6/20/13

Hi everyone!
Some of you may remember me, I stopped posting on this forum about a year ago because I got tired of the site for a number of reasons and it wasn't worth it for me anymore. However I'm a big believer of giving back, and I did learn a lot from this site and from a few of the users, so I thought someone might be interested in this, especially since most of the info here seems to target IBD and NYC/US, so hopefully I can give someone a hand.

My background: I was born and raised in continental Europe, studied there at one of the big targets, although I had terrible grades, so it wasn't easy breaking in. Did 2 internships in BBs in S&T in London and right now I'm in the Rates Trading desk at one of them. Love the product, love the people so extremely happy with my job.

Any questions I can answer on any topic like recruiting, interviewing, my job, trading desks, etc.. I'm happy to answer.

Having done 2 internships at BB I have met a lot of people who are now junior analysts at different firms, so I have a fairly good understanding of how the different internships and grad programs work if anyone has any questions as well.

If anyone has smth a bit more personal feel free to PM me as well, I WILL POST THE PM without your name on it, so no one can match the personal info with the user, but the goal of this is to benefit as many people as possible.

Comments (125)

1/26/13

Thank you Maximus for doing this

WSO's COO (Chief Operating Orangutan) | My story | My Linkedin

PM me if you're traveling to Buenos Aires in 2016 (I live here) :-)

1/26/13

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?

"Every man should lose a battle in his youth, so he does not lose a war when he is old"

1/26/13

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".

1/26/13

Maximus Decimus Meridius:
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....

thank you!

"Every man should lose a battle in his youth, so he does not lose a war when he is old"

1/26/13

Hi,

I have a few basic questions.

Why did you choose rates/what do you like about it?
What degree did you do?
What do you think of your job security?

1/26/13

JWick:
Hi,

I have a few basic questions.

Why did you choose rates/what do you like about it?
What degree did you do?
What do you think of your job security?

1.- I've always been a Macro guy. Corporate finance, company results, sector reports and that kind of thing bores me to death to be honest. On the other hand, politics, economics, money flows, trading balances, monetary policies, inflation and that kind of thing has always been very interesting for me. I also like the fact that pretty much any news affects my day, everything is related and has an impact on rates markets. Apart from that, there was a luck component, I was placed in a Rates desk on my first internship and that has always made it easier for me I guess.

2.- I have a Masters Degree in Engineering.

3.- I actually think it's pretty good. My desk is quite top heavy and small after firing some people. So there are basically MDs, EDs, 1 VP and me. This means I have a lot of work, a lot of grunt work, but I'm also fairly valuable and cheap. If they want to fire someone they will probably go for the expensive people, although I think that this ones have stayed because they are pretty damn good.

1/26/13

SB'd :)

Your post on the AC was really informative.

1/26/13

Do people who don't speak an EU language stand a chance? (please reply honestly!)

Why are 90%+ of people who get into the program (summer or otherwise) Caucasian (either british or European or Chinese-Asian) year on year? Do coloured people not apply?

Is diversity in the workplace a lie or do banks actually take it seriously?

Does a coloured person stand a smaller chance (or no chance)? (on linkedin the coloured people tend to have stronger profiles before they land an offer vs caucasian people - in general - from what ive seen).

In terms of 'personality' fit - what if you play sports/hit the gym, play an instrument etc but are not 'great' at it - do you stand a 0 chance of landing an offer as a coloured person? (I know many people who are not the 'best' at anything and get a 2:1 in a UK degree and still land offers so I'm wondering if the entry bar is different for different people).

1/26/13

Charles-perry:
Do people who don't speak an EU language stand a chance? (please reply honestly!)

Why are 90%+ of people who get into the program (summer or otherwise) Caucasian (either british or European or Chinese-Asian) year on year? Do coloured people not apply?

Is diversity in the workplace a lie or do banks actually take it seriously?

Does a coloured person stand a smaller chance (or no chance)? (on linkedin the coloured people tend to have stronger profiles before they land an offer vs caucasian people - in general - from what ive seen).

In terms of 'personality' fit - what if you play sports/hit the gym, play an instrument etc but are not 'great' at it - do you stand a 0 chance of landing an offer as a coloured person? (I know many people who are not the 'best' at anything and get a 2:1 in a UK degree and still land offers so I'm wondering if the entry bar is different for different people).

1.- Yes. In a trading desk languages are completely unnecessary. Yes, if we have to speak to a particular client/salesperson/broker that is from one of our home countries people will revert to their mother tongue, but for example I use my mother tongue like once a month. Structuring is pretty much the same (besides they are pretty much all Indian, Asian or French, so no real EU language skills) For sales jobs they are useful. Sales desks are divided by type of clients (HF sales, Central Bank sales, Real Money Clients...) and regions based on languages (Iberia, Germanics, Italy, Russia, etc...). If you speak the language you can obviously be eligible for more desks in the regional coverage so it's easier. However they all basically take natives.

2.- That's quite a mix you are making. Chinese people are not caucasian bro. Not even close to 90% of the people were caucasian at any of the 2 internships I've been in or in my graduate program. Same thing for my 3 flatmates colleagues. There are a lot of Asian, Indian, Arabs, South Americans, North Africans and black people. There are many white people as well who are from places like the middle east, eastern europe, russia, south america... The way I see it that's pretty diverse, even if they are white. It's true that Indian and black people tend to be UK educated. I just looked at the book from one of my internships and there's only like 55%-60% of European and brits. I think the problem comes from before. I'd like to know what percentage of the Oxbridge, Cass, Durham, Grande Ecoles, Bocconi, SSE and those kind of unis is not white. Because I'm pretty sure banks are more diverse than the universities they recruit from.

3.- I would argue that a coloured person has actually a higher chance, although not by much. Banks hold specific networking events for minorities and women so there are much fewer people and the people from the bank attending are generally much more helpful. Apart from that no one really thinks about it. When people at my desk talk about candidates race never comes up, and when we receive the applications for screening the page about gender and race is missing, so we truly don't know the race of the candidates. That's only used for HR statistics.

4.- Extracurriculars are crucial at the interview stage, even if you suck, but just as a conversation topic. If you do the technicals well, study at a good uni and a serious degree with good grades (2:1 is fine) the make or break is generally on those kinds of things. You need to sound fun and interesting, someone I can go for a beer with and talk about anything meaningless to unwind, sports, cars, music... If you like something and your interviewer does as well your chances are pretty good. For instance I once spent an entire interview talking about marathon preparation and sent the guy a software to design his own plan. I'm guessing his feedback was awesome. If you are all about finance you won't get hired.
Why do you mix everything with race? I mean, if I like you because you play football I like you because you play football. What difference does it make if you are a black pianist or a white pianist??? The thing is I know you have interests, and I like classical music, so we can talk about something. I mean, you could be a green pianist for all I care...

1/26/13

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)?

Best Response
1/26/13

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.

1/26/13

Maximus Decimus Meridius][quote=f4tality:

Thanks a lot, SBed

1/26/13

PM:
Hey man,
Thanks for the Q&A, I got some question. I work on the trading floor for a Continental European bank. My current gig has no fixed training program. I have been doing well and am running one of the high yield books with fairly limited experience. Very happy where I am for now but would love to be able to take on more risk in the future. How are the continental European banks viewed in London? Is it a viable move to go from a viable to move from a smaller European bank to one of the BB's in London? What sort of level is likely to enter at?

Bonus question: Do you have any idea about the type of risk the HY guys at your floor are running?

Thanks again

I am by no means an expert on experienced hires, but I guess it depends what continental european bank. BNP and SG are very respected in certain products and there are plenty of people in the floors of BBs coming from those firms. Places like Unicredit or Santander or Commerzbank also place some people, although not many, specially in trading. From what I see here, I think it's much easier to this at a medium/high level, so VP and above. That way you will have a track record and reputation and likely know someone in your product at the BBs that will help you get in. I don't know of anyone who has done it at the junior level. Maybe someone coming in through the graduate program, but for that you need to have been at your firm less than a year...
Can't give exact details on the HY books and what they are running, my educated guess is it depends a lot on the trader. It is very meritocratic here, and you see people who are 1.5 years in running the same risk as some people who have been here for 5 years. It depends on what you trade and how good you are...

1/26/13

Black pianist and a white pianist from what I've seen online makes a BIG difference.

1/26/13

fearless:
Black pianist and a white pianist from what I've seen online makes a BIG difference.

Well, if the internet says so there's nothing I can argue against it.

1/26/13

Great thread.

1/26/13

Commenting to stay in the loop on this
Great so far

"Do not go gentle into that good night"

1/26/13

thanks for doing this.

1. why'd you say that traders have "pretty much no exit opportunities"? i'd think you see a lot of rates traders being snapped up by macro funds if they're good.

2. do you think the exit opps vary according to the specific rates product you trade (i.e. cash bonds, swaps, options, or inflation)? i ask because i've noticed a few high profile hires to hedge funds being ex-swaps traders, but wasn't sure if it was just coincidence, or something specific that one learnt from trading swaps.

3. bondarb has said that rates impact all other markets, so understanding rates (especially the front end) will help you understand what other markets are doing. are you really able to see these connections between rates and fx/commodities? do these connections between rates --> fx/commodities persist in times OTHER than those immediately surrounding a big central bank announcement?

4. which banks have the most respected (feared?) rates traders?

1/26/13

whalesquid123:
thanks for doing this.

1. why'd you say that traders have "pretty much no exit opportunities"? i'd think you see a lot of rates traders being snapped up by macro funds if they're good.

2. do you think the exit opps vary according to the specific rates product you trade (i.e. cash bonds, swaps, options, or inflation)? i ask because i've noticed a few high profile hires to hedge funds being ex-swaps traders, but wasn't sure if it was just coincidence, or something specific that one learnt from trading swaps.

3. bondarb has said that rates impact all other markets, so understanding rates (especially the front end) will help you understand what other markets are doing. are you really able to see these connections between rates and fx/commodities? do these connections between rates --> fx/commodities persist in times OTHER than those immediately surrounding a big central bank announcement?

4. which banks have the most respected (feared?) rates traders?

As I said I'm a first year, so I don't have a lot of experience in things like moving to HFs or what they trade exactly, but I'll give you my thoughts.

1.- You are right that you can go to a macro fund, my point is if you do move from a rates desk you'll still be trading and most likely the same markets, only you are a pure risk taker instead of a market maker. But it's not really an exit opp in the sense that if you get burnt out and hate trading swaps, then you'll hate the job at the fund as much whereas if you are in M&A you can go to Business School and do something completely different. If you are in sales you can sell anything, and if you are in structuring you can do ALM and that kind of thing in the firm or in any financial services company. Besides, I think you are greatly overestimating the number of rates traders that go to HFs. I don't have numbers, but my guess is macro funds will probably hire an experienced trader with a proven track record who runs some decent risk, so most likely at one of the BBs who has a big rates book. So you are already picking from very few traders, and not all of them are good or able to trade without the flow. Maybe someone with more experience can shed some more light on this.

