For love of the game
I've been wanting to make this post for some time. In part due to ego, in part to help others, and in part out of the title of this post -- for love of the game.
I started my career on the street in a research/quantitative role and migrated into a trading role after the first few years. I have been trading since.
I had a mathematics background coming out of a non-target school and always had a passion for markets. Learning a coding language seemed like a mandatory skillset to develop in order to analyze markets, so I picked up some languages to achieve that goal, only to find that I thoroughly enjoyed the concepts behind software engineering as well.
I often see posts (on WSO or elsewhere) about young talent contemplating their path forward. Questions range from expected compensation, to work life balance, to mental health, etc, but for all the advice other anonymous individuals can provide this aspiring talent, they will each inevitably have to determine one question independently: whether they truly enjoy what they do, or think they will enjoy what they aspire to do.
It can be challenging to know beforehand. I was faced with many of the same dilemmas -- big tech versus the street, banking versus trading or research -- but I ultimately made the decision early on in my career based on what I felt I was most passionate about.
Passion is the ultimate differentiator. Younger generations today are afflicted by a short-termism that pervades every aspect of their lives (I may be included in this, I am in my mid 30s), be it social media or stories of vast success at a young age. This assault on their attention robs them of perspective that I feel generations before the millennium thoroughly understood, and it was the notion of developing a career.
On your path to build a career, passion is the trait that will enable you to work slightly harder than the next person. This edge will compound overtime until the gap between you and your counterpart is impossible to ignore.
It will keep you up at night thinking about how to improve your positions or whether your risk is properly captured. It will provide you with the energy to push through winter days when you do not see sunlight, because you want to see the extent to which you can excel at what you do. Not for compensation, not for title, but strictly to see what you are capable of accomplishing (without sacrificing your health, of course).
Compensation, title, and progression should be a consequence of your output. In mature industries that usually takes time. You may also get unlucky earlier in your career and land on some teams or in some firms that do not recognize your output and work ethic.
If you find yourself in this unfortunate situation do not hesitate to go out and get what you are worth. The variance of job placement will eventually wash out, and one day you will end up where you were supposed to be all along, but only if you are capable of lasting in this marathon you are about to embark upon.
There will be tough times in your 20s when you have to pull 20+ hour nights. There will be times when feel your head has been lit on fire due to the pressure, and you are uncertain about what course of action to take. But as long as you maintain your perspective on where you intend to go, and what you want to accomplish, you should take the tribulations of your path in stride, because each one of them will become a part of your story when you reach your destination.
As for myself, the markets this year are unprecedented. But with each challenge presents opportunity, and as a result a chance to rise to the occasion. It's a year that's reminded me why I love the street, pressure, intensity, scrutiny, all of it, and hopefully this post resonates with those of you who read it.
In the oft chance it does, I hope you all pursue what you truly enjoy, and find something that is easy for you to do.
Not for any of the bs, but strictly for love of the game.
Feel free to post any questions and I'm happy to do my best to answer them.
Great post, to start things off with a few questions:
You completely missed the point of the post with those stupid questions that have been answered 1mm times already on here
Thanks.
I trade macro vol. Quantitative inputs are consequently important but there is still an element of art and interpretation to trading a vol surface. Vol is an extension of the underlying, a second order expression of it, and it can take a bit or rewiring to think of vol as an asset in itself. Indeed, trading vol is trading the expectations about how much the market suspects an asset ought to move. This is seemingly trivial, but once you grasp this, you have taken your first step in developing a framework for trading vol.
Python will likely prove the most useful to you. VBA is certainly important, but a very strong understanding of Python gives you a capacity to perform analysis your peers probably won't be capable of if you develop a strong foundation. Optimization, object oriented design, etc, all of these will serve you well. Your superiors will find it useful if you are able to compress and bundle information up at the analyst level. Information compression, at no loss of its utility, is a highly valuable skillset for an analyst because it enables your superiors to quickly make informed decisions, which, in a fast market, is valuable.
I could write an essay on this. I believe the trading business will perform well over the next decade, macro assets in particular (but I am of course biased). Covid was the catalyst for political and socioeconomic disarray, and with the Fed pushing for normalization, the market will have to reconfigure its valuation frameworks under this new paradigm. The last decade was characterized by short vol, high carry strategies, and most market participants in the buy side space that survived the return environment still abide by this framework. These strategies are going to struggle in a normalized environment, creating opportunity for market makers and hedge funds alike. Additionally, the dispersion in policy across different regimes opens up the possibility of foreign securities outperforming US over some periods.
This is why traders won't be bankers and bankers won't be traders. Most people I work with enjoy what they do and would never switch to banking given the chance. Nothing wrong with the banking approach, just wanted to point out many in the markets side truly love and obsess over markets
I don't disagree with this sentiment at all. I certainly did not mean to imply you must love what you do. That statement was not meant to be unconditional; apologies if I came across as preachy, I didn't mean for that.
I also believe that you can accumulate enough wealth at 35 y/o to retire.
But I similarly believe it is true that, for any two people in a given field, the individual more passionate about their work will have a significantly greater chance at succeeding than someone who is simply getting by (all else equal).
Earlier in my career my colleagues looked forward to the weekend to escape work. I looked forward to the weekend so that I could work on projects that were difficult to focus on during the trading day. I worked most Saturdays to better prepare myself for Monday, and I looked forward to the periods of quiet where I could think deeply about a problem rather than thinking tactically.
