8/3/17

In Part 2 of Gekko's Guidance, I'm going to cover S&T interview prep (also can be used for Research). Part 1 of Gekko's Guidance.

This guide is meant to cover all the "How do I prepare for XXX interview in XXX product group". The simple truth is that 99% of preparation is the same, regardless of the position (sales or trading) and regardless of the product group. If you are interviewing for sales, you need to know the same info that a person interviewing for trading does. Sales gets a bad rap on this site, but I have met a lot of sales guys. They need to know the market and the product just as well as the traders do because they are the ones that need to pitch their client and answer the client's questions. A lot of the sales guys I know are ex-traders who for one reason or another quit trading to go into sales - and they love it (less stress), they know all about the product, and they do just as well as when they were trading.

The difference between these interviews is that they will focus on one area more than the other, but that does not mean you should not have a stock pick ready when going into a fixed income interview. In fact, most fixed income interviews ask economy and equity questions because they think you will know those and don't think you should know a lot about mortgages or distressed debt.

Warning: This guide is not meant to be a cram sheet. You can't pop two Adderall before the final and think you are set. This guide is meant to be completed over time and to prepare you for the marathon that is the interviewing process.

Section 1 - The Fit

Despite the guide's primary focus on technical questions, the fit part of the interview (anything not talking about markets or brain teasers) will be the longest part of the interview and will carry the most weight. To prepare for the fit part, I would read the WSO Fit Interview Guide and look hard at your resume for possible questions that could be asked (i.e., "I see you studied abroad in China. What did you think?"). Prepare answers and try weave an interesting story rather than, "China was really cool, great experience." Remember Rule #7 - Control the Interview.

Now some of you might be asking, if fit is so important, why bother with technicals? Technicals are there to differentiate candidates. If you have two candidates who are about equal in the fit category, you are going to take the one that either A) has a skill set you want (i.e., computer science) or B) knows more technicals. Technicals also help show that passion I talked about in Part 1.

Here's @dosk17 with a good summary of how fit questions function in S&T interviews.

"Fit" questions are more about whether you have the "trader mindset" and can make decisions quickly, think on your feet, how much you follow and enjoy the markets, your risk tolerance and how well you manage risk, etc.

Fitting in with the team and culture is also important, and you could still get leadership / team-type questions or get asked about your background. But it's less about proving you're a workhorse and more about proving you're a quick thinker and can act like a trader.

Section 2 - Technicals

First thing I recommend is that you read and download the Vault Guide to Finance Interviews.

I provided the link, but a quick Google search reveals several other links should this one go down. The guide is excellent in providing a basic understanding of the products and what types of questions you can receive.

Another excellent resource for brain teaser questions is Heard on the Street. The book is basically the bible for brainteaser and math-related questions. You might expect one or two brain teaser questions and maybe some math, but it is not definite. The math would be something like what is 39 x 39 or simple expected value. While getting the right answer is good, the interviewer really just wants to see your thought process and how you approach a brain teaser. My friends tell me that brain teasers and expected value questions are much more likely at prop shops. All the brain teasers/math questions I got during my BB interviews could have been answered by the Vault guide. (It has a small section on brain teasers.)

I also think either reading the Market Wizards books or Come Into My Trading Room by Alex Elder would be beneficial for S&T. Market Wizards is candid interviews with top traders, and Elder's book is one of those "learn how to trade books", but I really like it. The point of reading either of these books is to give you a better sense of what people look for in a trade and the different ways people trade. These books let you get a feel for what a trader is thinking, rather than the technical knowledge ,"A call option is..., you calculate delta by..."

Staying Up to Date with the Markets

I personally think that the Financial Times is a better paper, but I will talk about the WSJ because that is what most people have access to. If you only have 30 minutes of free time a day and can only get your information from one source, read the front cover of the WSJ, the front page of The Marketplace section, and the Money and Investing section. The Marketplace section can be used to generate a stock pick or a talk about why a specific event makes an industry look attractive.

Your primary focus should be the money and investing section. Read the front page, Heard on the Street (back page), Moving the Market, and any article on currencies or commodities. The idea is to get a general sense of what is happening in the markets along with investor's general mindset (aka the driving forces). That way when you tell the interviewer your view of the economy you can provide some examples - I think Energy will be a very big sector with higher commodity prices, demand from China and India, Potash, BHP. Maybe mention a growth number you picked up in your reading about the increase in demand for iron ore, whatever. The idea is to have a 2-3 investment "themes" and examples of those themes playing out.

Apart from the WSJ/FT, there are plenty of other sources of information to go to, and most of them have been listed on this site. I like PIMCO.com for fixed income research, Abnormalreturns.com, and seekingalpha.com.

I would say that those sites would keep you up to date with current events and provide plenty of investment ideas to talk about during an interview.

Specific Stock Question

When it comes to the specific stock question, I would have at least two choices. You should know the stock's P/E ratio (historically high or low), sales, net income, operating margin, products, risks to their business, areas where they are growing, and their strengths (brand name, international exposure, and things that they have done recently). I always tried to pick a stock and then steer the interview back to the general economy. So I would touch on its P/E ratio and say whether it was cheap or expensive. I would then say areas they were growing, some of their strengths, and how events in the general economy would affect it going forward. This strategy might not work for an equity research interview, but it worked most of the time for general interviews.