2.- Could be. I mean, they should all be able to make the move, but it makes sense for the guys in STIR, Swaps and Inflation to have it easier, although it's just a guess. Basically because Swaps and STIR guys trade the same products as HFs do, also the most liquid ones and the ones that in many ways drive the rest of the rates and the fixed income world. So if you understand and are able to read the movements of those markets, you can read all the rates markets. The inflation guys trade nominal bonds and swaps as well as inflation bonds and swaps, many of them in sterling and euros, which makes them very knowledgeable of all the liquid rates markets, and historically they've placed very well. The value the exotics desks adds is more on pricing and quantifying the risk of very complex combinations of products, they can be very valuable at handling hard to hedge risks, but they might struggle with the pace and speed of decision making required when trading swaps. Bond markets have a very particular dynamic because they are specific bonds and there's only a certain amount outstanding of each bond, whereas swaps and futures can be infinite. Trading bonds is very capital intensive and shorting them requires getting your hands on them through repo which for some bonds can be very hard and expensive, so I'm guessing HFs don't trade them as much as swaps or bond futures.

3.- Rates are the base of everything. Think about this, every book you read about how to price any financial security mentions rates somewhere. In fact, you will see that pretty much all fixed income trading desks have rates products on their books as hedges and some even have exclusive rates books. Whereas rates people don't really have credit or fx products on their books. Maybe CDSs on particular countries in the govvies desk, but that's about it. Revsly trades FX options and I think I remember him saying he also has a rates book for example. Maybe if someone who trades credit or fx can elaborate it would be helpful.

4.- Lol, I don't really understand the question to be honest, so if you could rephrase...

1/26/13

Maximus Decimus Meridius:
whalesquid123:

3. bondarb has said that rates impact all other markets, so understanding rates (especially the front end) will help you understand what other markets are doing. are you really able to see these connections between rates and fx/commodities? do these connections between rates --> fx/commodities persist in times OTHER than those immediately surrounding a big central bank announcement?

3.- Rates are the base of everything. Think about this, every book you read about how to price any financial security mentions rates somewhere. In fact, you will see that pretty much all fixed income trading desks have rates products on their books as hedges and some even have exclusive rates books. Whereas rates people don't really have credit or fx products on their books. Maybe CDSs on particular countries in the govvies desk, but that's about it. Revsly trades FX options and I think I remember him saying he also has a rates book for example. Maybe if someone who trades credit or fx can elaborate it would be helpful.

Like Maximus mentioned, I'm an FX Options trader and we always have rates positions, largely due to the fact that while the underlying instrument is the forward, we generally hedge delta with spot (it's liquid). As a result, I have to manage our rates positions via FX Swaps, IR Swaps, X-CCY Basis swaps, IR Futures, etc. Furthermore, I trade IR in my back book too, as I am a very macro person and I find it much more pure to express views in rates... FX Spot can be influenced by many factors, but say f/e OIS is what it is largely.

Everything is very interconnected, and those times where it disconnects usually there is a reversion trade to play. Just a simple example is with the Redemptions on Friday. I had some sizeable EUR delta positions on, so was closely monitoring the Euribor strip to see if rates market was reacting in confirmation with my position. Sometimes FX can drive IR though, and a recent example would be in Swiss rates. For a while, the euroswiss futures were trading above 100 (implying neg swiss libor) as the SNB attempts to protect its 1.20 floor in EURCHF. As EURCHF spot rallied quite a bit, it becomes less likely SNB will need to intervene in the rates market, and while it took a few days for the larger impact to happen, the euroswiss strip sold off quite hard. For a participant who wasn't paying attention to other markets, you might miss crucial information that costs PNL.

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

1/27/13

Revsly:
Maximus Decimus Meridius:
whalesquid123:

3. bondarb has said that rates impact all other markets, so understanding rates (especially the front end) will help you understand what other markets are doing. are you really able to see these connections between rates and fx/commodities? do these connections between rates --> fx/commodities persist in times OTHER than those immediately surrounding a big central bank announcement?

3.- Rates are the base of everything. Think about this, every book you read about how to price any financial security mentions rates somewhere. In fact, you will see that pretty much all fixed income trading desks have rates products on their books as hedges and some even have exclusive rates books. Whereas rates people don't really have credit or fx products on their books. Maybe CDSs on particular countries in the govvies desk, but that's about it. Revsly trades FX options and I think I remember him saying he also has a rates book for example. Maybe if someone who trades credit or fx can elaborate it would be helpful.

Like Maximus mentioned, I'm an FX Options trader and we always have rates positions, largely due to the fact that while the underlying instrument is the forward, we generally hedge delta with spot (it's liquid). As a result, I have to manage our rates positions via FX Swaps, IR Swaps, X-CCY Basis swaps, IR Futures, etc. Furthermore, I trade IR in my back book too, as I am a very macro person and I find it much more pure to express views in rates... FX Spot can be influenced by many factors, but say f/e OIS is what it is largely.

Everything is very interconnected, and those times where it disconnects usually there is a reversion trade to play. Just a simple example is with the Redemptions on Friday. I had some sizeable EUR delta positions on, so was closely monitoring the Euribor strip to see if rates market was reacting in confirmation with my position. Sometimes FX can drive IR though, and a recent example would be in Swiss rates. For a while, the euroswiss futures were trading above 100 (implying neg swiss libor) as the SNB attempts to protect its 1.20 floor in EURCHF. As EURCHF spot rallied quite a bit, it becomes less likely SNB will need to intervene in the rates market, and while it took a few days for the larger impact to happen, the euroswiss strip sold off quite hard. For a participant who wasn't paying attention to other markets, you might miss crucial information that costs PNL.


I would just like to say that Revsly doesn't post often, but posts with authority. Absolutely one of the best posters on WSO, without a doubt.
1/27/13

Revsly:
Maximus Decimus Meridius:
whalesquid123:

3. bondarb has said that rates impact all other markets, so understanding rates (especially the front end) will help you understand what other markets are doing. are you really able to see these connections between rates and fx/commodities? do these connections between rates --> fx/commodities persist in times OTHER than those immediately surrounding a big central bank announcement?

3.- Rates are the base of everything. Think about this, every book you read about how to price any financial security mentions rates somewhere. In fact, you will see that pretty much all fixed income trading desks have rates products on their books as hedges and some even have exclusive rates books. Whereas rates people don't really have credit or fx products on their books. Maybe CDSs on particular countries in the govvies desk, but that's about it. Revsly trades FX options and I think I remember him saying he also has a rates book for example. Maybe if someone who trades credit or fx can elaborate it would be helpful.

Like Maximus mentioned, I'm an FX Options trader and we always have rates positions, largely due to the fact that while the underlying instrument is the forward, we generally hedge delta with spot (it's liquid). As a result, I have to manage our rates positions via FX Swaps, IR Swaps, X-CCY Basis swaps, IR Futures, etc. Furthermore, I trade IR in my back book too, as I am a very macro person and I find it much more pure to express views in rates... FX Spot can be influenced by many factors, but say f/e OIS is what it is largely.

Everything is very interconnected, and those times where it disconnects usually there is a reversion trade to play. Just a simple example is with the Redemptions on Friday. I had some sizeable EUR delta positions on, so was closely monitoring the Euribor strip to see if rates market was reacting in confirmation with my position. Sometimes FX can drive IR though, and a recent example would be in Swiss rates. For a while, the euroswiss futures were trading above 100 (implying neg swiss libor) as the SNB attempts to protect its 1.20 floor in EURCHF. As EURCHF spot rallied quite a bit, it becomes less likely SNB will need to intervene in the rates market, and while it took a few days for the larger impact to happen, the euroswiss strip sold off quite hard. For a participant who wasn't paying attention to other markets, you might miss crucial information that costs PNL.

great info, thank you Revsly.

because i know almost nothing about rates/fx, i would like to see if i understand the relationship correctly.

- front end OIS and interest rate futures - are they driven solely by expectations of what the central banks will do at the next meeting, or are there other drivers of these instruments?

- when you had the EUR delta position and were looking to see if the Euribor strip (is this a zero-coupon IR future?) was moving in line, what did you expect would happen to EUR if the strip rallied, implying rates would fall? for the US, i'd associate a rate cut with broader concern about global growth, which would cause investors to pile into Treasuries and cause USD to rally. for all non-US markets, i'd think that if rates fall, the currency would sell off due to expectations that the supportive monetary policy would lead to future inflation. but in the case of EUR, perhaps a rate cut signals commitment to supporting the EUR and keeping it together, which might cause it to rally?

basically my question is, you can come up with so many different economic arguments in either direction (i.e. rates fall, does fx go up or down) - which is really the right one?

2/5/13

Maximus Decimus Meridius:
Besides, I think you are greatly overestimating the number of rates traders that go to HFs. I don't have numbers, but my guess is macro funds will probably hire an experienced trader with a proven track record who runs some decent risk, so most likely at one of the BBs who has a big rates book. So you are already picking from very few traders, and not all of them are good or able to trade without the flow.

What qualities do you think separate the rates traders that are able to make it to HFs (and stay there)?

I can understand not being able to trade without the flow, but you said in a subsequent post that you don't think most of the guys on your desk base their views on the flow anyway. And if a trader isn't good, wouldn't the BB not keep him around for very long anyway?

2/6/13

whalesquid123:

What qualities do you think separate the rates traders that are able to make it to HFs (and stay there)?

I can understand not being able to trade without the flow, but you said in a subsequent post that you don't think most of the guys on your desk base their views on the flow anyway. And if a trader isn't good, wouldn't the BB not keep him around for very long anyway?

I don't really know, haven't been here long enough and I don't have contacts with people who run money at Macro HFs.
It's not about basing your views on the flow, but you can make money out of the flow itself without any particular views. You can't do that at a HF. And if you are making money and giving your clients what they want the bank will leave you alone. In fact they might prefer that to the guy who rarely trades with clients and just does whatever he wants.

1/26/13

Wow. Best thread regarding trading so far this year.

CNBC sucks

"This financial crisis is worse than a divorce. I've lost all my money, but the wife is still here." - Client after getting blown up

1/26/13

PM:

Thanks a lot for taking the time for this thread :). I'll be joining a regional coverage sales team this summer at a BB, and I was curious what the "trade idea" generation process is like for sales people? I know for vanilla products like equity sales it's mostly pushing forward the firm's research, but I was curious what it's like / what type of ideas are pitched to clients on the more exotic side (equity derivatives etc).

