I am a Trader at an Investment Bank, ask me (mostly) anything:

It's a bit slow today due to the US being on holidays, so i thought this might be a decent opportunity to answer some questions.  I got a lot of value out of a similar thread i saw about half a decade ago. I have been a trader at a large investment bank for about 4 years. I trade commodities, but also have a lot of exposure to FX and rates. Started off in a different industry/role but managed to enter the industry 2 years after I graduated university. Originally based in a different city (think Singapore/Hong Kong) but moved to work in the London office a few years ago. I may be slightly vague in some aspects as once you start nailing down to specific products/assets its can be a very small industry. Happy to submit proof to a moderator (although im not sure how to prove my job?), however i think my answers should make it clear i know what i'm talking about.

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Comments (75)

Nov 27, 2020 - 7:11am

Well that makes one of us. Weird question but, do you ever miss the weather/culture/ambiance of Southeast Asia compared to the dreary/uptight culture of London? I currently live in NYC, but was talking with someone yesterday about how nice it would be to work in Singapore. Can you go through some of the pros/cons and which you like better overall? Also how expensive is it to live in Singapore compared to NYC/London? Do most people speak English there? Cheers and happy holiday. 

Nov 27, 2020 - 8:34am

Could you walk us through a trade you recently did? Also, could you share a little bit about your career progression in the industry and what a typical days looks like?

Most Helpful
Nov 27, 2020 - 9:07am

Let me think about that first question as its hard to talk about a recent trade without getting very specific on niche products which would expose who i was if someone i knew were to read this.

I graduated as an engineer and worked for an engineering firm after university. In those two years i got very interested in trading and eventually decided i wanted to make the career swap.  I struggled to make any progress (i didn't get a single interview) with any of the banks.  This was pretty understandable as a) i wasn't a fresh graduate b) i didn't really have any way to tangibly show i was interested in the position.  I did however get a interviews with most of the prop shops (optiver, tibra, flow traders, SIG, akuna etc) as i was able to pass the maths tests.  I ended up getting called for a screening interview for what was the only bank interview i was offered.  I think i performed okay in the phone interview, but luckily for me, the interviewer asked a tricky probability/logic question at the end. I had been studying a lot for the prop shop type logic questions and i was able to get the correct answer (later i would learn i was the only person who answered this correctly). I think had i not answered it i wouldn't have stood out enough to go through to the next stage.  After that was a series of interviews with various people on the desk, and i got lucky that the desk head was happy/preferred to hire someone with a few years of work experience.  I was hired directly onto a trading desk and didn't go through a rotational program.  

It was a tough decision to me to choose between optiver type of shop and an investment bank.  I believe the short term upside would have been higher at optiver.  However, i was coming from a different career already. I did not want to wash out as a trader at optiver and have to start another career. It was reassuring to me that if i didn't make it as a trader at an investment bank i could probably find another role within the organisation.  The type of trading more suited what i was interested in as well.  As well as running the franchise business the desk does their own analysis and prop trades directionally (or vol, or spreads or whatever), compared to what i perceived as mainly making money by making markets at the prop shops (although retrospectively i now know they take can take decent positions).

From there its pretty straight forward. Learning to be a trader is more an apprenticeship than a training program.  Sit with the other traders on the desk, learn how to quote, manage risk, do adhoc analysis, longer term projects, get coffee, whatever is needed. Then people are off desk for a little bit and you cover for them. Then people take a days leave and you're able to cover their book for them. Then i was given a little book with not much flow to manage along with everything else i was doing.  Eventually took on more products as people left or a new asset was being marketed etc.  At some point along the way a trader in London was quitting and i was asked if i wanted to move there and take over their books. 

Trading is very much like an apprenticeship. At first you're just watching, then helping a little, then covering when someone isn't there, and then one day you realise that you're just running your own thing.

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Dec 15, 2020 - 2:50pm

TraderJoey

Learning to be a trader is more an apprenticeship than a training program.  Sit with the other traders on the desk, learn how to quote, manage risk, do adhoc analysis, longer term projects, get coffee, whatever is needed.

Trading is very much like an apprenticeship. At first you're just watching, then helping a little, then covering when someone isn't there, and then one day you realise that you're just running your own thing.

Wanted to emphasize these parts as I couldn't agree with it more.  This is absolutely true in my experience.  You learn so much by osmosis and just being on the floor.

Nov 27, 2020 - 9:21am

Apologies, i forgot about your last question in my previous answer.

A typical day (pre covid).

6am: wakeup, check overnight markets while laying in bed, some form of exercise (usually a run), walk into the office and at the desk by 7-7.30am, grab a coffee and something to eat from the cafe on the way to my desk.  

Run risk, read news, maybe a meeting either with the other traders or sales etc.  When there's flow to quote i price that, if not im doing my own analysis, coming up with trading ideas, handling admin, chatting to people in the market. 

Lunch at desk, usually deliveroo, on a quiet day might duck out for 10 mins and buy food in person, but still eat it at the desk.

The same in the afternoon. Quoting flow, chatting to people in the market, or doing analysis for my own positions. High chance a sales person has booked me to be on a call with one of their customers (maybe a corporate thinking of a hedge program, or a hedge fund looking at the market) to talk about the market. 

