What do you get out of being sell-side trader/sales?

I am a rising junior, finance and applied math major in a top 20 school.

Always been interestd in watching the markets (especially FX and equity) and have been doing FX trading myself for 2 years. Because of that experience, I want sales and trading, which is one of the closely market related job, as the beginning of my career. I thought S&T as trader/sales use their analyses or reports from the research people to predict where the stock/currency rate might go and make profit out of the "bet".

But after I visited a few BBs, I realized most of the traders/sales are just acting as brokers. They don't care that much about which direction the stock goes or if they get the correct prediction, they care more about finding the matched buyers and sellers and taking commission out of it to make money. (That is just what I understand from talking to people, and please dont hesitate to correct me)

Honestly, to me, the charm of the market is that you get better sense of where it might go by using fundamental or tech analysis and then make profit, which is more like a buy-side business. The business of sell-side, which is simply trying to find the opposite side of clients, seems very boring.

So what kind of valuable experience, or skills will Sell-side S&T people get during their work? I understand they def get the multitask or the communication skills practiced, but any market-related skills?
Why do most people have to work in IB or sell-side S&T for a few years before entering to PE/VC(generally buy-side)?
Thanks!

 
Best Response

"But after I visited a few BBs, I realized most of the traders/sales are just acting as brokers. They don't care that much about which direction the stock goes or if they get the correct prediction, they care more about finding the matched buyers and sellers and taking commission out of it to make money. (That is just what I understand from talking to people, and please dont hesitate to correct me)"

Have you been sitting with cash? On the equities side, it's definitely an agency-centric business these days. Collect the fee, utilize little balance sheet, and try to leave the day closed out. Even in FICC we are starting to see a cultural shift to a low touch environment.

But it can be fun and more than trying to make crosses as a cash guy; the program trading team does the same thing but on a larger scale across the central risk book and uses various statistical models to accomplish this. And for now, most of FICC still deploys capital and holds positions. While a decreased appetite for risk across banks forces many of these traders to hold positions for shorter periods, a fundamental view still helps traders decide how they want to be exposed. Understanding how the client thinks can also be useful in shading your quotes one way or the other.

"So what kind of valuable experience, or skills will Sell-side S&T people get during their work? I understand they def get the multitask or the communication skills practiced, but any market-related skills?"

Across almost all desks you become accustomed to working in a high pressure environment and develop a pulse for your particular market. The buyside outside of execution guys is generally less concerned by the intricacies of price action, but the experience of it as a sellsider is still valuable. On some desks you may also develop skills in statistical modeling , fundamental analysis, multi-asset strategy, macro analysis, Greek hedging, and even some basic coding in VBA or R.

 

It is common for sell side rates trader to become a macro PM bc the skillset used are very similiar. Rates trader needs to know the macro environment in order to be able to hedge their flow trades properly and to make money for the bank. Macro Environment knowledge will serve them well in becoming a Macro PM. However, sell side equity trader uses a complete different skill set than an equity PM. Trading mechanisms across asset classes require different skill/thought process.

 

structural, regulatory, and legal reasons. how rates, fx, etc. are traded could be considered front running in equities.. The specific exposures are more hedgable, the liquidity is far greater and the opportunity set, and risk set, for the bank is simply a different landscape than equities.

again, different trading mechanism require different thought processes

 

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just google it...you're welcome

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