@derivstrading also had some great thoughts on this aspect of the interview. He points out that, instead of a trading pitch, a lot of interviewees give a sales pitch. Your pitch needs to have an edge, and there's no doubt that the interviewer will ask you about it. Here's @derivstrading with some insight into the edge as well some follow-up questions you need to be prepared to answer.

1) What is the edge on this trade? Why do you expect to make money?

Let's say company X earnings are being priced in at a 4% move (i.e., options have an implied vol that is pricing a vol of this magnitude). You look back and find that never has the stock of this company moved more than 2% post earnings, and there aren't any different factors now than other earnings. Therefore, going short vol presents a simple form of edge. Now it is true that you are using historical information and extrapolating, but it is much better than telling the interviewer simply that, "I think the earnings move priced into the options market is too rich."

So you've defined your edge. Is that all you need to know going in? Not quite, as there are still a few questions commonly asked that you need to be able to answer.

2) What is your stop loss on this trade and why?

At what point do you get out of the trade? Let's say you went short gamma in the above example, and the stock starts to move heavily as the earnings announcement is moving closer, more than the implied vol you sold gamma. At what point do you decide to get out? (It's a bit simpler with straight stock compared to options because you only have price to look at in terms of a stop, whereas with options, you can lose money in many more ways and therefore have to think about various scenarios.)

When an interviewer asks this question, go through a scenario analysis of situations that could make you lose money and then explain what you would do.

3) How do you get out of the position if it goes against you?

Do you get rid of all at once, in two or three stages, or in small steps? Your answer should be about amount of liquidity and market conditions (i.e., whether your trade hypothesis has changed or not).

4) How long do you expect to hold the trade for?

What if you went long a stock because you have studied this stock and found that the probability of it being acquired is high? How long until you reverse this hypothesis? Note that holding time does not have to be in terms of days/months, but also in terms of relevant market conditions.

5) What are your main risks?

You want to think about a scenario analysis of possible situations that can make you lose money. Of course, you cannot prepare for everything that can happen, but some prep is better than none. Let's say a stock is going to announce a drug test result and you see the following vol schedule. (The drug announcement is at the beginning of September, and it is currently May.) June: 20% vol, September: 18% vol, December: 22% vol

You think the 18 vol is cheap, and it should rise to at least 30% leading up to the event (or you think the event will be a large realized move in which case you are planning on making money on gamma, but we will stick with vega and implied vol in this example).

You might think about going short the June vol at 20 to fund the long vol position in the Sept contract to reduce the risk of losing money leading up to the announcement if nothing happens throughout June.

Facts & Figures You NEED to Know

You should know the current levels for all of the below. You should also know what their price movements looked like over the last 6-9 months and, if possible, the market sentiment behind the moves--all of which becomes very easy if you actively follow the markets. You should also note their support and resistance levels and events that could force them out of their ranges.

The S&P 500, The Dow Jones, Oil, Gold, 2 yr UST, 5 yr UST, 10 yr UST, 30 yr UST, Fed Funds Rate, O/N LIBOR (What is LIBOR - and I don't just mean the name), 3-month LIBOR, 6-month LIBOR, USD, GBP, JPY, EUR, AUD, and CAD

(I would also know the ball park duration of the 10 yr and 30 yr and EXACTLY what duration is. I mean, saying the alphabet in your sleep kind of know.)

I have had interviews where people ask me about the 2 yr UST. As I already said, I have had interviews where they ask you to detail the price movements for the last 6 months and then what market factors would cause the a change.

Additional Prep

If you would like to learn more general info about a topic, use Google and Investopedia (or Wikipedia).

Click on this link and scroll to the bottom of the page to see a gold mine of information. Having more general knowledge of different products and trading strategies allows you to ask interviewers more detailed questions about the market they trade, what they do on a daily basis, and how they got to their current position. It also allows you to see what is out there and what catches your interest.

Do some research on the firm so you have an understanding of how they do business, their values, etc. The more intelligently you can speak about the firm, the better.

Why Trading

You should have two separate answers to the question, "Why trading?" One of those answers is the massive influence of exit opps, pay, and prestige that entices us all to choose these careers. Those aren't things you should mention when you get asked during the interview, although it's not entirely discouraged to abstain from mentioning the pay. After all, the light in the tunnel to all traders is money, and that light isn't achieved without competence. While it would be the honest thing to do, we recommend abstaining as it's already an accepted fact that money is a massive incentive if you're interviewing to begin with. Moving on, here are some good answers to the question:

  • Entrepreneurial/meritocratic environment: You are paid/promoted based on your skill in generating investment/trading ideas for your clients and finding value where others fail to do so. Stress that it's less political than other areas of the bank and that it's more fair/meritocratic, thus appealing to your personality, etc. (@fishbeancake)
  • You like the challenge of interacting with different clients and coming to an understanding of their business and how your product can suit their needs as well as moving your trading desk's risk. (@Jimbo)
  • You're great at managing relationships and seeking common solutions - i.e., balancing the interests of your traders and clients.
  • You enjoy debating and persuading, so working with clients is right up your alley.

Of course, there are a myriad of different answers effective in demonstrating that you know the functions of the job and why you are capable. You should look to find something related to what sales and traders do and/or the environment, and base your answer on detailing why that factor fits you perfectly.