You are not obligated to push firm research, but it's frowned upon if you don't, specially if you do it often. You still have a lot of firm research on things like rates. In Fixed Income you will also have a morning meeting from each space (credit, rates and FX) in the morning where all the research guys will talk, then someone from each of the liquid trading desks like govvies and swaps, and the sales guys will take notes and ask questions, so I guess a lot also comes from there. They will also try to push traders axes and risks they don't want.
If you go to the exotic products, generally sales people provide the relationship with the client and do a lot of the hand-holding and communication between structuring/trading and the client, not really the idea since they are more bespoke and complex products. So they will push their structurers products or help create something bespoke for the client. Besides many of this products don't have an investment goal and are more of a Liability Management kind of thing.

1/26/13

1.) How do you calm your nerves?

2.) What brands are mostly found in your work wardrobe?

1/26/13

MomentaLaugh:
1.) How do you calm your nerves?

2.) What brands are mostly found in your work wardrobe?

1.- I'm not really a nervous person, so I do the same things I've done all my life. Nothing unusual. After a particularly stressful time of the day I generally just talk about nonsense with the people in my desk, go to the vending machine for a Coke or talk to some analyst friend at another desk or someone on a chat or something. I'm also a long distance runner, so running something like 6-10 miles gives me a lot of time to think when I have a lot of things in my head and I get home completely relaxed. I also do Karate which I guess helps when I'm pissed off.

2.- I'm not much of a brand guy, I find they are pretty much all quite tacky. Tailor made shirts, suits from a small shop I know in London, or dark dress pants I find in local shops or places like brooks brothers or hackett with a good old fashion V-neck wool jumper in a solid discrete colour, mainly Alan Paine but as long as the brand doesn't show anywhere I don't mind. Shoes some C&J and AE, although I do have a couple from no-name local shops as well. I keep 2 ties at the office, they are both TM Lewin and are the kind that match any shirt and suit, just in case, but never wear them to the office.

1/26/13

Thanks for taking the time to answer questions. I'm a bit of an IB newbie so excuse any gap in my knowledge - you said you worked in S&T? Could you possibly give a breakdown of the universities analysts went to or a rough guide? I'm hoping to work in IB in London and have several university offers (Bristol, LSE, UCL), deciding which one is best to pick for what I intend to do (M&A is an attractive option)

1/26/13

simon-kemp:
Thanks for taking the time to answer questions. I'm a bit of an IB newbie so excuse any gap in my knowledge - you said you worked in S&T? Could you possibly give a breakdown of the universities analysts went to or a rough guide? I'm hoping to work in IB in London and have several university offers (Bristol, LSE, UCL), deciding which one is best to pick for what I intend to do.

All those 3 unis are fine and have decent numbers in investment banks, so can't really go wrong. LSE would be the highest of the 3 in terms of placements I think.

1/26/13

I'm interning at the FICC department at a BB in London this summer, so I was wondering how you can get the return offer? What did you do that set you apart from all the other interns?

1/26/13

Monkeyfaces:
I'm interning at the FICC department at a BB in London this summer, so I was wondering how you can get the return offer? What did you do that set you apart from all the other interns?

Mmmm kind of a hard one. I haven't had an intern yet, so from my interning experience. First of all don't do anything stupid like falling asleep on an MD conference while sitting in the first row or shit like that. It sounds silly but a lot of people don't get offers for things like that.
Follow the basics. Things that come to mind:
-First one in, last one out.
-Be nice, calm, smiling, willing and helpful no matter what they ask you to do. Don't look/act tired.
-Check your work a billion times, always print it and look for errors on paper. You'll get incremental amount of responsibility based on the quality of your work. If you screw up the basics, you won't get anything cool.
-Underpromise and overdeliver. Always add something to whatever you are asked to do (you asked me to analyze XYZ, but I thought it could be interesting to add XYZ). Always hand in your work earlier than expected and say it's a draft and if they could point out how to improve it (try to use the juniors for this).
-Don't kiss the MDs and EDs ass and piss off your juniors, but don't be afraid to talk to the higher ups either.
-If you go sit with other desks make sure you don't have any work to do and always ask if it's OK and tell them where you are going. They will get really pissed of if they need something from you and they can't find you.
-Be nice, fun, polite and integrate yourself. If you are going for a coffee, ask if anyone wants. If they are talking about football get into the conversation. Forward funny emails. If they all order lunch from somewhere or go for a beer after work and ask you to join don't say no. That kind of stuff.
-Don't badmouth other interns.
-Ask for feedback after your work and once a week, don't wait for the HR thing. You should know what HR is going to say in your reviews.
-This is not IBD but things need to look decent. After doing a spreadsheet, format it. Don't obsess and spend 3h on it, but make damn sure it's readable.
-Read the floor. Use the time early in the morning, during lunch and after markets for questions. Use the busier times of the day to work by yourself. If you don't have any projects use the firms internal training, read internal research or a book on bond pricing, I don't care but do something useful, work related and where you can learn. Go ask questions afterwards so that they notice you have initiative.
-Write things down. Make sure you never ask the same question twice. Also, if you are doing a project make sure you ask all the questions in advance and write the rest down and accumulate. Also make sure you google it, look in investopedia, books, research and internal training. Don't go every ten minutes to one of the traders to ask something you could have found by yourself.

1/28/13

Maximus Decimus Meridius:
Monkeyfaces:
I'm interning at the FICC department at a BB in London this summer, so I was wondering how you can get the return offer? What did you do that set you apart from all the other interns?

Mmmm kind of a hard one. I haven't had an intern yet, so from my interning experience. First of all don't do anything stupid like falling asleep on an MD conference while sitting in the first row or shit like that. It sounds silly but a lot of people don't get offers for things like that.
Follow the basics. Things that come to mind:
-First one in, last one out.
-Be nice, calm, smiling, willing and helpful no matter what they ask you to do. Don't look/act tired.
-Check your work a billion times, always print it and look for errors on paper. You'll get incremental amount of responsibility based on the quality of your work. If you screw up the basics, you won't get anything cool.
-Underpromise and overdeliver. Always add something to whatever you are asked to do (you asked me to analyze XYZ, but I thought it could be interesting to add XYZ). Always hand in your work earlier than expected and say it's a draft and if they could point out how to improve it (try to use the juniors for this).
-Don't kiss the MDs and EDs ass and piss off your juniors, but don't be afraid to talk to the higher ups either.
-If you go sit with other desks make sure you don't have any work to do and always ask if it's OK and tell them where you are going. They will get really pissed of if they need something from you and they can't find you.
-Be nice, fun, polite and integrate yourself. If you are going for a coffee, ask if anyone wants. If they are talking about football get into the conversation. Forward funny emails. If they all order lunch from somewhere or go for a beer after work and ask you to join don't say no. That kind of stuff.
-Don't badmouth other interns.
-Ask for feedback after your work and once a week, don't wait for the HR thing. You should know what HR is going to say in your reviews.
-This is not IBD but things need to look decent. After doing a spreadsheet, format it. Don't obsess and spend 3h on it, but make damn sure it's readable.
-Read the floor. Use the time early in the morning, during lunch and after markets for questions. Use the busier times of the day to work by yourself. If you don't have any projects use the firms internal training, read internal research or a book on bond pricing, I don't care but do something useful, work related and where you can learn. Go ask questions afterwards so that they notice you have initiative.
-Write things down. Make sure you never ask the same question twice. Also, if you are doing a project make sure you ask all the questions in advance and write the rest down and accumulate. Also make sure you google it, look in investopedia, books, research and internal training. Don't go every ten minutes to one of the traders to ask something you could have found by yourself.

Thank you so much for your reply, it is really helpful! One more practical question, how did you find a room in London for during your internship? I'll be working in Canary Wharf, so I was thinking I should be close to the jubilee line.

1/26/13

Thank you for doing this. What do you think of the LBS MiM and LSE's MSc Finance/Finance & Accounting/Finance & Economics degrees for breaking into investment banking? I am an American with an EU citizenship considering those programs (not for trading, but IB, though).

1/26/13

KKS:
Thank you for doing this. What do you think of the LBS MiM and LSE's MSc Finance/Finance & Accounting/Finance & Economics degrees for breaking into investment banking? I am an American with an EU citizenship considering those programs (not for trading, but IB, though).

I didn't study in the UK and I have never done IBD, so don't really know a lot. LBS MBA is very valued, don't know about the MiM and LSE is a great and respected uni, lots of people from their masters so I guess they should help.
1/28/13

Maximus Decimus Meridius:
KKS:
Thank you for doing this. What do you think of the LBS MiM and LSE's MSc Finance/Finance & Accounting/Finance & Economics degrees for breaking into investment banking? I am an American with an EU citizenship considering those programs (not for trading, but IB, though).

I didn't study in the UK and I have never done IBD, so don't really know a lot. LBS MBA is very valued, don't know about the MiM and LSE is a great and respected uni, lots of people from their masters so I guess they should help.

Do banks actually know the differences in the courses at a uni such as the LSE, or doesnt it matter whether you e.g. study Finance & Economics or Accounting & Finance?
1/28/13

Polymath89:
Maximus Decimus Meridius:
KKS:
Thank you for doing this. What do you think of the LBS MiM and LSE's MSc Finance/Finance & Accounting/Finance & Economics degrees for breaking into investment banking? I am an American with an EU citizenship considering those programs (not for trading, but IB, though).

I didn't study in the UK and I have never done IBD, so don't really know a lot. LBS MBA is very valued, don't know about the MiM and LSE is a great and respected uni, lots of people from their masters so I guess they should help.

Do banks actually know the differences in the courses at a uni such as the LSE, or doesnt it matter whether you e.g. study Finance & Economics or Accounting & Finance?

They generally get someone with your background to read CVs because of the difference between countries. So for example, French students will generally have their CVs screened by someone who studied in France. So I'm assuming they will know the difference, although I don't know how positive/negative that is.

1/26/13

thanks for the replies, good stuff.

what i meant by the last question was simply: which banks have the best rates trading desks and most skilled/respected traders, based on their reputation on the street (instead of measures like revenue and pnl which may be more a function of the sales force)?

1/26/13

whalesquid123:
thanks for the replies, good stuff.

what i meant by the last question was simply: which banks have the best rates trading desks and most skilled/respected traders, based on their reputation on the street (instead of measures like revenue and pnl which may be more a function of the sales force)?


If you don't account for volume/market share or PnL I think it's pretty much the same. I don't really know how to say which one is best because I don't know how to measure it. Every bank has a rates desk, it's one of the very basic desks, and at BBs they are all fairly big and respected.
1/26/13

Hi Maximus thanks for doing this. So could you kindly suggest some training or reading materials that you used to sharpen your abilities as a student. Or anything you found particularly insightful when learning about rates trading?

1/26/13

whotookmybowtie:
Hi Maximus thanks for doing this. So could you kindly suggest some training or reading materials that you used to sharpen your abilities as a student. Or anything you found particularly insightful when learning about rates trading?

