Update: I was speaking to a guy in Australia on the cash equities desk at a BB. Just edited the post for the US/global audience, cut out slangs about kangaroos and shit.
Hey guys, I think it's about time to post something since I have been a member for couple years now. The following is from my blog that I recently started (link at the bottom of the post)
At 22 years old, my goal after my studies is to pursue Sales and Trading, Note: this is not a post about the day to day role of a salesperson/trader at a bank, what the banks do, etc, that's something if you are new to S&T can easily google or find answers in this forum, I am going to write what more interesting dot points I took away from this conversation and hope they may help you :)
1. Which role is more quantitative - Sales, Sales Trading or Trading?
All of these are quite similar in the amount of quantitative ability required. You need to be able to run a few models and use the calculator but you don't need to be a math genius. I know Black Scholes, but I don't use it often (cash equities desk). Clients would ask you about it and that's why it's worth knowing.
2. How does a graduate add value to justify his 6 figure starting pay from years 1-3?
On the trading floor your value to the business/desk is stemmed from your ability to gather information, create trading opportunities within the market and actually execute deals. Just gathering information is not enough. The more deals you close, the more volume you trade is what adds to your bottomline. The worst performer is a 4th year graduate trader that has zero clients and still summarises morning news articles. He will be fired. If you the sales person is right 6/10 times with regards to the stocks that you are pitching then that is a career for you on the sell-side and most likely the buy side. On the other hand, someone that is able to gain clients and facilitate transactions quickly, is likely to double his base 3 years into the job.
A bank would pay a six figure starting base for a grad that doesn't know shit and and gets him to summarise morning market news, which is basic reading comprehension. The research isn't worth the paper it's written on but the reason the bank do that is because that kid is in fact the bank's own investment. The bank invests in you because they know that 3 years down the track they can make 10 fold the initial investment that they are paying you at the start.
3. How do I prepare myself this year for graduate positions/internships in S&T?
Know a dozen stocks and how you derived their prices, where the market is and where it is going, investing your own money and being able to talk about it will all help you stand out in the candidate pool. Out of 20-30 applicants that HR filters out for interviews, very few will be able to run through a model and give their price for Stock X. To be able to do that and have an intelligent conversation with your interviewer will definitely put you in a good position for a S&T job offer.
To add to that, trading positions are never advertised on Career Website X, the ones that do just aren't worthwhile. In order to get your foot in the door, there are two methods. One is by applying through the online portal, showing HR your stellar H1 average, perfect club history and pedigree, because HR sure knows nothing about markets and tick the boxes of requirements for school, grades, experience, etc. The other method is to get yourself out there and meet people in the industry. If i were to hire I would have a short list of my candidates already in the back of my head.
4. Where do you see S&T headed in the next 10 years?
Australia is definitely 'over-broked'. Too many Investment Banks, too little margin so it's harder than ever to do business. We will see maybe 5 big Investment Banks providing their trading services and other players in the market to exit as the business drys up over time. That being said the exit opportunities for sell side traders is quite good.
5. Should I do something else that has transferable skills to S&T and try to break in?
Yes absolutely, jobs like IBD, research, PWM, Consulting, Accounting jobs and Asset Management will all be beneficial to S&T. The head of my bank in London started as a real estate salesman. However I must warn you that not many shops are hiring and the downsizing will continue for years to come. We let X traders go last year at our firm. But you are still young so I say just go for another crack at it this year, why not? Take some risk. You don't have a family to be risk-averse.
6. What do you read on the job?
I read the AFR, WSJ, FT besides of course my broker's research, our own in-house research and Bloomberg, Reuters etc. Another good place to look at is Macrobusiness.com.au.
To conclude, I was told the most important qualities to break in will be the market knowledge, charisma, persistence, assertiveness and a differentiation of the big banks - what each of them do and who does it best at what.
What I found interesting was that to prepare for battle, having stocks to pitch is sufficient but having your own models to back yourself up gives you the differentiating factor.
All the best guys/girls.