Best Products to Trade

I am simply curious, but people seem to think equity and FI trading sucks. I realize the best product to trade would be the one you are most interested in but which products are widely considered to be the most interesting/desireable to trade?

 

"people seem to think equity and FI trading sucks"

what are you exactly talking about? are you implying only FX and commodities are fun to trade?

this is inherently a dumb question. I assume you mean what are the "hot" products right now. Well, it doesnt really matter, because that changes. Structured credit was hot, and now, not so much. if you are given the choice of which product to trade, pick a product that you are happy to read about 15+ hours a week. personally, after spending a few days on the desk, i thought swaptions would be an awesome product to trade. for better or worse, i didnt end up on that desk.

 

The problem is that was not your question, you asked what "which products are widely considered to be the most interesting/desirable to trade." They are completely different. Some people love pouring through a companies financial statements and projecting earnings or determining creditworthiness. I do not, I find macro products interesting, like Swaptions, etc. It depends on the person, obviously what is good for one is not necessarily good for all. Do you like prop or do you prefer flow? These are all questions that need to be considered imo.

On a separate note, who said equity and fixed income trading sucked? And why?

Jack: They’re all former investment bankers who were laid off from that economic crisis that Nancy Pelosi caused. They have zero real world skills, but God they work hard. -30 Rock
 

I think you misinterpreted the thread. If you were to ask most people here, Vanilla equities would probably be low on their list, but equities has a lot more than that, including derivatives. Trading is certainly not for everyone, but it definitely doesn't suck (though the environment and firings do suck right now).

Jack: They’re all former investment bankers who were laid off from that economic crisis that Nancy Pelosi caused. They have zero real world skills, but God they work hard. -30 Rock
 

I agree with bateman on how to assess yourself on what your interests are. Basically its micro/Macro, Fast/Slow, Quant/Qualitative, Liquid/Illiquid

I prefer a very liquid fast paced environment hence why I enjoy equities. You can also get into some very complex strategies within equity such as stat arb, risk arb, Relative Value, mean reversion etc.

"Oh the ladies ever tell you that you look like a fucking optical illusion" - Frank Slaughtery 25th Hour.
 
trade4size:
I agree with bateman on how to assess yourself on what your interests are. Basically its micro/Macro, Fast/Slow, Quant/Qualitative, Liquid/Illiquid

I prefer a very liquid fast paced environment hence why I enjoy equities. You can also get into some very complex strategies within equity such as stat arb, risk arb, Relative Value, mean reversion etc.

Which products are more qualitative than quant? Also, isn't there a general correlation between how fast a market is and its liquidity?

 

Equities/stock index futures on a relative basis would be more qualitative.

Credit/commodities - blend of quantitative and qualitative

Rates/FX/derivatives/exotics - more quantitative

Yes the faster the market the more liquid was just putting it into broad terms for people to understand.

"Oh the ladies ever tell you that you look like a fucking optical illusion" - Frank Slaughtery 25th Hour.
 
trade4size:
Equities/stock index futures on a relative basis would be more qualitative.

Credit/commodities - blend of quantitative and qualitative

Rates/FX/derivatives/exotics - more quantitative

Yes the faster the market the more liquid was just putting it into broad terms for people to understand.

i would say rates are a mix/more qualitative rather than more quantitative

 

As was said comes down to the specific interest of the person. We could do a survey on WSO and find the most wanted desk between members, but if you used that to make your decision it would be a very stupid thing to do.

As was said, some people like pouring over financial statements (high yield credit), some like very macro oriented stuff (govt bond trading) etc.

Personally, I like options because i just find it interesting. I knew after i read my first options book that it was the product I wanted to trade. I just think there are a lot of ways you can make money with options (although a lot of ways to lose as well)

 

it is also worth mentioning that by quantitative people mean you may have to understand more complex models, concepts, and higher order risk factors. the shit you learn in a math degree, while certainty quantitative, will mean jack shit and will be useless on a trading floor. i know this is said time and time again, but Hull IS the best book you can read.

and yes, cash equities on every trading floor i have been on attracted generally the same kind of person. Loud, crude, and overweight. the classic trader in many respects. they also tended to go out and come in drunk to work the most.

i am more cerebral so would get eaten alive on a cash equities desk (and almost did). i work with structured rates products and that is where i belong.