Specific for rates and pure "textbooks":
Interest Rate Swaps and Their Derivatives
Pricing and Hedging Swaps
The handbook of Fixed Income securities
The Treasury Bond Basis

In here: http://www.traders-library.com/ you can find pretty much any book in pdf in the trading books and trading knowledge files.

12/24/13

@"Maximus Decimus Meridius": Thanks for doing this Maximus? What are your thoughts on Interest Rate Markets by Siddhartha Jha?

12/27/13

TraderDaily:

@Maximus Decimus Meridius: Thanks for doing this Maximus? What are your thoughts on Interest Rate Markets by Siddhartha Jha?

I haven't actually read it, so not much I can say I'm afraid.

1/26/13

Thank you, this helps more than you can imagine.

1/26/13

How is the compensation for your division?

1/27/13

Ludendorff:
How is the compensation for your division?

Not answering that. First year salaries are between 43-45k at BBs is all I can really say.

1/26/13

Thanks for doing this. Do you have your own book to punt ideas and take risks? If so, to what extent does flow have bearing on your idea generation process? Also, how did you manage to overcome your grades during your internships and FT recruitment?

1/27/13

Macro Arbitrage:
Thanks for doing this. Do you have your own book to punt ideas and take risks? If so, to what extent does flow have bearing on your idea generation process? Also, how did you manage to overcome your grades during your internships and FT recruitment?

I just got my own book, so I don't really take much risk. Don't take punts, I do the smaller trades of the desk and if I get some risk I like I let it run a bit, but not much. However yes, we can keep risk we like and not hedge it out immediately, or take risk ourselves. Flow gives you extra information, so even when trades are not happening you still get a vibe for what clients are looking to do, which is helpful. It also gives us some extra liquidity, in the sense that if you don't see any bids in the market you can try and sell to a client through the sales guys. However, most of our risk is "reactive" risk, in the sense that it has to do with serving clients. So residual risks after trades, getting stuck in positions you don't want, or building inventory according to how you think the market is going to move. So for example if you know all your fast money clients are positioned the same way, and the market is moving/going to move against them (smth like a short squeeze) you need to prepare your books for when they come looking to unwind. My point is most of this is not taking punts but trying to not lose too much money when making a market. However yes, we are allowed to put on positions ourselves and keep them, I just don't really have enough confidence yet, but I don't think flow has much bearing on the fundamental views of the senior traders here.
To overcome bad grades you need to figure out a different way in. In my case I won a trading game organized by one of the banks. They are actually more useful than people in this site make them to be. It allowed me to interview for a summer internship even though I had 2 years of uni left, and I did well enough that I got the job. After that, I always needed someone to push my resume internally, because my grades wouldn't get me through the HR screening, or in some cases I put "Expected Grade" instead of "Obtained Grade" and pushed it up enough to make the cut. With a BB SA position, when my CV got to the business people I got interviews pretty much everywhere and then just went through the process.

1/27/13

This is a great thread. I work on the other side of the desk as the salesforce in Rates. I may make a thread like this soon to help anyone who is interested.

In the end, the king and the pawn go in the same box.

1/30/13

blocktrade:
This is a great thread. I work on the other side of the desk as the salesforce in Rates. I may make a thread like this soon to help anyone who is interested.

I would definitely look forward to getting a sales perspective of this.

Because when you're in a room full of smart people, smart suddenly doesn't matter--interesting is what matters.

1/30/13

PM:
Hi,

since you opened this thread about 1st year S&T Q&A, I wondered if you could help me out regarding a question I have.

Last year, I graduated from a Master's programme here in London and started working at bank in the city. I would categorise the bank as mid-market with a small local presence. I am within cash credit trading now and do not really enjoy the role - I am and always have been a more macro-inclined guy, so working in credit does not make any sense for me (plus it's cash - why did I go to uni in the first place). Like you, I did two internships at a BB but in my home country, where the bank still has a legacy presence. Since I did not want to work within my home country, I interviewed for a position at that bank here in London when suddenly all this hiring freeze bs started + they only hire people now who have been summer interns in London. Long story short, I did a Master's degree to improve my profile and then got quite a few interviews with most of the big banks here in London but did not get any offers. I obv got an offer from the current place though and accepted it, not knowing I would do cash credit trading but it is still trading and risk-taking, so better than any sales role etc.

I am now thinking about how I could change my situation. I can't transfer internally because the bank is so small. I was thinking about just applying for a full time grad programme again for next year but was a little late and only got rejections/no feedback at all apart from an interview at one BB and that was for convertibles trading. Since I am always way too honest, I said that I am not really interested in micro-focused products and that was the end of the story.

Do you have any other suggestions about what I could do?

Thanks for your time

Honestly, you won't get a graduate position in trading directly. Like you said, they only hire from summer interns, which is why all the internships are filled with people who have already graduated and didn't have offers. I think you should take anything you can get at a BB (like converts trading) and try to move internally, which is doable. Also look for Off-cycle internships, which will give you a very good shot. It's a step down, but it's the only way I can see you transferring since you won't be able to apply for internships or next years full time program. Otherwise, try to be as good as possible, get noticed and make contacts at BB with people who trade the same stuff as you and try to get hired, and then maybe even move internally...

1/27/13

I would love to ask how hard do you find breaking into London S&T coming from a non-target UK uni, also I'd appreciate if you could elaborate on which UK unis do you consider as targets;semi-targets?

Thanks!

1/27/13

Forgot to add: as undergraduate degrees are concerned

1/27/13

ranney95:
I would love to ask how hard do you find breaking into London S&T coming from a non-target UK uni, also I'd appreciate if you could elaborate on which UK unis do you consider as targets;semi-targets?

Thanks!

Seeker:
I would also like to know what are the best european/uk universities for a MSc in Finance in order to break into IB in London. I know the classic ones, like Oxford,LSE,Imperial, but if I don't get accepted to one of those, what's the next top uni? Warwick or Cass or something else?

I think breaking into S&T in London is extremely hard, you can only do it through internships since banks don't really hire full time any more, which means you have people with 1 or 2 internships at BBs applying for internships, so it's very hard. Like I said, if you come from a non-target you need to find a different way in, and your grades will need to be perfect and have some relevant experience. Depends what year you are in, but I would try to get experience at some smaller firms before trying BBs.

For both of you, I didn't study in the UK, so I'm not an expert. But people here seem to be from Oxbridge, LSE, Imperial, UCL, Warwick, Cass, Bath, Durham, Bristol, some undergrad but most people have some kind of masters.

Also, there are some very good European unis. Bocconi and HEC masters students place extremely well, I'd say better than most UK unis for example. But it depends on your language abilities...

1/27/13

I would also like to know what are the best european/uk universities for a MSc in Finance in order to break into IB in London. I know the classic ones, like Oxford,LSE,Imperial, but if I don't get accepted to one of those, what's the next top uni? Warwick or Cass or something else?

1/27/13

Are you familiar with how the interview process for IB and S&T works in the US? If so, how does it differ in Europe?

1/27/13

KKS:
Are you familiar with how the interview process for IB and S&T works in the US? If so, how does it differ in Europe?

They don't have ACs, they have superdays, which are just many interviews in a row. You will have the same in Goldman in London (they don't do AC) and it will also be part of the AC at other firms. Bear in mind an AC can run from 8am until 5pm or something like that...
1/27/13

Thanks for your detailed reply. Couple more questions if you don't mind.

1. What interesting stuff did you have on your CV while applying/stuff you talked about during interviews (other then marathon running and classical music - or were these the things that made you stand out?).

2. Can you describe the typical personality of someone who lands an offer/does well in trading.

3. Are most/all traders super smart (ie A grades at A level, first class in econ/finance etc, GMAT 700+ and so on) or does it vary? What if your smart but not super smart (i.e. get through academics fine but now a whiz kid on IQ math questions). What % of traders have a masters? For IBD I keep seeing its a 50/50 split between undergrads/postgrads and 90%+ are Caucasian which is why i used the generalisation above.

4. Do the traders do stuff together after work e.g. bars etc? You mentioned the classes are pretty mixed - so I'm assuming there are muslim people who don't drink (so a bar is awkward for them) or indian people who are veg (therefore a steakhouse is awkward for them). Are they doomed even before they enter the building?

5. What if your more of a micro person and don't like following the 'interest rate changes in the federal reserve' for example (but are aware of large macro trends). Should you only consider the equities division? Or another job entirely?

6. What resources do you use to keep up to date with the financial press? FT?

7. How do you make money? The bank teaches you to follow a specific model (made by quants?) and then you follow it? How much room is their for your own input in trades? Can you explain a typical 'trade timeline' i.e. the process of what you do.

8. How valuable are programming skills? Which ones are the most valuable?

9. If you can't land a summer internship in S&T, what do you recommend to undergrads to do with their time? (other then work experience in a similar/smaller shop)

10. What do you recommend from the trading-library.com?

Thanks! :)

1/27/13

Charles-perry:
Thanks for your detailed reply. Couple more questions if you don't mind....

1.- National champion of a team sport, serious charity work (as in spending 6 months in south east asia) and marathon were the most popular and definitely provided a lot of conversation. There are quite a lot of athletes in the floor.

2.- Varies a lot by desk. Cash products tend to be more fratty/extroverted/loud, whereas exotics have more introverted/geeky guys, but it's a huge generalization. In general, people who are comfortable making decisions and taking responsibility for them when they go wrong, who are very disciplined and who can handle pressure.

3.- Not really super smart. They are all obviously smart, since banks hire people with good academic backgrounds from top unis, but in no way are we Einsteins. Exotics desks tend to have more quanty and analytical people (lots of Asian, Indians and French guys) whereas cash people are faster decision makers, but again huge generalization. Also I disagree with the notion that grades are a perfect proxy for smartness, but maybe is because I had shitty grades in uni. High % have a masters, although in places like Spain, Germany or France Masters degrees are undergrad degrees, so hard to say.

4.- Some desks don't, some go for beers every now and then and some even go on holidays together, each desk is different. There's no problem at all with that kind of thing, honestly, people don't care. In my desk there's a Muslim who leaves 4 times a day to pray, does Ramadan and doesn't drink and it's fine. He just has a Coke when we go for a beer and we cover his book when he's praying. And Indians are not veggies for the most part, but again, it's fine if you order something vegetarian. All the London restaurants will have a veggie option.

5.- Equities would be a better fit for you. So would cash credit.

6.- Now I only read like opinion articles or in-depth reports in the FT/WSJ and specially The Economist. News from yesterday aren't of much use, I will already have read them on BBG.