More Technical Stuff

If you were to follow the assigned reading and keep up to date with the markets, you would probably be fine for any S&T interview. Below is a list of more technical books that provide a deeper understanding of a particular product. While they are all good reads, if you have time, I would read 1 or 2 of them that interest you, so that you can get a better understanding and REALLY impress the interviewer. If you have an interview that is geared towards a particular product, you are not expected to know everything about the product, but I would know some basics. I would know what factors affect the price of the product, risk factors the product faces and how to hedge them, why someone would want to invest in a particular product, and what customers the product attracts.

To give an example, let's use an MBS. Factors that affect price are interest rate, prepayments, and credit if it's not an agency security. How to hedge those risks - UST or derivatives for IR and Credit risk, Prepay risk? (The answer is the dollar roll, or the lock out period if it's CMBS, but that is a little too technical.) Why someone would want to invest - diversify portfolio, higher yields. Which bond do I want to prepay faster: a bond priced at 95 or a bond priced at 105? Answer is we want the 95 bond to prepay faster so that we can collect the principal at par.

If you happen to land an internship or FT offer in one of these particular product areas, I would buy the mentioned book to keep it at your desk.

Technical Analysis - Japanese Candlestick Charting

Energy - Energy Trading and Investing (A great introduction to all the various energy markets.)

equity value Investing - Security Analysis by Benjamin Graham. Also, Margin of Safety.

General Equity Trading - Come into My Trading Room by Alexander Elder

Options - Options Volatility and Pricing by Natenberg

Exotic Options Trading - I am a big fan of Exotic Options Trading. It was written by a Barcap derivatives trader and explains general options trading in very simple language. It then goes on to cover various 1st and 2nd generation derivatives, their characteristics, risk profiles, etc. I would also recommend this book if you are starting in FX options because a normal FX options trader deals with digitals, barriers, etc.

Rates - Interest Rate Swaps and Their Derivatives (Recommended by a swaps trader at a BB and assigned to the interns.)

FX - Foreign Exchange by Tim Weithers (I have recommended this countless times, and I will continue to do so. #1 FX book I have ever read.)

Credit - Fabozzi; Distressed Debt Investing; Handbook of Municipal Bonds

Mortgages - The Handbook of Mortgage Backed Securities

Emerging Markets - An Amazing Thread on EM Trading

Prop Trading Test

Prop trading is notorious for its difficult math tests. There are some people out there who might be able to pass these tests without much effort. Those are the arithmetic geniuses, the guys and gals who can do absurd mental math calculations like it's nothing and view the world in numbers.

For us mere mortals, there's one thing we need to do to pass these barrier tests. In the wise words of NBA legend Allen Iverson, "I'm talkin 'bout practice." Here's @clevortrevor with how exactly you can practice for these tests:

If you're serious about getting one of these jobs in the future, start going to this site and doing 15 reps each day, followed by one run through of Trader Test on the easy section. The first link will get your mental horsepower up with continuous practice, and the second link will prepare you for the conditions of the exams (negative marking, 8 minute time limit, etc.)

You have to treat it like exercise, and set aside 30-40 minutes a day for it.

In addition to practicing your basic arithmetic, the WSO Prop Trading Guide has everything you need to know for prop trading interviews, including a myriad of questions with thoroughly explained answers.

In Closing

In this last post, I laid out a lot of information and informational tools to help you get ahead in the interview process. I want you to use them, but remember Rule #6 and Rule #10 (Ah, yes, there WERE only 9 rules, but I decided to add another one even though it is sort of implied in a few others.)

The Last Rule - Always Be Honest and Humble

If someone asks you if you know about X, always respond with, "I have done some reading, so I know a little bit. I know that X and Y about Z." Show the interviewer your knowledge by talking about it - it may lead to more detailed questions, but if you are honest and humble about it, those detailed questions that you don't know won't hurt you. If you get a question you don't know, admit you don't know it, offer some guesses with your reasoning behind them, and then politely ask the interviewer what the answer is. Even if you know a great deal about a topic, it's always safer to play it humble and let your answers reveal your knowledge. If you walk into an interview with a cocky know-it-all attitude, I guarantee you will get mind-fucked with technicals.

Well, that's all, folks. As usual, leave any comments or questions below and enjoy your weekend.

Comments (110)

12/11/10

This should be stickied in the S&T Section.

If you are interviewing for a S&T Generalist program this pretty much will prepare you for it. If you are interviewing for a more specific division Equity, Fixed Income, Commodity, Currency I would focus on that area.

I still dont know what duration is haha.

"Oh the ladies ever tell you that you look like a fucking optical illusion" - Frank Slaughtery 25th Hour.

12/11/10

Just a quick add on to your pick a stock section. I always have 2 stocks ready to pitch but usually have one buy and one short. As far as picking 2, would you recommend having a short position as well as a long or does it matter?

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

12/11/10
happypantsmcgee:

Just a quick add on to your pick a stock section. I always have 2 stocks ready to pitch but usually have one buy and one short. As far as picking 2, would you recommend having a short position as well as a long or does it matter?

I think having one long and one short is a nice combination. Another alternative would be to have a general industry you would short and why---ie. Defense Contractors.

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

12/11/10

I would also say that technical analysis is probably not something you should bring up unless you a) know how the interviewer views or uses technicals or b) know a fair amount about it yourself. Some people think you have a better chance of using astrology to predict stock movements then using TA. Others live and die by it so know what you're getting into.