 

Rates and FX although a lot of the macro HF trade mortgages, commodities, equities, credit--basically all the 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."
 

I agree with Gekko. I don't know your educational or trading backgorund, but rates & fx would be your best bet to hit the ground running. It will allow for you to get a broader economic FEEL of what causes the other markets to tick.

Happy Trading

Please don't make me talk to you like an asshole...
 

quantitative analysis is a technique for analyzing securities. People put money to work using quant strategies in every product. Likewise, other analysis methods like fundamental analysis, technical analysis, etc are used by traders in all products. I work with a 95% qualitative group of traders and we trade rates, FX, stock indices, credit, and commodities. At my firm we also have quant groups that trade all of these products.

 

You sound like you have your priorities in the right place.

"After you work on Wall Street it’s a choice, would you rather work at McDonalds or on the sell-side? I would choose McDonalds over the sell-side.” - David Tepper
 

Long story short, no one can answer this question.

Jack: They’re all former investment bankers who were laid off from that economic crisis that Nancy Pelosi caused. They have zero real world skills, but God they work hard. -30 Rock
 

this is like saying what sport to play when your an athlete, you do what your best at, which will give you the chance to be most successful

The answer to your question is 1) network 2) get involved 3) beef up your resume 4) repeat -happypantsmcgee WSO is not your personal search function.
 
Best Response

Electronic trading will grow outside of its current world (right now it's mostly equities, FX, and futures at the big banks) as more products become standardized and centralized on exchanges. The algorithms you sell on e-desks aren't always the simplest things in the world either, so learning to communicate those concepts to clients is a useful transferable skill.

They've all got their pros and cons though. It depends what you want out of an exit op (i.e., prime brokerage could help you get into a non-quantitative hedge fund but it definitely won't help you become a prop trader the way working on an options desk would).

Then out spake brave Horatius, The Captain of the Gate: "To every man upon this earth, death cometh soon or late. And how can man die better than facing fearful odds, For the ashes of his fathers, and the temples of his Gods."
 

I’m inclined to agree with VolSurface regarding the growth of electronic trading, regulation has pushed many more products into standardized contracts and onto exchanges since 2008.

In terms of asset classes, I really feel that Interest Rate Derivatives could be set to grow in terms of headcount. Most IR derivatives desks are fairly streamline after rates being held so low for so long. If the Fed actually get on with the long awaited hiking cycle, I see growth in IR deriv. demand from hedgers, thus a growth in headcount.

Just my $0.02

 

when just starting...it almost doesn't matter...you just want to be in a market that moves and has volume.

So, cattle futures would be a BAD place to start....as would subprime collateralized CDOs...because neither trade very often...so there is little opportunity for you to learn about the price discovery process.

Best places then would be -equities -govt / LIBOR interest rates -energy (crude oil, nat gas) -FX

(spot, futures and options for all of these markets)....When you move out to the more esoteric stuff....you get pidgeon-holed into a product. Not necessarily a bad thing if you are very good...but if a market stops trading...then you just twiddle your thumbs and wait.

 

100% agreed from a trading perspective

I would also note that technology and regulation, to an extent have bifurcated the market. If you're on a more vanilla/flow driven side of the market, realize that you will likely go electronic in some way or another over the course of your career. If you're on the more exotic side of the market, know that while the products may become simpler, the individuals who survive will by and large become more and more quantitative. Also as balance sheet becomes a scarce resource, there's been growing demand for traders in roles like equity swaps or XVA in fixed income. Some might say this is a fad.

From a sales perspective, think about where you get your edge and what you enjoy. Someone with average people skills but above average quantitative ability or product knowledge may be better suited for something like a derivative or structured sales role. On the other hand, those with superb interpersonal ability may want to focus on a desk that is less transactional and focused on client relationships like research sales or parts of PB.

 
WaywardFinancier:

Hi,

I would like know your opinion on which financial product/trading desks in general have the best job opportunities; in other words, desks that are going to stick around, that banks aren't likely to eliminate in the future, and that are looking to hire. For example, a lot of banks are scaling back their commodities trading so that might not be ideal.

Also, any recommendation on a BAML S&T desk? I have a SA offer and would like to know which desk would offer the best chance for me to get a FT offer. It doesn't matter what I trade, main goal is a FT offer.

Thanks in advance.