7.- Your desk teaches you how to trade. Position sizes, how to hedge risks, discipline, what risks do you have, how to interpret different info/news, how to make prices and that kind of thing. Quants make trading models for algo and high frequency trading, not for us. For us they help to build pricing tools, spreadsheets and stuff like that, which we try to improve constantly and then getting help from IT to implement them. Typical trade, a sales guy comes in through the box asking for a price on something, look at what we have on the book, who the client is, what I think the market is going to do, what prices am I seeing in brokers/BBG/etc... what price action looks like on the security and the stuff I'm going to use to hedge, give a price to the sales guy, he confirms the trade, I book it and start thinking what I'm going to do with it. Either unwind it instantly, some of it, keep it in the book, buy something against it...

8.- Excel/VBA can be extremely helpful.

9.- Try to find something in finance as closely related to the markets as possible. Asset Management, HF, even PWM.

10.- My list is basically compiled from WSO. I haven't read all of them, so pick according to what you are interested in. This only includes technical books, I would also read books on the industry like More Money than God, Reminiscences of a Stock Operator, Market Wizards I and II, Inside the House of Money, etc... Not technical stuff but will help understand the industry.

Options Trading by Frans de Weet.
Margin of Safety
Distress Investing by Marty Whitman.
Hull - Options, Futures and Derivatives
Technical Analysis-Japanese Candlestick Charting
Energy Trading and Investing
Security Analysis by Benjamin Graham.
Margin of Safety .
Come into My Trading Room by Alexander Elder
Options Volatility and Pricing by Natenberg
Exotic Options Trading (maybe Revsly can help more here)
Foreign Exchange by Tim Weithers
Credit--Fabozzi;
Distressed Debt Investing;
Handbook of Municipal Bonds
The Handbook of Mortgage Backed Securities

1/27/13

PM:

hey maximus, didn't want to hijack your rates thread as it's not really related, but i noticed in a previous thread where someone asked for advice about choosing desks, you mentioned that credit will provide a good blend of the macro and micro. i thought credit was micro only, so curious to know where the macro component comes in. were you talking specifically about IG, HY, or EM credit, and how does the macro/micro balance vary across these 3?

thanks

I assume you are referring to cash, which is the most micro part of credit. Both those 3 are quite micro, but macro is still important. I mean, just look at how HY credit is moving all around the world, and the huge number of issuances and demand for them in companies in troubled peripheral countries. That is explained by macroeconomics, the individual companies are as fucked/healthy as they were 6 months ago, nothing has changed...
And if you look at derivatives, things like Index Trading, it becomes much more about the big credit picture, not the individual companies, so very Macro oriented.

1/28/13

Maximus Decimus Meridius:
Charles-perry:
Thanks for your detailed reply. Couple more questions if you don't mind....

7.- Your desk teaches you how to trade. Position sizes, how to hedge risks, discipline, what risks do you have, how to interpret different info/news, how to make prices and that kind of thing. Quants make trading models for algo and high frequency trading, not for us. For us they help to build pricing tools, spreadsheets and stuff like that, which we try to improve constantly and then getting help from IT to implement them. Typical trade, a sales guy comes in through the box asking for a price on something, look at what we have on the book, who the client is, what I think the market is going to do, what prices am I seeing in brokers/BBG/etc... what price action looks like on the security and the stuff I'm going to use to hedge, give a price to the sales guy, he confirms the trade, I book it and start thinking what I'm going to do with it. Either unwind it instantly, some of it, keep it in the book, buy something against it...

Great explanation of what trading is at a BB- applicable to most desks I bet.

"Do not go gentle into that good night"

1/27/13

Thanks again for the detailed reply.

Just one other question. You mentioned national sport rep, travel abroad etc. Just wondering - what if you haven't done charity work abroad, or don't compete at a national level in sport. What if your just a normal person who hits the gym, plays sport for fun, travel for a holiday and so on? You don't stand a chance? Quite interested in 'what the average level' is vs 'who the exceptions' are as there seems to be a discrepancy on LinkedIn (arguably because everyone doesn't upload everything they do! haha)

1/28/13

Charles-perry:
Thanks again for the detailed reply.

Just one other question. You mentioned national sport rep, travel abroad etc. Just wondering - what if you haven't done charity work abroad, or don't compete at a national level in sport. What if your just a normal person who hits the gym, plays sport for fun, travel for a holiday and so on? You don't stand a chance? Quite interested in 'what the average level' is vs 'who the exceptions' are as there seems to be a discrepancy on LinkedIn (arguably because everyone doesn't upload everything they do! haha)

The average person is pretty normal. There are many exceptions, and people with awesome backgrounds (I've met an Olympic gold medalists and an ex Navy Seal). But you should phrase stuff in your CV so that it looks better. It's not the same to write "Interests: Sport" as "Interests: Football team captain, playing in a weekly league", even though both people just play football with their friends.

1/27/13

Hi,

Thanks for doing this really helpful.

3 question if tyou would not mind!

With markets picking up a bit, do you see conversion rates from summer to full time being higher this year than last?

Secondly, what desk would you reccomend for someone who studies econ history, is pretty analytical, good at maths but no maths genius, and a sociable person, i am competitive in a good way so would like a desk that go out as a team and there is some interaction beyond work. Is there good money to be made in equities as opposed to more macro products/ commodities? (I worry a vanilla equities desk may not potentially be challenging enough?!) ...maybe something like EM debt a good idea?

You said you read comment articles and opinion pieces. What do you read outside of the FT and The Economist for market insight/ commentary? Any blogs, or anything a bit more left field that is particularly interesting and refreshing?

Thank you.

1/28/13

njokes:
Hi,

Thanks for doing this really helpful.

3 question if tyou would not mind!

With markets picking up a bit, do you see conversion rates from summer to full time being higher this year than last?

Secondly, what desk would you reccomend for someone who studies econ history, is pretty analytical, good at maths but no maths genius, and a sociable person, i am competitive in a good way so would like a desk that go out as a team and there is some interaction beyond work. Is there good money to be made in equities as opposed to more macro products/ commodities? (I worry a vanilla equities desk may not potentially be challenging enough?!) ...maybe something like EM debt a good idea?

You said you read comment articles and opinion pieces. What do you read outside of the FT and The Economist for market insight/ commentary? Any blogs, or anything a bit more left field that is particularly interesting and refreshing?

Thank you.

1.- I don't think they were that low to begin with, no matter what you read on the Internet. They generally reduced intern classes proportionally.

2.- You can make a fortune in the Equities floor, but it's much harder than in the FICC world. I think it was derivstrading who wrote "You need to be very smart to make a lot of money in FICC, but you need to be f***ing smart to make a lot of money in equities". I think the statement is pretty accurate.
I can't really recommend a desk, you can probably do any job on the floor, but none of your info stated what you liked. You need to figure out what you like, then choose a desk. You should ask yourself questions like:
-Do you prefer macro, micro, or like both?
-Do you like the quant/mathematical part of finance?
-Do you want to work on long term projects and complex products and structures or be involved in a high flow extremely fast-paced product?
-Do you want to handle risk?
-Do you want to interact with clients, develop relationships with the big names of finance and pitch to them?
-Do you want to be involved in the markets or prefer a more intellectual role and being able to think about stuff detachedly from the day to day problems?
Think hard about those questions, and you'll find your place. Decide role and then a rough idea of products you like. Your place shouldn't be a very specific desk like EM Debt. It should be more general, like fixed income sales except the specialist structured product sales for example.

3.- Not really. Lot of industry research. Seekingalpha I find quite good. Zerohedge has some (very few) good articles. Dealbreaker has interesting stuff every now and then. But reading The Economist almost cover to cover is quite a piece of work...

6/20/13

So from above what would you recommend for someone who prefers macro and micro, likes the math part of finance, either work on long-term or handle flow, and wants to handle risk?

1/28/13

Jubilee or DLR are most ideal if you don't want to be in the Wharf itself. If you're getting in at 6 something every morning, you'll learn not transferring lines is a massive plus.

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

1/28/13

Revsly:
Jubilee or DLR are most ideal if you don't want to be in the Wharf itself. If you're getting in at 6 something every morning, you'll learn not transferring lines is a massive plus.

When it comes to logistics, many banks have agreements with residences so you can use those. If you don't have a network in the city this is a great idea because you will be living in a student residence with the rest of the interns, so lots of socializing/going out/poker tournaments/etc... Although they tend to be in quite crappy areas, but close to work (around the DLR stops between Bank and CW) You will suffer on cab fares if you go out in South Ken or Mayfair though.
If you want to live with other friends or by yourself, do what Revsly suggested. Something that has a quick connection to Bank should also be good, even though you have to change to the DLR, but you can probably still make it in around 35 min. Buses are also good because there's no traffic at 6am (although going back can be a pain in the arse) so for example the 135 goes through all the City if you want to live in the Bishopsgate/Old Street/Brick Lane area. There are a couple of student residences over there.

1/28/13

Great thread! These are the best on WSO

1/28/13

Hi Maximus

Thanks for doing this, it's really helpful for me.

I am doing off-cycle internship with BB in London in Equity Derivatives flow trading.
I always wanted to be in FICC , but got an offer only from this desk and realizing now that I don't really enjoy equities.

Do you have any advice on how to move from equities to ficc? Do you have examples on your trading floor who did this move before?

Thank you again

1/29/13

feelko:
Hi Maximus

Thanks for doing this, it's really helpful for me.

I am doing off-cycle internship with BB in London in Equity Derivatives flow trading.
I always wanted to be in FICC , but got an offer only from this desk and realizing now that I don't really enjoy equities.

Do you have any advice on how to move from equities to ficc? Do you have examples on your trading floor who did this move before?

Thank you again

Honestly, no, I don't know anyone who moved from equities to ficc. You see people move around in ficc and in equities quite a lot, but not really between the two. Your best shot would be to do an amazing job at your current desk and network your ass off in ficc until a spot becomes available, then tell them to give you a shot, but you'll need to have a very good reputation in the firm.

1/29/13

Maximus Decimus Meridius:
feelko:
Hi Maximus

Thanks for doing this, it's really helpful for me.

I am doing off-cycle internship with BB in London in Equity Derivatives flow trading.
I always wanted to be in FICC , but got an offer only from this desk and realizing now that I don't really enjoy equities.

Do you have any advice on how to move from equities to ficc? Do you have examples on your trading floor who did this move before?

Thank you again

Honestly, no, I don't know anyone who moved from equities to ficc. You see people move around in ficc and in equities quite a lot, but not really between the two. Your best shot would be to do an amazing job at your current desk and network your ass off in ficc until a spot becomes available, then tell them to give you a shot, but you'll need to have a very good reputation in the firm.

I know one guy, started in FI, moved to EQ and wound up back in FI. I believe he was on the sales side as well, but not positive. As said above, it seems very rare

1/29/13

feelko:
Hi Maximus

Thanks for doing this, it's really helpful for me.

I am doing off-cycle internship with BB in London in Equity Derivatives flow trading.
I always wanted to be in FICC , but got an offer only from this desk and realizing now that I don't really enjoy equities.