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

12/11/10
happypantsmcgee:

I would also say that technical analysis is probably not something you should bring up unless you a) know how the interviewer views or uses technicals or b) know a fair amount about it yourself. Some people think you have a better chance of using astrology to predict stock movements then using TA. Others live and die by it so know what you're getting into.

Very true. If its FX, I think you can mention technical analysis just because the market relies so heavily on it. I also think it is ok to bring up highs and lows. but apart from that you may want to feel out your interviewer. I always knew that some people use technical analysis more than others, but then I met a trader who ABSOLUTELY didn't believe in it (not even basic support and resistance) and our conversation got very awkward.

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

12/11/10

Gekko that trader probably sucks or is only interested in big theme like moves.

"Oh the ladies ever tell you that you look like a fucking optical illusion" - Frank Slaughtery 25th Hour.

12/11/10

Easily one of the best S&T threads on WSO (silver banana'd).

@Gekko:

With regards to "Come into my Trading Room", how would you compare it to Elder's best-seller "Trading for a Living"? Judging by the e-book pdf copies that I've skimmed through, there seems to be a substantial overlap of content, however Trading for a Living places greater emphasis on trading psychology and technical analysis, while Come into my Trading Room focuses on position sizing and money management. I plan on getting one of the Elder books for Christmas.

I win here, I win there...

12/11/10
I Am Batman:

Easily one of the best S&T threads on WSO (silver banana'd).

@Gekko:

With regards to "Come into my Trading Room", how would you compare it to Elder's best-seller "Trading for a Living"? Judging by the e-book pdf copies that I've skimmed through, there seems to be a substantial overlap of content, however Trading for a Living places greater emphasis on trading psychology and technical analysis, while Come into my Trading Room focuses on position sizing and money management. I plan on getting one of the Elder books for Christmas.

I only read Come into My trading room because it was the newer book. He definitely covers tech analysis in Come into my Trading Room, and you can find other books to supplement what you are missing.

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

12/11/10

Gekko - awesome post, thanks again for taking the time to help everyone out.

T4S - As I've mentioned before, stickies are really a slippery slope. Besides the issue of having it on the home page sticked (no other posts will come above it), there have been ~50-100 or so threads in the history of WSO that people argue shoudl be stickied to the top of a forum. After several years, you will probably be left with 10-20 sitckied threads which is really just a mess and hides any new content. What I prefer to do is encourage everyone to give this post a 5 Banana Rating so that it works its way up the Top Ranked Content.

As you can see, most of the best threads / content can be found right here: http://www.wallstreetoasis.com/rankposts
Thanks

12/11/10

damn and i thought I was already pretty prepared with my technicals... I guess not

is your guide more geared towards FT recruiting... I am going for an undergraduate summer internship and people have always been impressed with my technicals and market knowledge but I don't have that deep an understanding of many products as you detail

12/11/10
ambition56:

damn and i thought I was already pretty prepared with my technicals... I guess not

is your guide more geared towards FT recruiting... I am going for an undergraduate summer internship and people have always been impressed with my technicals and market knowledge but I don't have that deep an understanding of many products as you detail

This is geared for recruiting of any kind. I would say you should know everything above "Additional Prep". Like I said, the more technical stuff was for people who wanted some good resources for different products.

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

12/11/10

Thank you so much for your help Gekko.

Does this apply to small proprietary trading/ market making firms as well or is it mostly BBs?

12/11/10
JSA:

Thank you so much for your help Gekko.

Does this apply to small proprietary trading/ market making firms as well or is it mostly BBs?

Every S&T interview. Although, prop firms tend to focus on brain teasers a lot more and smaller firms may put an added emphasis on fit.

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

12/12/10

If I were in charge of the interviewing for anyone going to be prop trading whether thats at a dealer/hf/prop desk I would definitely hire a trading psychologist to do part of the interview on any potential candidates wanting to move forward with.

"Oh the ladies ever tell you that you look like a fucking optical illusion" - Frank Slaughtery 25th Hour.

12/12/10
trade4size:

If I were in charge of the interviewing for anyone going to be prop trading whether thats at a dealer/hf/prop desk I would definitely hire a trading psychologist to do part of the interview on any potential candidates wanting to move forward with.

So do you mean you would put a lot of emphasis on fit?

12/12/10
JSA:
trade4size:

If I were in charge of the interviewing for anyone going to be prop trading whether thats at a dealer/hf/prop desk I would definitely hire a trading psychologist to do part of the interview on any potential candidates wanting to move forward with.

So do you mean you would put a lot of emphasis on fit?

Sort of. What he is saying is that prop trading takes a different mindset/skillset than market making. A person who is a successful market maker is not automatically an amazing prop trader.

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

12/12/10

I think that there are many psychological factors at play in trading and as a way to screen for it I just think having a pschologist that specializes in trading is a great investment.

For example, suppose your thinking of hiring someone that is basically a perfectionist, they always find the answers no matter what. I would want to explore to make sure this person is not going to hold a a losing position past their stop and start rationalizing why they have not taken the loss.

"Oh the ladies ever tell you that you look like a fucking optical illusion" - Frank Slaughtery 25th Hour.