5-6pm leave, bit of down time. On a Thursday probably gets beers after work with a colleague or brokers. 

Although i call this downtime, if my phone goes i have to be able to respond / quote / trade. The markets are still open and things are happening.  Or a sales person in the new york office needs something of me.

10pm. Final check on things before i go to bed. Pnl estimate for the day sent out. Make sure i have a good idea of how my position will look tomorrow morning in each product, maybe i have to do a bit of position management due to the positions changing due to time/vol etc.

Weekends are completely my own time. Maybe if I'm far behind on something i need to complete i catch up on it on the weekend, but this isn't necessary.

  • Incoming Analyst in S&T - FI
Nov 27, 2020 - 9:31am

In your experience, is it really all doom and gloom (shrinking comp & headcount/regs/automation etc) as this forum puts it? I know these exist but are they as bad as WSO portrays it to be?

If not - what motivates you to stay? 

Nov 27, 2020 - 10:03am

First on comp: If you're an average performer, your equivalent pay today will be less than it was 15 years ago, but will still be higher than 99% of the workforce. If you're a high performer, the sky is the limit as a trader. You can still earn >$1m at a bank and there is literally no limit to what you could earn at a fund. Only a small % of traders achieve this though (obviously).

If that paragraph discourages an aspiring trader than I think they should consider a different career anyway, I wouldn't hire someone who was aiming to be an average performer.  Lastly, If the deciding factor between trading and investment banking is +/-$100k difference in salary 5 years down the line, I don't think you're passionate enough about trading to be a trader anyway.

Nov 27, 2020 - 10:04am

On regs/automation: i wrote a pretty comprehensive reply about this to another comment, i'll just paste that below.

"I often see the "trading becoming automated" argument, but i run a very busy option book (including exotics etc) which wont be automated any time soon.  So from that perspective I'm not worried about being laid off, however, if i was on a vanilla equities desk, or trading anything purely flat price i would be more worried. "

"Regulation does worry me yes.  I understand it is necessary but it does feel like as a trader we are sometimes a mis-click a way from accidently committing a felony.  We do a lot of inhouse training obviously, but a lot of it feels like the bank just wants our signature to say we understand, so we take all the liability if something ever goes wrong.  The bank will just be able to say it was the traders fault and they've signed off that they understood all the laws.   Or another example could be accidently front running a customer.  A sales person might off-hand say to me that a customer/client is thinking about hedging X today.  Now from my point of view I'm scared of doing any sort of transaction in that asset for the rest of the day.  Even if there is no malice intended, or in my head i was thinking about selling X that day it can still look very bad."

Nov 27, 2020 - 11:37am

what are your thoughts on an older 40+ linear rates trader (govts) who has been out of the business for 5 years, (previously was a semi-quantitative trader, trading a strategy that was 80% automated) who wants to come back?

just google it...you're welcome
Nov 27, 2020 - 11:45am

To be honest I don't think I would be able to give you an answer with any value to this. If i was in this situation i'd reach out to a headhunter in the space or to an old colleague or someone in area for advice.

Nov 27, 2020 - 11:55am

unfortunately, all my former colleagues have moved on...except one, who as it turns out didn't like me very much, and is now the head of rates at one of the smaller primary dealers.

there was a job listing for an associate position on the USD swaps desk at one of the large BBs a month or 2 ago that i applied for, and never even got asked to interview...just got dinged.  (i'm sure there was over 100 applicants...but still)

just google it...you're welcome
Nov 27, 2020 - 4:00pm

Hi TraderJoey, thanks for doing this. I'll be starting full time in a S&T rotational program after graduation at a US based bank known for Rates and FX trading. Unfortunately due to visa issues, analysts from my country cannot do the rotational program in NY, and I have to do it at the bank's satellite office in my country. Problem for me is I really want to do trading (non-linear macro products) but the desks on the rotation are mostly sales or solutions. There is one trading desk on the rotation but it's non-market making, (however, can "prop trade" linear products). Although after the rotational program the bank allows analysts to transfer to NY, LDN or HK, I'm not sure if any trading desks in those offices would take someone who mostly rotated in sales and solutions over someone who did more trading rotations. Do you have any advice on what I can do during the rotation to make myself more appealing to a desk trading macro, non-linear products? 

My background: Business + Mathematical Finance degree from university that is well-known in my country, but less so elsewhere. 

Thanks in advance!

Nov 30, 2020 - 11:59am

Getting on a trading desk is 100x harder than switching trading desks. Do whatever you can to get on that one trading desk option you do have (regardless of whether its the product you want to do).   I'll have a more thorough think and might come back with further here. 

Nov 30, 2020 - 11:56am

Being able to program isn't 100% necessary, but certainly on our desk being able to program is looked upon favourably.  We'll always ask potential juniors whether they can program, not that we wouldn't hire someone if they couldn't, but it will certainly be a tick in the right box and put you above another candidate all else being equal.  We have quants for the really heavy stuff, but at the end of the day your skill set is going to be broader if you can.  Being able to help program a pricer or build more complex quanty models in python is beneficial.   It's an asymmetrical trade really, being able to program will never be a bad thing, but could definitely be seen as a good thing, so worth spending the time to pick up the fundamentals.   I wouldn't overestimate your skills to much on a resume though, as if you list that you can program on a resume we would throw some relevant questions at you (not too hard but to make sure you've at least done the python 101 you're claiming).