Do you have any advice on how to move from equities to ficc? Do you have examples on your trading floor who did this move before?

Thank you again

I'm not Maximus, but I did that move. Went from Eq. trading to bond sales and back to eq. trading due to me not being a complete retard.... and the sudden HY bond boom origination at my bank (DCM stepped their game up). Just network your ass off.

CNBC sucks

"This financial crisis is worse than a divorce. I've lost all my money, but the wife is still here." - Client after getting blown up

1/30/13

Hi Maxiumus,

thanks for your time. I have always been more geared toward IBD but have always been interested in S&T however as stupid as it sounds, I still get quite confused by the concept of market making, I understand the very basics of it but thats it.

I wondered if you had any links to resources that would give me a good overview of S&T so I can understand the business more, how it works etc. nothing too technical if possible. thanks a lot

"because I want, to fit, in"

1/30/13

TheCityBoy:
Hi Maxiumus,

thanks for your time. I have always been more geared toward IBD but have always been interested in S&T however as stupid as it sounds, I still get quite confused by the concept of market making, I understand the very basics of it but thats it.

I wondered if you had any links to resources that would give me a good overview of S&T so I can understand the business more, how it works etc. nothing too technical if possible. thanks a lot

I work at a buyside shop hedging risk with swaps, swaptions and futures, so I am the client on the other end of the phone with the S&T guys at the BB's. Here is how it basically works (example with swaps):
1) Sales guy calls over the firms axes, one of them being that BB wants to pay 5yr swaps (they want to pay fixed)
2) If the axe lines up with our hedging needs and we want to receive 5yrs, we call back and execute the trade.
3) BB guy talks to trader and quotes us the rate he wants to pay at. If this rate is any difference from the "mid" (bid+ask)/2 that is how the BB makes money and they are out of the risk.

Now let's assume the BB was not axed and I called them anyway to get their bid on a clip of 5s. BB is going to charge more for this (let's say 1/4 bp from mid) and now they have that risk. They can either hold the whole position (treasury risk + spread risk = swap risk), or sell out of some part or all of the Treasury rate or Spread position by using dealer screens or sending this out as an axe to their other clients, or sell out of the whole risk. In this case let's say the BB doesn't want the risk (and markets don't move), so the sales guys blast out their axe and they get out of the trade at mid. The desk just made 1/4 bp on the trade, which assuming the trade was $200mln 5yrs, that would be $25,000 profit just like that. You can see how a lot can go wrong if markets are moving, but they can also be very profitable when flows are heavy.

Hope that helps, and willing to answer any other questions. On one of the last questions on other ways to educate yourself, I usually recommend that newcomers listen to bloomberg radio w/ tom keene. In the beginning it won't make a lot of sense but if you listen for long enough you will pick it up and be able to talk intelligently about various topics in no time.

1/30/13

PM:
Hey MDM,

Thank you for your Q&A! Firstly, I have a quick technical question. What are the different LIBOR rates used for? I know they serve as a benchmark for other rates, but which ones exactly?
Lastly (and I know this is a bit of a noob question), but what exactly does a trader do? I've heard so many different answers from different people. Some say you're on the phone selling securities and pocketing the spread, others tell me you just execute orders that salespeople shout out at you, and you mentioned a P&L, which seems to imply there's some prop trading involved at a BB trading desk. Can you please shed light on which is normally true at a typical BB? Thanks again

LIBOR are rates. They are used as a benchmark for financial securities, such as Interest Rate Swaps or just as market information on credit flow and the state of the economy.
You're not on the phone selling, that's a sales or a sales-trader. A sales-trader is a broker, so he sells an idea to the client and then executes it in the market for him without taking the risk himself, so he's not the counterpart of the trade. You don't execute orders that sales people shout at you, you give them prices (and no one shouts, there's an electronic box through which your sales people will ask for the prices). The process of price giving has been explained by DCHedge. There's a PnL because traders act as counterpart in the trade, so when DCHedge calls our sales desk, I give him a price in the 5yr swap and if he accepts now I have that swap on my book. Therefore, there will always be a profit or a loss when I hedge it/unwind it or just by the market moving and my book being marked to market. Plus, there's also a certain amount of Prop, we can take positions on our views, and we also do it to build inventories so that when all clients want to do the same we don't go bankrupt.
What you do is buy and sell financial securities in the name of your firm. Market making means when a client wants to buy or sell anything, we always give him a price and we buy from them or sell to them, even if we don't want to do it, providing liquidity.

1/30/13

TheCityBoy:
Hi Maxiumus,

thanks for your time. I have always been more geared toward IBD but have always been interested in S&T however as stupid as it sounds, I still get quite confused by the concept of market making, I understand the very basics of it but thats it.

I wondered if you had any links to resources that would give me a good overview of S&T so I can understand the business more, how it works etc. nothing too technical if possible. thanks a lot

I think DChedge explained it quite well. Honestly, the best I can do as a S&T overview is on one of the previous posts.
Basically market making involves providing liquidity, which means we commit to always buy and sell anything from/to our clients ourselves so they can put on/take off positions at any time. Even if we don't want that long/short position. Then we handle that risk and try to make money out of it. I know this is very basic, but if you can maybe tell me what parts you struggle with exactly I can probably answer better.

1/30/13

Amazing thread, great responses to reiterate what others have said. Much appreciated.

I'm SA'ing later this year for S&T at a BB in London and am particularly interested in trading:

1) I'm interested in the FICC desks and have rotations to experiment with them. Desks like FX or commodities seem to be more clear cut and accessible in how they operate but others such as Rates or Credit are not. Whilst I vaguely know of the products on these desks the familiarity and understanding I have is much worse. Can you tell me a bit more about them/how I can get more experience or information about them myself?

2) As a trader, what sort of Excel/VBA programs do you make and run?

3) How do you find Rates and how did you get into it in the first place? (Slightly linked to first question)

Thanks in advance - once again, much appreciated!

1/30/13

ZeroDelta:
Amazing thread, great responses to reiterate what others have said. Much appreciated.

I'm SA'ing later this year for S&T at a BB in London and am particularly interested in trading:

1) I'm interested in the FICC desks and have rotations to experiment with them. Desks like FX or commodities seem to be more clear cut and accessible in how they operate but others such as Rates or Credit are not. Whilst I vaguely know of the products on these desks the familiarity and understanding I have is much worse. Can you tell me a bit more about them/how I can get more experience or information about them myself?

2) As a trader, what sort of Excel/VBA programs do you make and run?

3) How do you find Rates and how did you get into it in the first place? (Slightly linked to first question)

Thanks in advance - once again, much appreciated!

1.- Rates and credit desks basically are divided the same way as any asset class in a bank: cash, derivatives and exotics. For rates cash are government bonds, derivatives are swaps and bond futures and exotics are things like swaptions (vanilla options on swaps), constant maturity swaps, exotic options on swaps (digital, barrier, etc...) and structured products based on rates. You also will find a short term interest rate trading desk, which trades short term interest rate futures, FRAs and 2yr Swaps (there are shorter term maturity swaps but aren't really traded). There will also be an inflation desk, which trades inflation bonds, inflation swaps, the nominal bonds and swaps for the same country and currency and inflation options (although not really liquid).
I'm less familiar with credit, but cash credit are corporate bonds, from investment grade to high yield. Derivatives are things like Index Trading or CDS trading. Exotics involve options on those products and trading structured products. In the book list I provided there are a lot of rates book and a very good book on credit.

2.- Basically Excel in trading desks is a doped excel. We have our own add-ins so we have our functions to do things like get prices and positions for our books in excel. As an intern you will mostly use bloomberg on excel to get prices and run some sort of analysis and make graphs and build swap curves or stuff like that.

3.- I've always loved macroeconomics, and rates is the place to be if you love that. I agree with Revsly when he says it's the purest way to express a view on macroeconomics. I sort of went through it in one of the posts in the first page, if you can make your question a bit more specific I can maybe elaborate some more.

1/30/13

How does networking in the UK differ from that in the US? Here in the US, it is completely normal to look people up on LinkedIn, send them an e-mail, ask for an informational interview, and hope that they eventually ask you for your resume. I have heard this might be considered stalking or downright rude in the UK.

1/31/13

KKS:
How does networking in the UK differ from that in the US? Here in the US, it is completely normal to look people up on LinkedIn, send them an e-mail, ask for an informational interview, and hope that they eventually ask you for your resume. I have heard this might be considered stalking or downright rude in the UK.

Networking here is way less aggressive. You should use "official" channels, like campus presentations and events (they hold them throughout Europe, not only UK) or get referrals, even if they are not professional (a friend giving you his brothers email or something like that). After you have met people through these channels it's fine to email them and try to get their help, but from what I read in this site people are way less helpful here.

2/1/13

PM:
Do you find anyone from bllomberg/factset etc coming through to work in research positions? Also how valuable is the CFA in getting a job?

Thanks

I'm not very familiar with the backgrounds of our research people, although many seemed to be economists before. I can't think of anyone who worked at bloomberg or factset full time. Some people did internships there while in uni, but not many. CFA for trading is useless, can be useful in Equity Research (I'm not sure, maybe one of the ER guys in the forum can chime in), I would think also useless for Macro research to be honest.

2/1/13

Culture:

Can you tell us more about what conversations happen on the trading floor?
Is it work talk all day then people go their way? Or do people talk about sports/family life etc in between?
Lunch at your desk always?

Networking/getting in:

If the bank just isn't picking up your CV/interviewing you for whatever reason - and your saying networking doesn't work as well here - is the person screwed? There is nothing they can do?

If you don't have a S&T internship but have other finance/similar internships do you stand a chance of landing an (internship) offer? Or is recruiting getting similar to IBD in the sense that those at the top tier BBs tend to have completed an internship at a 'lower tier' BB?

Moving around:

How common is it to be moved from one desk to the other?

2/4/13

Charles-perry:
Culture:

Can you tell us more about what conversations happen on the trading floor?
Is it work talk all day then people go their way? Or do people talk about sports/family life etc in between?
Lunch at your desk always?

Networking/getting in:

If the bank just isn't picking up your CV/interviewing you for whatever reason - and your saying networking doesn't work as well here - is the person screwed? There is nothing they can do?

If you don't have a S&T internship but have other finance/similar internships do you stand a chance of landing an (internship) offer? Or is recruiting getting similar to IBD in the sense that those at the top tier BBs tend to have completed an internship at a 'lower tier' BB?

Moving around:

How common is it to be moved from one desk to the other?

Apologies for the delay, I had a very busy weekend.