12/13/10

Phenomenal post Gekko. Sticky-worthy to be sure.

12/13/10

Do you have a particular recommendation for fixed-income structuring in particular? It seems to be some combination of what you have listed, but I'm curious if there's a bible of fixed-income securities out there that's worth snagging.

Thank you for your excellent resource!

12/13/10

Do you have a particular recommendation for fixed-income structuring in particular? It seems to be some combination of what you have listed, but I'm curious if there's a bible of fixed-income securities out there that's worth snagging.

Thank you for your excellent resource!

12/13/10

Click on the Fabozzi link. but that covers all FI securities. If you want something that only focuses on structuring, you may need to look on google or Wiley finance.

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

12/13/10

Great post Gekko. It's great to see people with real Wall Street experience taking the time to give back to college students. An unfortunate weakness in forums like this are that people actually working in S&T are less likely to have the time to give advice. So most of the advice is from college kids and it ends up being a 'blind leading the blind' situation.

It's rare to find someone who is actually working in trading that has time to post so much advice on WSO. I am curious how you get away with that. You mentioned you're a 1st Year Analyst. Do you just post on WSO during the day between trades? Or do you mostly post from your phone or something?

12/13/10
12345:

Great post Gekko. It's great to see people with real Wall Street experience taking the time to give back to college students. An unfortunate weakness in forums like this are that people actually working in S&T are less likely to have the time to give advice. So most of the advice is from college kids and it ends up being a 'blind leading the blind' situation.

It's rare to find someone who is actually working in trading that has time to post so much advice on WSO. I am curious how you get away with that. You mentioned you're a 1st Year Analyst. Do you just post on WSO during the day between trades? Or do you mostly post from your phone or something?

iPad while on the shitter...done and done

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

12/13/10
happypantsmcgee:

iPad while on the shitter...done and done

Impressive if that's the case.

Gekko, mind chiming in on this. How do you post so much while at work?

12/13/10

Combination of things. Iphone, slow day, running errands like getting lunch, coffee, pinkberry. Remember, first year analyst don't actually trade.

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

12/13/10
Gekko21:

Combination of things. Iphone, slow day, running errands like getting lunch, coffee, pinkberry. Remember, first year analyst don't actually trade.

Ah that's what I figured. But there's one more thing I'm confused about. I remember you posting a lot about how you were trying to get a summer internship.

How were you looking for internships 8 months ago yet now you're a full time analyst?

12/13/10

this is a great post... sb my man

12/14/10

started early.

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

12/14/10
Gekko21:

started early.

Did you graduate during the summer?

12/14/10
12345:
Gekko21:

started early.

Did you graduate during the summer?

Why don't you just put on a rubber glove and find out what you REALLY want to know about him

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

12/14/10

I think we can all agree that it's not in anyone's best interest to have college kids posting on WSO pretending to be investment bankers.

Gekko21, what's your opinion on that?

12/14/10
12345:

I think we can all agree that it's not in anyone's best interest to have college kids posting on WSO pretending to be investment bankers.

Gekko21, what's your opinion on that?

I think we can all also agree that Gekko provides invaluable advice and has done so for a long time now. You accomplish nothing by doing this dude. I am with you on your overarching point though. As a rule, it is a bad idea to generally accept advice you get, in any form, without doing a bit of your own due diligence. I know Gekko and he speaks from experience...

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

12/14/10

If his advice was invaluable, he wouldn't have to pretend to work on Wall Street to get people to listen.

12/17/10

Gekko... you said in the OP that you can find margin of safety online.... Can you post the link, I have been looking for an online copy for a while, but I am having great difficulty. Thanks

12/17/10

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

12/17/10

Yay. Thank you very much

1/12/11

Thank you so much for sharing this! I find it to be really helpful.
I'm just wondering which part I should focus on for technical questions. I have my 2nd round with GS and JPM for Securities in Hong Kong, and I applied for Sales. I have experience working with IPOs and have taken classes on forwards, futures, and options. Which section would be most beneficial for me?

1/12/11

Is it for a specific product or general?

Provided you know everything in the "Facts and Figures" section and above, you should be fine. The additional prep is just some extra stuff you might want to look at if you have time/interest.

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

1/13/11

it's for general securities. im not sure about the structure of the interview, but im anticipating some technical questions since i never got asked those in first round. the "facts and figures" section mainly about the market. will i get any other questions for options and bonds?

1/22/11
andreahu:

it's for general securities. im not sure about the structure of the interview, but im anticipating some technical questions since i never got asked those in first round. the "facts and figures" section mainly about the market. will i get any other questions for options and bonds?

The amount and depth of technical you get heavily depends on who you are interviewed by and how you answer simple questions. from my experience you get asked some easy questions and if you answer correctly they get harder and harder to find your limit. However there have been times when my interviewer simply made me jump in the deep end, so you never know. My mantra was to be prepared for anything.

1/21/11

This post is very helpful. Is this true for NY and Boston? What about mutual funds? Should I read sites like calculatedriskblog.com and zerohedge.com to keep up with the markets?

1/22/11
JohnMay:

This post is very helpful. Is this true for NY and Boston? What about mutual funds? Should I read sites like calculatedriskblog.com and zerohedge.com to keep up with the markets?

My advice for following the markets is to get a wide range of sources. If you only read zerohedge, after a couple weeks you will think the whole world is coming down. They have great articles but they are very pessimistic. Keep track of figures and try to explain the movements. Then start forming your opinion.