I'm no expert but based on previous comments here it is a bad idea to base the decision of which product to trade with on which would give you the best chance to land an FT offer. Also I am not sure if there's any correlation between return offers and certain desks.

In every period (2-3 years or more I guess) a different kind of asset class is booming, and obviously nobody could predict the next one. Therefore, go with the asset class you think you'd enjoy the most, it is important.

I'd advise to keep yourself away from spot desks (like cash equities for instance) as it is more likely to be computerized overtime and there is not much you learn from them, and you should also be asking yourself how good you are at math, so maybe you could go into some more quant products, which often has bigger job safety.

 

dabanobo - that's the main impression i get. The problem that I come to then is how do you prepare for that interview. just know the basics of all types of mkts?

Maximus - thanks for the advice. Ideally this is what I want but as said before, jobs are scarce. Any advice on where to start doing research for these mkts with a focus on getting into trading? WSJ/FT/BBG?

I say fuck change, I don't chase dimes
 
AnATLieninNY:
dabanobo - that's the main impression i get. The problem that I come to then is how do you prepare for that interview. just know the basics of all types of mkts?

Maximus - thanks for the advice. Ideally this is what I want but as said before, jobs are scarce. Any advice on where to start doing research for these mkts with a focus on getting into trading? WSJ/FT/BBG?

Just follow the news regarding that market. Try to get your hands on some research reports from banks, you might be able to find some online. Like many people have said, the desk chooses you, but there are a number of things you can do to help being chosen, and being prepared and showing interest is crucial IMO. You'll get a chance to network with all the desks, and if you are doing an internship you can always just go up to the guys tell them you are really interested in their product and ask to sit with them for a day or two, even if you're not rotating through that desk. That will give you a chance to shine, talk to them about things you have read and ask good questions. Don't be a smartass, you don't know much, but it will show you are really interested.

Also listen to some of the above posters in two very important things: - Have an open mind. Many people from my intern class discovered they liked a desk that they hadn't thought about. - Fit is uber important. If you get to trade in the EM desk covering Brazil but you hate everyone there you'll learn nothing and want to kill yourself. Personality varies a lot by desk, but each desk is pretty uniform since they hire people they like. So it's key to find a desk that fits your personality and where you get along with the people and they are willing to teach you.

 

Wtf ? Traders don't pick their products the fight it out in a massive pit where the first one out has to do equities in Dallas.

Follow the shit your fellow monkeys say @shitWSOsays Life is hard, it's even harder when you're stupid - John Wayne
 

To some extent, the "elders" of the desk will match the products to you.

Interview-wise, the trader mindset is not product-specific, though of course some basic knowledge of a particular market will help modestly, so long as you don't over represent yourself (a highly UNdesirable trait in a trader).

Portray yourself as young, hungry, and competent. It's important to understand risk-reward, payouts, probability distributions, etc., but just as important is passion for the markets/pricing, raw ambition, and willingness to learn.

 
dabanobo:
To some extent, the "elders" of the desk will match the products to you.

Interview-wise, the trader mindset is not product-specific, though of course some basic knowledge of a particular market will help modestly, so long as you don't over represent yourself (a highly UNdesirable trait in a trader).

Portray yourself as young, hungry, and competent. It's important to understand risk-reward, payouts, probability distributions, etc., but just as important is passion for the markets/pricing, raw ambition, and willingness to learn.

perfect advice -- i did a lot of trading comps and did very well in undergrad but i knew i was entering a very different world which was shown by all the crazy data being thrown at me the first day on the trading floor. most of the guys who come in having read a ton of books and knowing EVERYTHING fuck their trading up and are out in the first year.

 

if you're in a formal internship program you'll have the opportunity to be on a bunch of different desks. generally speaking, if you have the ability to choose, you'd really like to go for where you fit best rather than what product you like best--you could be on the desk with the product you love most, but the bottom line is that if you hate everyone you work with you're going to end up hating your life. fit is IMO one of the most underrated parts of desk selection.

 

I wanted to do equities because they are fast paced can combine macro and micro elements. I did however fall into the strategy that my group covers (event driven). The funny part is a lot of the names we cover are like watching paint dry they trade so slow and with super massive queue's and lack of volatility.

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

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I don't accept sacrifices and I don't make them. ... If ever the pleasure of one has to be bought by the pain of the other, there better be no trade at all. A trade by which one gains and the other loses is a fraud.
 

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