Conversations are the same as in many offices I guess. We talk about everything. Bear in mind very few people have offices on a trading floor, and they only use them for meetings, so everyone is sitting 1m away from the rest of their team. Conversation involves the normal stuff, family, friends, weekend, sports, trips... Yes, lunch at the desk always.
I didn't say (or didn't mean) it didn't work as well. I mean it's harder to get someone to move your application internally. But if you manage that, I think it might actually make more of a difference than in the us. Like I said, get to know people through networking events (the official ones), conferences, common friends, etc.. If you are in London this is fairly easy because there are thousands of bankers.
Definitely helps to have S&T experience, but it's not a must. Plus, in S&T there really aren't "top tier" BBs, or they would be very different from the IBD ones. Same for IBD. I know plenty of GS/MS/JPM who have always been at their firm.
Between related desks it's quite common, there aren't that many people who have traded the exact same thing for 10+ years.

2/1/13

Thank you for your help Maximus.

1. I had AC's at 2 top BB S&T SA's but failed to convert them so I am now without a summer internship. I am in my second year at the moment.

What do you advise me to do? I am thinking of taking a year out to study abroad, would this allow me to apply for summer internships again due to being a penultimate year? Would the same firms I have already had AC's at give me another AC?

2. There is an option of me paying 4 grand for a summer internship at a boutique hedge fund in Derivatives (2 months). Would you recommend doing something like this? I am thinking of using this as a way to get a good chance of a BB internship the following year and paying that 4 grand off.

I really want to become a trader. My plan is to pay 4 grand to get real solid experience, do a year abroad and reapply again with all the extra stuff. What do you think?

Thank you.

2/1/13

Another question, what is your social life like? How often does the average trader go to a London nightclub?

Is the lifestyle really work hard, play hard?

2/4/13

BestTraderAlive:
Thank you for your help Maximus.

1. I had AC's at 2 top BB S&T SA's but failed to convert them so I am now without a summer internship. I am in my second year at the moment.

What do you advise me to do? I am thinking of taking a year out to study abroad, would this allow me to apply for summer internships again due to being a penultimate year? Would the same firms I have already had AC's at give me another AC?

2. There is an option of me paying 4 grand for a summer internship at a boutique hedge fund in Derivatives (2 months). Would you recommend doing something like this? I am thinking of using this as a way to get a good chance of a BB internship the following year and paying that 4 grand off.

I really want to become a trader. My plan is to pay 4 grand to get real solid experience, do a year abroad and reapply again with all the extra stuff. What do you think?

Thank you.

1.- You can apply to internships even after you have graduated, although each year without experience makes it harder. Yes, they can give you another AC, but you need to have improved your CV. I would try to find something as closely related to the markets as possible, always in finance, and then spin it adequately. Anything in the buy side like HFs or big asset managers, maybe even PWM, I don't know, anything but having a blank.

2.- Having HF experience can be great. I can't really make a recommendation, because it depends tremendously on what 4k mean to you. If you can pay them easily and you are sure the place is legit it will look good on your CV. However I would be very wary of a Hedge Fund that makes you pay 4k to intern. It's one thing not to pay interns, but asking them for money makes me extremely suspicious, I've never heard of something like that at a HF. And 4k is a lot of money, so do your research and if you have the smallest suspicion don't do it.

BestTraderAlive:
Another question, what is your social life like? How often does the average trader go to a London nightclub?

Is the lifestyle really work hard, play hard?

I don't know how specific you want me to be. I go to a club every friday, 50% of saturdays and about one thursday per month. I try to relax and go to sleep very early on Sundays, otherwise I feel like shit the whole week. During the week I go for a beer after work sometimes, and I have an early dinner with my flatmates and/or a couple of friends pretty much every day.

2/5/13

Hi Maximus,

just quickly if you would be so kind.

Where did you live as a SA in London and where do you live in London now? Do you think commuting from suburbs outside of London is a silly idea as a SA in S&T?

Thanks :)

2/6/13

njokes:
Hi Maximus,

just quickly if you would be so kind.

Where did you live as a SA in London and where do you live in London now? Do you think commuting from suburbs outside of London is a silly idea as a SA in S&T?

Thanks :)

I lived one summer near Covent Garden and last summer in the student residence provided by the bank. Now I live south of the park in the South Kensington/Chelsea area.
Depends what kind of suburbs we are talking about, because London goes on and on for miles. I would think very hard about anything that involves a commute of 30min+ and a commute of 1h+ is going to make your life extremely miserable when you have to get in at 6:30. And I'm counting door to door time, not what the train or bus takes, because those can be very different.
It will make your social life suck as well, because going home after going out at night will cost you a fortune in cab fares and it will make it difficult for you to go to dinner or lunch or just a couple of beers with people over the weekend if it takes you 1h30min to get there.

6/9/13

Hi, I study at a semi-target (UK). I'm on a good track for a first (econ). I'm from continental Europe and wasn't familiar with the UK uni admission system, so I didn't aim high enough. I graduated as valedictorian and probably could have gotten into a better school. I'm only telling this to describe my situation.

Considering that I am "only" at a semi-target (though my uni is Russell Group/ Redbrick), can I still break into trading at a BB, as I'm on a track for a first and engaged in many extracurriculars (Econ society, investment society, running) and have done two internships at a large asset manager and a boutique investment bank (summer before uni and summer between first and second year)??

if so, I will definitely submit my applications for summer internships at BBs in London. already wrote and corrected my applications actually.

thank you very much for any reply!! very kind to host a q&a session btw!

6/10/13

UK2013plus:

Hi, I study at a semi-target (UK). I'm on a good track for a first (econ). I'm from continental Europe and wasn't familiar with the UK uni admission system, so I didn't aim high enough. I graduated as valedictorian and probably could have gotten into a better school. I'm only telling this to describe my situation.

Considering that I am "only" at a semi-target (though my uni is Russell Group/ Redbrick), can I still break into trading at a BB, as I'm on a track for a first and engaged in many extracurriculars (Econ society, investment society, running) and have done two internships at a large asset manager and a boutique investment bank (summer before uni and summer between first and second year)??

if so, I will definitely submit my applications for summer internships at BBs in London. already wrote and corrected my applications actually.

thank you very much for any reply!! very kind to host a q&a session btw!

There are many factors when it comes to recruiting, so I can't really predict it, but if you are doing something relevant this summer you should be able to get interviews, from there it's up to you.
Plus, to be perfectly honest I don't understand why you care about what your chances are. If you want the job apply, if you don't want it don't apply. What can you lose, what's the possible downside?

6/10/13

Maximus Decimus Meridius:

UK2013plus:

Hi, I study at a semi-target (UK). I'm on a good track for a first (econ). I'm from continental Europe and wasn't familiar with the UK uni admission system, so I didn't aim high enough. I graduated as valedictorian and probably could have gotten into a better school. I'm only telling this to describe my situation.
Considering that I am "only" at a semi-target (though my uni is Russell Group/ Redbrick), can I still break into trading at a BB, as I'm on a track for a first and engaged in many extracurriculars (Econ society, investment society, running) and have done two internships at a large asset manager and a boutique investment bank (summer before uni and summer between first and second year)??
if so, I will definitely submit my applications for summer internships at BBs in London. already wrote and corrected my applications actually.
thank you very much for any reply!! very kind to host a q&a session btw!

There are many factors when it comes to recruiting, so I can't really predict it, but if you are doing something relevant this summer you should be able to get interviews, from there it's up to you.
Plus, to be perfectly honest I don't understand why you care about what your chances are. If you want the job apply, if you don't want it don't apply. What can you lose, what's the possible downside?

ok thanks. yes, im doing an internship this summer, but in ER. interested in both ER and S&T

6/18/13

Thumbs up

6/18/13

Hi Maximus,

I'm an Engineering graduate also, who is 2 years removed from a S+T Summer Internship (I've had 3 market facing internships total). Since then I have been unable to get an offer in Trading (my first preference) or any other front office role (I interviewed with one BB but had an offer rescinded after 8+ interviews), despite many direct applications & talking to recruitment agencies.

I've been in a very good non-Finance related graduate job since then and left it, because it didn't interest me and I know I want to be a Trader.

Having been out of the Finance circle for 2 years now, what would you advise me to do? I'm thinking of doing a Mathematics/Finance related Masters degree.

6/19/13

YouMyBoyBlue:

Hi Maximus,

I'm an Engineering graduate also, who is 2 years removed from a S+T Summer Internship (I've had 3 market facing internships total). Since then I have been unable to get an offer in Trading (my first preference) or any other front office role (I interviewed with one BB but had an offer rescinded after 8+ interviews), despite many direct applications & talking to recruitment agencies.

I've been in a very good non-Finance related graduate job since then and left it, because it didn't interest me and I know I want to be a Trader.

Having been out of the Finance circle for 2 years now, what would you advise me to do? I'm thinking of doing a Mathematics/Finance related Masters degree.

Yeah, it seems that going to school might give you a shot, although you'd still have to start at the bottom and it's not a certitude, so be careful. Also consider using your network at previous firms.

6/20/13

Hi mate,

Thank you very much for this....V. Helpful indeed.

I will be applying for summer internships next year and have been really trying to pinpoint what desks I want to work/rotate on.

I was wondering if you could chime in with some input or help.

Firstly I'm in interested in Emerging Markets, esp. Asia. I am UK based, but I have worked in HK & Singapore covering those markets and found them alot more interesting compared to developed markets.

I am very Macro orientated, so defiantly FICC but I am interested in coming up with strategies/investment ideas. That said, I want to manage risk and I want to be involved in the market.

The dilemma I hold is that if I look at my skills, I am peoples person, I love chatting about the market and I like coming up with ideas.

The split I have is whether to work in research/sales or trading.

I suppose a rotation between all three is my best shout, but what are your thoughts?

EDIT: Also....Sorry as I have remembered, As a UK student at a UK uni, I was wondering if you know what the deal is on UK guys working in the Hong Kong office? Would you say it is possible to get a FT position from uni in HK on a sales/trading desk.

Cheers

6/20/13

Thanks a lot for doing this

6/20/13

I was hoping you could answer some questions about getting an internship? I know some poeple had some more detailed questions about the topic, but I will be coming to London in September until the end of May as part of a study abroad program from my university in the USA. The school will be helping me find an internship, but I don't know if they will be able to place me where I want. I don't have any previous experience besides my own portfolio and reading every day. Any information would be golden!

Thanks!

...

6/20/13

Mont:

Hi mate,

Thank you very much for this....V. Helpful indeed.

I will be applying for summer internships next year and have been really trying to pinpoint what desks I want to work/rotate on.

I was wondering if you could chime in with some input or help.

Firstly I'm in interested in Emerging Markets, esp. Asia. I am UK based, but I have worked in HK & Singapore covering those markets and found them alot more interesting compared to developed markets.

I am very Macro orientated, so defiantly FICC but I am interested in coming up with strategies/investment ideas. That said, I want to manage risk and I want to be involved in the market.