One thing to stress: Do not try to find facts to support your hypothesis, find a hypothesis that supports the facts. This is a big problem with people starting out as they are used to the scientific method of hypothesis -> data collection. But with markets its really easy to get stuck to an idea and just find evidence to support it (forgot what bias this was). You want to continually be looking at the facts while you are forming your hypothesis.

1/22/11

Thanks, Gekko. I followed your advice and I JUST landed a S&T internship with a BB! You're a great service to the community.

1/22/11

Thanks, Gekko. I followed your advice and I JUST landed a S&T internship with a BB! You're a great service to the community.

See, that is what I like to hear. A SB and a congrats. If you have any other questions fell free to PM me.

JohnMay:

This post is very helpful. Is this true for NY and Boston? What about mutual funds? Should I read sites like calculatedriskblog.com and zerohedge.com to keep up with the markets?

Reading Zerohedge.com would be fine, but that shouldn't be the only site. This would probably prepare you for a mual fund interview depending on the fund's strategy. It might have more of an investing rather than trading focus. Obviously if the fund specializes in a sector you should learn everything you can about that sector.

andreahu:

it's for general securities. im not sure about the structure of the interview, but im anticipating some technical questions since i never got asked those in first round. the "facts and figures" section mainly about the market. will i get any other questions for options and bonds?

That list is pretty comprehensive, but obviously someone can always ask some random screwball fact. If it's for something international.EM related, I would probably checkout what some of the foreign equity indexes were doing.

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

1/22/11

I've noticed that a lot of candidates who have also been selected for the same interviews as I am are not nearly as familiar with the markets/ derivative products. However, when it comes to fit questions, it's a pretty even ball game. Do you think that having a little more experience with the markets will prove to be a significant advantage when it comes to SA positions for undergrad? Or should I focus on refining my fit answers?

1/22/11
ambition56:

I've noticed that a lot of candidates who have also been selected for the same interviews as I am are not nearly as familiar with the markets/ derivative products. However, when it comes to fit questions, it's a pretty even ball game. Do you think that having a little more experience with the markets will prove to be a significant advantage when it comes to SA positions for undergrad? Or should I focus on refining my fit answers?

Honestly, you should make time to do both. You will not get an offer if you fail the fit questions, but having a strong technical knowledge can be a huge help also and he push you that extra inch ahead of the other guy. Also, don't forget that sometimes really knowing your technicals can manufacture "fit" in the "I like this kid, he really knows his stuff" kind of way.

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

1/29/11

That link on emerging markets aint working gekko any chance of reposting or helping me find it?

1/31/11

Gekko21,
I want to take this post to thank you for your guide.
I'm from a non-target in Canada with a mediocre GPA. But I followed your interview guide to the hilt and against all odds, made it onto the S&T floor of a major BB in NY.

1/31/11
bapester:

Gekko21,
I want to take this post to thank you for your guide.
I'm from a non-target in Canada with a mediocre GPA. But I followed your interview guide to the hilt and against all odds, made it onto the S&T floor of a major BB in NY.

Yes! Boom goes the dynamite!

This is the kind of shit I'm talking about. Anyone that bitches and moans because WSO is 'just a bunch of college kids' needs to shut their fucking mouths. This is AT LEAST the 20th person that has made a similar claim in the last few months. WSO is an absolute wealth of information and has tons of people in every area of the financial industry. Congrats on the offer bud, just make sure you pay it forward as you start working.

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

1/31/11
bapester:

Gekko21,
I want to take this post to thank you for your guide.
I'm from a non-target in Canada with a mediocre GPA. But I followed your interview guide to the hilt and against all odds, made it onto the S&T floor of a major BB in NY.

That's awesome! As a freshman in a Canadian non-target, I'll see you in two years!

I win here, I win there...

1/31/11
ArbitRAGE.:
bapester:

Gekko21,
I want to take this post to thank you for your guide.
I'm from a non-target in Canada with a mediocre GPA. But I followed your interview guide to the hilt and against all odds, made it onto the S&T floor of a major BB in NY.

That's awesome! As a freshman in a Canadian non-target, I'll see you in two years!

Hey arbi,
Thanks. What school you from? Just fyi, I'm from Waterloo. lol

1/31/11

Waterloo ActSci + Finance is a sick program. I'll send you a PM in a few hours, I'm currently in a CompSci lect lol.

I win here, I win there...

2/20/11

Gekko would you recommend any books that cover Economic Indicators and their effect on markets (from a traders perspective)?

I award you no points, and may god have mercy on your soul.

2/15/12

@Gekko21: I like how you hit on how to "read" the WSJ to save time and be productive at the same time. How do you approach the Financial Times in the AM to prevent wasting time?

4/7/12

Thank you for your great guide Gekko21! I was just wondering if you should specify in your application to summer internships at BB's that you want a sales position rather then a trading?

7/6/12

So incredibly helpful. Thanks for the post!

11/2/12

So.. what is bond duration? There seem to be several different kinds, so how do you go about answering this question?
And thank you very much for the guide

12/7/12

Thank you, great stuff!

5/19/13

Bookmarked. Thank you, sir.

