specifically exotics. Furthermore, pricing them is often the trivial part of the equation. The real skill comes in risk managing and hedging.

Jack: They’re all former investment bankers who were laid off from that economic crisis that Nancy Pelosi caused. They have zero real world skills, but God they work hard. -30 Rock
 
Sean518:
If you're legitimate just start building a track record at a prop shop.

Ok great thanks. What about moving across asset classes? That firm is equities only, so how comparable do firms view equities trading vs. other asset classes. Given the obvious mechanical differences between them is successful trading in one correlated with success in another?

Macro Arbitrage:
Even if you're surrounded by the meat-heads in your team, I wouldn't go around proposing "I'm so baller cuz know more about trading than most people"- humility is an extremely important trait for traders and it is particularly important for those in HFs.

Oh trust me if there's a meathead on the team it's me, I'm surrounded by wildly intelligent people... I just want to distinguish myself from the kids who say, "I want to do trading because I watch CNBC and Jim Cramer". Plus it was my professor who said it, not me. Maybe there's a better way to approach it?

melvvvar:
post your sharpes and drawdowns.

Max drawdown 63%, that sharpe is going to be hell to calculate because my broker provides me very limited information on my statements but I'm working on it.

hungryhobo:
What happened during Summer Analyst recruiting?

The firm told me that there was 0% chance of hiring but I took it because that was all I had at the time; due to low GPA I couldn't get my foot in the door at most banks. I ended up getting one FICC offer at a big bank but I had already set up the other internship. They are extremely well connected on the street and said they would leverage connections at the banks and get me placed there (their interns regularly go to tier-1 research firms) but not even the most powerful connections were useful in the hiring climate that followed August.

 

Even if you're surrounded by the meat-heads in your team, I wouldn't go around proposing "I'm so baller cuz know more about trading than most people"- humility is an extremely important trait for traders and it is particularly important for those in HFs.

I just skimmed through your essay, but I'd suggest that you pick a strategy that you're interested, spend a significant amount of your time learning as much as possible about it, network your balls off and hope for the best.

If you don't get a s&T or HF gig out of college doesn't imply that you're nixed from the industry.

 

I am glad to find another monkey that is in the same situation as me. I am too exciting about trading and I know that is because all i care about at work is the market . I trade mostly US equity and options and recently had some very good day until I took too much risk. The job market is terrible and I graduated in 2011 and currently temp in a non financial company doing accounting and hardly getting any interview from the wall st firms. Since I am studying for the level2 in June, so I am seriously consider maybe join a prop shop after the exam. I haven't starting research which one is the legitimate one yet. I would like to find one with good training and team oriented. Which prop firm are you considering? are they legit?

Does any one know a good prop shop in NYC for a junior trader( I don't have engineering/CS background) to start? contribute a small capital is ok for me, non is always better. Does it always cost money to get train?

 

You go to a top target AND are on an athletic team? I know there are at least 10 of your 'bros' working as traders out there that graduated recently. If they liked you, they should be able to give you a shot at scoring an interview.

 
protectedclass:
You go to a top target AND are on an athletic team? I know there are at least 10 of your 'bros' working as traders out there that graduated recently. If they liked you, they should be able to give you a shot at scoring an interview.

Yep, interviewed with several of them at a top firm in Chicago (not personal friends with them but I knew who they were), ended up getting waitlisted and cut after final round. Another is principal at another one of the bigger chitown prop firms but he said they were just hiring programmers at the moment.

Macro, thanks for the advice, I'll take it to heart. And about the drawdown, I wasn't sure exactly how to calculate it for FX so I just took my maximum margin value and calculated %drop to the lowest subsequent point. That next valley was still over 650% of what I started with a few years back so I was pretty risk-on. I wouldn't want to take the same risk with a larger account, I never had more than $20k.

 

Right, so you're obviously passionate about the markets, but don't ever say that in an interview. When I was in college I networked my way into a HF soph summer internship. Shortly after getting the offer, I grabbed lunch with a VP of FX prop at a BB and during our meeting he said "So you're in your second year, right? And you've landed a hedge fund internship? That's impressive, not even students at Harvard have this sort of opportunity." The ego got to my head, I laughed irrationally and blurted out "I know, but I'm willing to bet that i'm more knowledgable about the markets than most of them." He smiled and brought our meeting to a closure shortly after- essentilly things went downhill from there. When we spoke again, he gave me the same advice I gave you about humility.

Ignore the sharpe ratio and network your way into the industry to overcome your gpa. Both the sharpe ratio and gpa are by far the most useless indicators of market success out there. Your max drawdown should be of concern. Even though is common knowledge that your worst drawdown is yet to come, 63% is obscene. You obviously need to spend time working on your risk and portfolio management before letting an academic lead you to believe that you're the shit. Indeed, losing 63% of your capital and still having the motivation to pursue a career in trading is commendable as it speaks quite a bit about your motivation. But it can also be a double edged dagger by conveying your complacency if you don't take any steps toward improvement.

An equities prop trading gig is great as long as you don't have to put up a capital deposit and you have decent buying power. Focus on building your track record there.

 

Forget about margin, just use peak to trough in your equity to calculate your equity to calculate max drawdown. Very few prop shops trade spot FX- the only ones I can think of are first new York securities and Allston trading. Most prop firms trade fx options.

Btw, I accidentally gave you a sb but I guess you deserve it cause you have the right attitude.

 

If you lose 63% of your equity in a prop shop they'll fire you so fast your head will explode. I agree with the posters above, I'd take the equities gig, build a track record while networking your ass off (much more than you have done, use your enormous alumni network!!!) and you should to be able to make it into a bigger shop if that's what you're looking for. Who knows, maybe you'll love the place...

 

Some more info would be helpful. College undergrad, recent graduate, career changer? What's your background?

And when you say not a quant, do you understand probability theory well and have you at least taken linear algebra, calculus, etc.?

 

Would likely say they are more quantish as they run models to search for different products with right levels etc Less algo and C++ and more SQL type programming.

Also would need a prior background in structured finance. Having knowledge in structured finance is more important than being able to program if you want to work at HF in structured finance

 

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