How to Explain Large Trading Loss in Interview
Hey guys, looking for some advice. I'm a junior PM at a fund in New York. I'm currently interviewing for firms like Millennium, Bluecrest etc which tend to be quite conservative on risk, because I think it's time for a job change. Up to now, my profile was looking quite good but this week I made a large loss that basically wiped out 1.5 years of accumulated P&L. The loss was related to an illiquid product that I was forced by management to size up on. When markets turned crazy, I couldn't get out so I hedged the best that I could. Nevertheless it cost me a lot.
I am wondering how these firms would take this kind of one-off loss. Also, is there any "excuse" I can give to account for it that recruiters would be likely to accept. This is the largest loss of my career and my P&L has otherwise been quite stable with minimal drawdowns. I am a conservative trader and I really learned my lesson on this.
Thank you for your advice. Good luck out there
There may be no lesson to learn, frankly. When bosses make you size up, or do things you don't want to, you are massively short a put. Thing does well, they won't pay you because it was their idea. Thing does badly? Well, it's your book, right... Boss walks away and you don't get paid (or worse) get canned.
Is your track record verifiable or does the Firm keep it? If the latter, I wouldn't mention it. If the former, hmm... Hopefully someone else on this board can help there (I can't sadly). I would certainly have colleagues, whether they are fellow PMs, traders, back office as well as brokers who can vouch for the story, ready on your behalf if/when you need it.
Recruiters, headhunters etc, all of whom have never run a dime of risk in their life literally know nothing and have no clue what it's like. In other words, they are only looking to ding you. Their knowledge of products, the situation, etc will be minimal. You can say all kinds of things and they won't be able to test or verify it. Being brutally honest/open etc will only get you dinged.
What I am saying is, if you can, don't highlight it, or bring it up. You can consider doing so with markets people, ie. Senior PMs, traders etc. No matter the firm they will uniformly be more understanding because they have sat in that seat and seen a lot of things.
You need to get in the door first.
I wish I could give better thoughts, but this is the nature of the beast. How do you think so many blowup artists and dudes who have barely made P&L keep getting into different hedge funds? Why is turnover so high at MMs? For all of their interviewing, diligence etc, turnover annually is well north of 30% from what I have been told by people at said MMs.
Good Luck