This is just my experience; it is unique to me. But I cannot understate the impact of that compounding on the trajectory of my career.
I spent ~40 Saturdays over ~6 years, or 240 extra days of uninterrupted, deep thought. So approximately one year of working days, with the benefit of no interruptions to focus on things.
In trading, this compounding in skillset is probably more important than in other careers due to the right tail that exists. The median compensation is strong in itself, but I was always interested in the skew, in the right tail.
I am in a position now where I stand to make some multiple of my career compensation up to this point in time if I continue performing. This is something that can be missed by those strictly focused on compensation in isolation; sometimes, life is about the tails, and you should concentrate your bets accordingly.
Friendly advice: get it out of your head that your GPA is a roadblock (though it may be, this sentiment is more about your internal dialogue). The moment you stop questioning what is in your way is when you can start moving forward. It sounds cliche, but we (humans) often rationalize why we are capable or incapable of doing something. The moment you stop questioning that, and instead start determining it empirically, is when you truly find out what is possible. The movie 'Being There' encapsulates this sentiment perfectly, and it's a film I treasure due to its spirit.
Sorry for the digression. Onto the actionable advice.
Man, you're still in college. College! You're so young. There are an infinite number of ways to get where you want to go, be it IB/S&T or elsewhere. Once you figure that out, push for it. Obsess over it (but never at the cost of balance). If you really want something, you won't have to conjure motivation to do it. It should feel like breathing -- you should thirst for it if you've been deprived of it.
Once you have that, network your ass off. Make true connections with people. Don't ask for referrals on the first email. Setup calls, coffee, etc. and offer your take on markets (whatever) or offer to contribute to what they have going on. Once that relationship develops, then pop the question, and you may even be surprised that they come to you with opportunities.
Interviewing should then become a conversation. Employers need you as much as you need them. It should feel like a conversation where you are communicating your knowledge to them about this thing you desperately want to do professionally. It should feel easy, it should ooze out of you.
Interviewing, if you put the work in, is the easy part. You just need people capable of walking you through the right doors.
Trips: Would slip out on some Saturday mornings when I decided I needed to unplug to get the time away. Allocated vacation helps too. Your firm gives you vacation -- use it. If your desk's culture isn't supportive of that, it's a red flag in my opinion. Everyone needs time.
Exercise: I always exercised a minimum of 2-4 days a week. It was all a function of prioritizing it. Looking back, it was undoubtedly a grind, but I think part of me took pride in juggling it all. If I hadn't taken care of my body I feel I would've lacked the stamina to push myself intellectually. Whenever I found a free 45mins-1.5h, I hit the gym, and Sunday mornings was a religious time for me to workout and walk around the city.
Friends: I made time for them on weeknights or Sundays for drinks/coffee. Went out on either a Thurs or Fri night, never too late, because stamina was of utmost importance. I think its extremely important you surround yourself with people who will support you on your pursuits. I lost friends who were friendly strictly for the sake of convenience. My real friends were those who understood what I aspired for, and were grateful for the time I was able to get with them, as I was grateful for their time.
Relationships: In the same way you want friends who support you, same goes for your partner. If you bring someone into your life who will detract from what you're trying to accomplish, you must avoid dating them long term. Shiny objects are a distraction sometimes. Conversely, choosing a someone who is a value add, and enables you to continue your pursuits, but somehow enhance your vigor, is something you should not take lightly.
I'm glad the post has resonated with you.
The benefit of studying mathematics is that it is an education in applied philosophy, in the most abstract sense. Good mathematicians are inherently good logicians, they've just specialized more. This provides you with an excellent framework for learning (math teaches you how to learn quickly, succinctly, and precisely) and will enable you to navigate new information because your disposition should be towards axioms, never generalizations.
The ultimate book for any serious risk taker is Dynamic Hedging by Nassim Taleb in the options space. This is the purest reduction of risk management I've ever come across from a practical and rigorous sense. Taleb perfectly communicates the quandaries of a trader, how to navigate the complexities of an option portfolio, not a position, but a portfolio. He does use positions to motivate examples, but everything about the book screams that it was written by none other than a trader. Trading is obsession to detail. The thought process of trading oozes between every line of the text. You may not feel this if you've never taken risk in serious capacity before, but one you have, there is no denying that it is the definitive resource for options trading, bar none.
For rates trading, pick up Interest Rate Swaps and Derivatives by Howard Corb. This is a perfect introduction to the rates derivative space. Not too complicated, but not too easy, and it forces you to really understand what's going on. If your interest is FI, try to bootstrap a yield curve on your own. If your interest is FX, or FX options, look at the SABR model and try to calibrate the parameters to market quotes. This will help you prepare for the interviews you will eventually take, and set you above your peers because you would have internalized important information before even starting.
Anything that seems remotely interesting to you, you should think about. What is your view on the interplay between rates and equities today? Why is the dollar strengthening against other currencies? Does inflation matter more than growth right now? Why? You will be wrong early in your career, I am wrong plenty to this day, but this is all part of the growth of a trader. Additionally, being wrong need not be a death sentence, because you will eventually learn how to determine what the distribution of your payouts are if you survive in this business long enough.
I reread this every now and again to get myself hyped up. Better than any pep talk I've ever heard.