The dilemma I hold is that if I look at my skills, I am peoples person, I love chatting about the market and I like coming up with ideas.

The split I have is whether to work in research/sales or trading.

I suppose a rotation between all three is my best shout, but what are your thoughts?

EDIT: Also....Sorry as I have remembered, As a UK student at a UK uni, I was wondering if you know what the deal is on UK guys working in the Hong Kong office? Would you say it is possible to get a FT position from uni in HK on a sales/trading desk.

Cheers

I don't understand why you want to be in Asia. You can trade those markets from London no problem. Unless you're Asian I think getting a job over there is going to be pretty difficult out of school. Getting a job in EM in London and then moving internally after a couple of years might be your best bet, but I don't really know.

Honestly, except for what you mentioned about managing risk it sounds like you should be in sales in EM FX or Rates/Credit (EM Credit is generally the same as EM rates) but it's hard to tell since I don't really know you and you seem like you want to everything, so you need to sit down and decide what your priorities are and what you're good at. If you have doubts aim for one of the rotational programs instead of the ones with fixed placements.

6/20/13

BreakingRich:

I was hoping you could answer some questions about getting an internship? I know some poeple had some more detailed questions about the topic, but I will be coming to London in September until the end of May as part of a study abroad program from my university in the USA. The school will be helping me find an internship, but I don't know if they will be able to place me where I want. I don't have any previous experience besides my own portfolio and reading every day. Any information would be golden!

Thanks!

Try to get experience on something finance related, otherwise it might me a bit of a hard. I don't know if you're looking for a Summer Internship or an Off-Cycle while you're in London, but I don't think they have part time internships if you have to go to uni. Other than that, nothing special, what has been said in this site countless times. Perfect CV, perfect cover letter, practice your interviews, follow the news and the markets, learn as many technicals as you can, network and talk to people on the business and try to understand how a trading floor is organized and how it works...

6/20/13

Alexander Supertramp:

So from above what would you recommend for someone who prefers macro and micro, likes the math part of finance, either work on long-term or handle flow, and wants to handle risk?

Probably something like vanilla Credit Derivs trading or credit structuring. The more mathematical you get, the less micro component probably, so you need to find a balance. Take this with a pinch of salt because I've never on a credit desk, so I might be wrong, but talk to people doing Credit and get more accurate info.

6/20/13

Hey I think a lot of college students here would appreciate a walkthrough of how a trade is originated and executed as well as your thought process as a trader in that particular situation. A lot of us have never even seen a trading floor and it would definitely be an enlightening answer.

6/21/13

can you briefly explain what are the drivers of rates and the leading indicators you use? (guess : inflation, central bank, gdp, commodities?)

after, can you briefly explain how rates affect equities, FX, commodities, and any other crucial market/variable?

I know this will be a detailed post so thanks in advance. If it's not too much to ask, I'm trying understand the market and would like to PM you with some basic frameworks I've built to help me understand how things move together. would you mind going over it with me?

6/21/13

Hi Maximus,

Do you see a decent amount of graduate students on the trading floor?

I am considering a degree in Math Finance/ Financial Engineering for this reason.

6/22/13

Hi Maximus,

I was wondering which papers do you read? WSJ, Economist or any other European paper?

6/23/13

packmate:

Hey I think a lot of college students here would appreciate a walkthrough of how a trade is originated and executed as well as your thought process as a trader in that particular situation. A lot of us have never even seen a trading floor and it would definitely be an enlightening answer.

Depends a lot on the type of trade. If it's a flow product, first the sales will call his client and pitch an idea to him or the client will call the sales guy and ask for a price (might also use e-mail or BBG chat). The sales guy calls the trader through the box (an electronic thing that has a speaker and a microphone and some buttons so you can dial an extension and you have like speed dial with your sales/traders) and asks for a price. Trader gives a price. Sales gives the price to the client. Client says yes/no or counteroffer. If the trade is done you book it, if not you'll probably try to find out the price the client got so you can figure out what other people on the street think.
For a structured product it's more like the structurers develop a product they think is good and try to sell it to clients or the client comes looking for a bespoke solution through the sales force. Traders price it, execute it and then manage the risk. It's more of a pure risk management role, in a way more similar to prop trading than a flow role where you're giving prices all day.

6/23/13

couchy:

can you briefly explain what are the drivers of rates and the leading indicators you use? (guess : inflation, central bank, gdp, commodities?)

after, can you briefly explain how rates affect equities, FX, commodities, and any other crucial market/variable?

I know this will be a detailed post so thanks in advance. If it's not too much to ask, I'm trying understand the market and would like to PM you with some basic frameworks I've built to help me understand how things move together. would you mind going over it with me?

We don't really use indicators as such like in quant or pure technical trading. The thing about rates is that everything can move the market. Inflation, central banks, gdp, commods, equities, fx, general news, risk appetite, unemployment/Non farm payrolls, natural disasters...
The correlations between markets is not constant. Plus, you need to judge what's priced in and what isn't. Text books like to talk about economic and financial theory, but reality is a lot different since you have humans and market sentiment in between. It's a useful exercise for you to try and figure out what the relationship between these things should be. As an example, say that the ECB raises interest rates. Probably people will want to invest in the eurozone since they'll get a higher return, so the EUR might appreciate against main pairs. But is the market expecting this raise and therefore it's priced in? What are the other consequences of this raise? Can it affect other markets that in turn can affect the spot rate in an opposite way or boost the effect?
You can PM me, no problem. Although I think it'll be more useful if you post it here so other people can chime in and help.

6/23/13

klaasv:

Hi Maximus,

I was wondering which papers do you read? WSJ, Economist or any other European paper?

Like I said I don't read that many papers. I read a lot of news through BBG during the day, so it's not that useful for me to read news the day after. I take a look at the FT and the WSJ and a financial and normal newspaper from home (plus a couple of sports ones) during the day, but not much. I prefer reading more profound analysis or opinion articles, so I read The Economist almost cover to cover.

6/23/13

amastu:

Hi Maximus,

Do you see a decent amount of graduate students on the trading floor?

I am considering a degree in Math Finance/ Financial Engineering for this reason.

Almost everyone in the floor got in finance through a graduate program of some sort, either in this firm or at another or at another related industry.

6/23/13

Hey sorry, I'm looking for an off-cycle. I will have a Tier 4 Visa that will allow me to work 20 hours a week while there. Think that might change my chances of landing something?

...

6/23/13

BreakingRich:

Hey sorry, I'm looking for an off-cycle. I will have a Tier 4 Visa that will allow me to work 20 hours a week while there. Think that might change my chances of landing something?

I would be shocked if anyone were to hire you to work 2 days a week.

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

6/23/13

Pretty dull question... Is working on the sell - side/trading rates something you see yourself doing for 5..10 years? Would you think about covering a differn asset class/location etc.. or working on the buy - side?

6/25/13

Revsly:

BreakingRich:

Hey sorry, I'm looking for an off-cycle. I will have a Tier 4 Visa that will allow me to work 20 hours a week while there. Think that might change my chances of landing something?

I would be shocked if anyone were to hire you to work 2 days a week.

This.

6/25/13

Mont:

Pretty dull question... Is working on the sell - side/trading rates something you see yourself doing for 5..10 years? Would you think about covering a differn asset class/location etc.. or working on the buy - side?

In all honesty I don't know. I'm happy where I am and I'm learning a lot, but I would like to trade other products and markets eventually. Move to NYC or HK for a couple of years and come back sounds very good to me.
Moving to the buy-side to a big macro hf would be ideal, but I don't how feasible it will be, I know I'm not even close to ready now.
This also depends on a lot of non-career factors. In the next 5 or 10 years a lot can potentially change like girlfriend/wife, maybe kids or I might be living exactly like now. So the opportunity will need to be good but also at the right time and the right place. So I don't spend much time thinking about this stuff because I honestly think it's 100% unpredictable right now.

6/26/13

Would you be so kind as to give us a primer on the short-end/money market instruments like OIS, Eurodollar futures, FRA(?), and more that I'm missing? More specifically, which specific rates (LIBOR, FF) do these instruments "imply" or "price in", and how do traders use them to predict central bank policy moves and think about market expectations surrounding these moves?

I know this is a long shot considering you might not be a short-end guy, but any info you could share would be helpful. Thanks

7/2/13

you guys interested in the interest rates markets should check out "@govttrader on twitter. There is tons of free info and market commentary there (also check out the blog there)

There is lots of educational content for free that you would normally get when sitting on a Rates desk.

Other than a bloomberg terminal, Twitter has become THE place for market news and the social trading community

And...if you don't already have a futures account somewhere..then at the least you should open an account at TD Ameritrade (its free)...and install their Mobile Trader app on your smartphone...the software is easy to use / understand..and best of all its free.

I wouldn't recommend actually using TD ThinkOrSwim to trade...their commissions are way too high.

"deepdiscounttrading" is much better for actual trading (they are the cheapest i've seen for retail...even cheaper then interactive brokers)

I am a proprietary Govt Bond Trader...i post my comments on the mkt intraday at twitter...and longer articles on my blog. I've accumulated a lot of educational info in these blogs..so i highly recommend checking them out
http://govttrader.blogspot.com

7/2/13

whalesquid123:

Would you be so kind as to give us a primer on the short-end/money market instruments like OIS, Eurodollar futures, FRA(?), and more that I'm missing? More specifically, which specific rates (LIBOR, FF) do these instruments "imply" or "price in", and how do traders use them to predict central bank policy moves and think about market expectations surrounding these moves?

I know this is a long shot considering you might not be a short-end guy, but any info you could share would be helpful. Thanks


Create a new thread. Others, like myself, might be able to help with this if MD is not inclined.

Sorry for threadjack.

7/3/13

whalesquid123:

Would you be so kind as to give us a primer on the short-end/money market instruments like OIS, Eurodollar futures, FRA(?), and more that I'm missing? More specifically, which specific rates (LIBOR, FF) do these instruments "imply" or "price in", and how do traders use them to predict central bank policy moves and think about market expectations surrounding these moves?

I know this is a long shot considering you might not be a short-end guy, but any info you could share would be helpful. Thanks

Sorry about this, I totally forgot about your post. Although to be honest I don't really understand what information exactly is that you want.
As for the second question, each of these instruments is referred to a specific rate. USD 3 Month Libor for Eurodollar futures for example. So each instrument prices a specific rate at a specific time. You can look at market expectations of central bank policy by looking at how the longer dated futures are trading. So if there's a spike in Red March for example, maybe the market is thinking that the central bank is going to raise interest rates. Or maybe not. There's not a fixed rule. You need to look at all the curves, the markets, the spread between different markets, etc.. and form your opinion.

Martinghoul (and other) feel free to pitch in, the point of this is to help as many people as possible.

7/3/13
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Chemically speaking, alcohol is a solution.

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