5/19/13

It comes up way less than you would think. Knowing what's going on in the markets/demonstrating passion/not sounding like a complete weirdo is 85% of the battle. If you get math questions my experience has been that (at least on the sell-side) they're all basic probability questions (Bayes' Theorem). And I've heard of people being asked to do multiplication in their head quickly but I really don't think that's as much of a thing anymore. You don't need a book just read S&T interview questions online and try to find a way to practice. How you present your knowledge of and interest in the job/markets is way more important than your ability to answer math questions. If you're going to focus on technicals then focus on stuff like bond math, duration, convexity, hedging, options theory, etc.

5/19/13

For brainteasers, I have found Heard on the Street to be very comprehensive. Also find a mental math calculator game online and practice it 15 minutes ever day. YOu dont need to be a wizard but with brainteasers/mental math, but you dont want to be stumped. The thing with brainteasers, once you know some of them you can sort of know all of them just by extracting thought processes required.

In terms of the poster above, I agree with him that it doesnt come up often for BB S&T (different story for prop shops), but when it does it is a chance to differentiate yourself. I remember I got 49^2 in an interview and i could tell that answering within a split second did catch the interviewer off guard (I had practiced my squares up to a 100 prior).

In terms of other stuff, you should be reading the FT/WSJ everyday for 30 minutes for a couple months leading up to interviews, thats the tonly way you can start to follow the stories unfold. A lot of kids make the mistake of picking it up the week of thinking they can cram, that doesnt really help you in holding an intelligent conversation.

My other tip, is for technicals, try to find a product/asset class that interests you, and try to learn as much as possible about it. The best way I found to impress was to really show I spent a lot of time learning about something that interested me.

5/19/13

Thank you for these inputs, they have definitely given me a bit of a road map of things to do over the next couple of months. I really appreciate this help

5/19/13

lol. you memorized squares to do that? It's just 49*50 - 49, or 50^2-50-49 if 50^2=2500 is easier to reach mentally for you. No memorization. Still calculated in <3s. :)

5/19/13

My favorite is Reminiscences of a stock operator, by edwin lefevre... hence the name.

this is not difficult to find, i believe that goldman even has a recommended reading list...

5/19/13

Hull - Options, Futures and Derivatives

Hands down the best book for S&T interviews.

5/19/13
acs_london:

Hull - Options, Futures and Derivatives

Hands down the best book for S&T interviews.

?? While it might be good for options, I wouldn't use it for all sales and trading interviews.

There are a few books that you should look at depending on what skills/knowledge you need/want to develop.

The vault guide to Sales and Trading could provides information on some basics of S&T along with what you usually do during the day.

Then I would also read a book on one or two product groups that you have a legitimate interest in. Post what product areas your interested in and I'll tell you if I know of any good books.

After that, I would also recommend either the first two Market Wizards books or The invisible hands. Invisible hands is more recent, but I think they offer a great way to begin to understand how traders think and what factors they look at---this also gives you some examples of questions you can ask interviewers to learn more about them and the market they trade.

http://www.Amazon.com/Invisible-Hands-Hedge-Record-Rethinking/dp/047060753X/ref=sr_1_1?ie=UTF8&s=books&qid=1291405889&sr=8-1

http://www.Amazon.com/Market-Wizards-Interviews-Top-Traders/dp/1592802974/ref=sr_1_1?s=books&ie=UTF8&qid=1291406101&sr=1-1

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

5/19/13
Gekko21:
acs_london:

Hull - Options, Futures and Derivatives

Hands down the best book for S&T interviews.

?? While it might be good for options, I wouldn't use it for all sales and trading interviews.

There are a few books that you should look at depending on what skills/knowledge you need/want to develop.

The vault guide to Sales and Trading could provides information on some basics of S&T along with what you usually do during the day.

Then I would also read a book on one or two product groups that you have a legitimate interest in. Post what product areas your interested in and I'll tell you if I know of any good books.

After that, I would also recommend either the first two Market Wizards books or The invisible hands. Invisible hands is more recent, but I think they offer a great way to begin to understand how traders think and what factors they look at---this also gives you some examples of questions you can ask interviewers to learn more about them and the market they trade.

http://www.Amazon.com/Invisible-Hands-Hedge-Record-Rethinking/dp/047060753X/ref=sr_1_1?ie=UTF8&s=books&qid=1291405889&sr=8-1

http://www.Amazon.com/Market-Wizards-Interviews-Top-Traders/dp/1592802974/ref=sr_1_1?s=books&ie=UTF8&qid=1291406101&sr=1-1

Hi Gecko, thanks for the input. I'm specifically interested in Private Client Sales, Equities and Currencies.

Thanks!

5/19/13

At the level of Sales Intern the interviews really won't be at all techncial, Too Big to Fail or similar would be good to read to get a good understanding of the crisis - as they will often ask you what you think caused the crisis so nice to be able to talk in some depth and understand what went on.

5/19/13

For FX,

Foreign Exchange by Weithers. FX trading for dummies is also an ok read, although I would get the first book first.

For equities there are a few books and I'm not sure which ones are the best, but Security Analysis is the bible for value investing. There is also Margin of Safety---but you can only find that online because a hard copy is worth $1300.

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

5/19/13

No need to read books for interviews, network and then catch up on the news and come up with some solid trade ideas and you're good to go.

5/19/13

easy tigers.... start with Liar's Poker if you havent read that yet

go easy with the technical (i.e. Hull) books...you can easily get lost amidst the formulas and theories and miss the point. agree with gutshot: avoid the overly technical books (quick reads like Liar's Poker s fine), talk to more people and catch up on whats going on in the markets.

Best Response
5/19/13

Wall Street Mentor (Richard): Preparing for a Sales & Trading Interview (Originally Posted: 11/08/2010)

In this Wall Street Mentors Q&A, Richard covers how to prepare for a Sales and Trading Interview. Richard was formerly the Head of Sovereign Emerging Markets Trading for Barclays Capital.

Our Wall Street Mentors program allows you to connect with senior finance professionals, as well receive a recorded Mock Interviews so you can improve your interviewing skills.

5/19/13

Great insights, great interview tips amazing job guys!...I was watching it very loudly and when Chris' phone rang I jumped out of my chair hahaha

5/19/13

Any insights about how to quickly get a few stock tips/pitches for interviews? I'm applying to a few junior level prop trading positions, but I didn't study finance in college. I've read some introductory materials on equity (and other asset) valuations, but I don't feel comfortable enough yet to actually carry them out. So, what can I do?

5/19/13

The video does not work any more...pls fix ;-)

5/19/13

clothes on or off

5/19/13

everyday clothes. if your trolling, good one.

5/19/13

Are you in the industry already, or are you looking to break in?

5/19/13

There is a retarded amount of posts on here that you can find this info Just check the related content or use the search bar

5/19/13

mostly fit+market and a few probability/brainteasers that every applicant knows by heart

5/19/13

Fit, Behavioural and Technical

5/19/13

Wetfeet are usually pretty decent...

5/19/13

but is there a special one for S&T?

5/19/13

vault guide to finance interviews and the vault guide to S&T

5/19/13

^^^ and vault guide on case interviews too. knowledge of the industry and latest financial news is more important than any prep book though

5/19/13

The best interview prep book on S&T is the market

5/19/13

similar to what Elliot said, the wsj is the best thing to read. having an opinion and knowing whats going on in the market is 100% necessary. That being said, if you like a specific area (equities, rates, fx, whatever) that's where you get more specific to a good "prep book".

Picking up a textbook and knowing the basics (bid/ask, what an index is, s&p vs DJIA, etc.) isn't a bad idea but for someone interested in S&T, learning that stuff comes naturally I think.

5/19/13

If this is for the analyst level.. you will not be asked to derive anything... they do not expect all their incoming analysts to have a heavy finance background...

(caveat: if you claim to know all those things on ur resume though.. they may test you on it)

  1. know current events.. what's hot.. whose not... perhaps yesterday's closing prices on the major indices, etc.
  2. show ENTHUSIASM! they gotta see that ur hungry enough to survive in that kind of environment
  3. they may ask you relationships between bonds/interest rates... when to invest in fixed income vs. equities, etc.
5/19/13

.....

5/19/13

This answer is focused on an entry-level interviewer. Experienced S&T candidates are evaluated differently - i.e. past production, portability of client relationships and reference checks all outweigh the interview, which is more of a sanity check than anything.

Success in an interview for this position isn't rocket science. That doesn't mean it's easy, though. The key success factors of S&T lie in the intangibles. Here's a few:

1) Quick thinking - talking "on your feet."
2) Ability to build relationships with strangers.
3) The ability to influence others to see your point of view.
4) Listening skills.
5) A general enthusiasm for finance and the stock market.
6) (For traders) the ability and willingness to take calculated risks.

Looking at those skills, the interviewer will be looking very closely at how you act during the interview. Do you make solid eye contact? Are you someone who the interviewer would want to socialize with? Are you easy to talk to? Do you radiate enthusiasm? (without being overbearing).

He may ask you to recommend a stock to him. Can you effectively "pitch" him on your idea in 5 minutes, drilling down to the key factors? Do you even have a stock in mind?

Focus on the intangibles. Think "smart and personable."

Find the federal resume writing service here; federalresumewritingservice. net/

5/19/13

Very helpful post. Would the same apply for a lateral move to a Corporate Rate Sales desk?

5/19/13

bump

5/19/13

Anyone?

5/19/13

Get a WSO and BIWS guides.

5/19/13

Tbh keep reading as much as you can, especially historical economic books to get a sense of the last 100 years of what has happened. Many kids dont bother with these but i think its one of the more crucial knowledge holes you need to fill.

The second step is know whats going on right now, that means reading the FT/WSJ every couple days. What I did and still do today is keep a small journal and write anything important down, then slwoly you start to build a reference book of events. On top of this i would sti down one day and get a sense of historical levels ofr various securities. For the main world equity indices, bond yields, currencies, commodities etc, look at what their all time high was, all time low, high and low during the financial crisis, high.low during sovereign debt crisis, where is it now compared to various crisis. This gives a lot of perspective you really dont have if you dont work in the markets, and after you know this reading financial news will also help you put things in context.

Then learn the technicals, start broad with either Hull or Fabozzi and stuff that interests you start reading deeper and deeper. You will find a product that interests you more and you should strive to become as knowledgeable as you can on this topic.

5/19/13

Okay thanks a ton, I've been reading a lot and will definitely continue to do so. Great advice.

5/19/13
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"The markets are always changing , and they are always the same."

12/3/17
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