Nov 27, 2020 - 10:27pm

What do you think about the future of cash equities? My bank only has a handful of traders there but doesn't really hire unless someone leaves or gets fired and this is post-automation or as automated as you can get I think

I know its still pretty vanilla but if you are the only trader in that sector is that pretty safe? Also what about electronic equities trading in your opinion if cash equities is not a safe spot?

Array
Nov 28, 2020 - 1:46pm

How would you say the P&L of a non-agency Securitized products desk ranks vs others? Out of a scale of 10, with 10 being top of the bank's desks.
How about a structured rates desk?
How about your desk in equities options?

  • Analyst 1 in S&T - Other
Nov 29, 2020 - 12:12am

What's the culture on the trading desk today? How "fratty" is it? Is there any culture of hazing? Is it still crazy busy with people constantly on the phones? Do you have any crazy stories?

  • Analyst 1 in S&T - Equities
Nov 29, 2020 - 5:31am

Thanks for doing this, I really appreciate your time! 

On the topic of "automation" and all of that, what is your view of whether equity derivative products for example convertible bonds in particular are at high or low risk.

Would it be any different for index options volatility trading for example?

I was fortunate enough to snag 2 offers on these desks but am unsure which to pick as both are very very interesting to me :)

Nov 29, 2020 - 10:02am

First off, thanks for taking the time to answer our newbie questions.

I'm just learning how to run a long/short portfolio focusing on fundamental development of trade ideas.

I'm an older guy and would like to not only trade my own book (currently doing) but possibly work for a firm.

Any advice for a 50 year old guy just learning long/short portfolio trading?

Nov 29, 2020 - 11:49am

age will preclude S&T and IB (ageism sucks..i know)...however, PWM (private wealth mgmt) is a realistic career.  All the big firms (MS, JPM, etc..) take people of every age and provide training....reason being customers vary in age / race and often prefer to work similar people.  In PWM, you do a lot of things, but that includes portfolio mgmt / trading.  what have you been doing prior to now?

just google it...you're welcome
  • 1
  • Incoming Analyst in IB - DCM
Nov 29, 2020 - 4:39pm

Any thoughts on the sales/structuring side of your desk? At the junior level, makes a good trader vs salesperson? How should one go about determining which side is a better fit?

Dec 3, 2020 - 1:55am

I'm really happy to see this type of post. I recently got an summer analyst offer from trading team in one of the BB at Hong Kong office, but I still don't have specific idea about the daily operations of the trading team in the large investment banks. The questions might sound naïve though:

1. Interviewers I faced with mentioned about 'managing risk', and I could see you also talking about managing risk, this part I'm not sure about the risk that the trader faces. Do you mind explaining a bit more about managing risk as a trader in the daily business activity? 

2. I am also from mathematics background with programming experience, but I'm not sure how this would have been proven advantageous/how I could leverage this in the business activities in the trading team in IBs where I know that it is mainly the agency trading. (Though I am aware that this academic background is definitely a must for prop trading shops) 

Thanks in advance!

Dec 3, 2020 - 6:52am

one example of managing risk (assuming you are joining a trading desk where you will make markets to large clients - typical of a BB trading desk)

You start off flat with no positions.

Client then sells you large block of securities that you have previously had no opinion, long or short....you are neutral.

You now have a large position, in a security that moves in price, potentially a lot...you now have significant market risk...and you have no opinion on whether you think prices will go up or down...but you know volatility is coming, and you don't want this position.  There is no immediate direct hedge....you provided your client more liquidity than the market is offering you.  If prices go up, you'll make money, but if prices go down, you'll lose money...potentially a lot...millions.

What do you do?   This is now "managing risk"

just google it...you're welcome
  • 2
Dec 6, 2020 - 3:00pm

Hi,

Thanks for taking the time to answer all these questions! I just got an offer from a BB Equity Trading as a SA 2021 at Hong Kong, which is great but I want to come back to the NYC office.

Little bit of background on me: Class of 2022 at a target school. Have several internship experiences in AM/HF in NYC prior, 3.7+ GPA. 

My question is the following:

Is it possible to transfer from intern HK office to full-time NYC office? If so, How would I make it happen?

Dec 6, 2020 - 7:28pm

suggest you remove the name of the firm from your post...however, yes, people can move from Asia to NY

just google it...you're welcome
  • VP in S&T - FI
Dec 7, 2020 - 6:44am

Do you know which bank still have prop trading desk? I heard a lot of European and Asian bank still do prop trading. So does foreign office of US banks.

Dec 8, 2020 - 7:29am

Almost entirely fundamental. I'd only use technical analysis when looking at entry/exit positions, stop outs, gamma trading levels etc.  Even then the technical analysis is not very technical, only really using horizontal lines on charts looking at support and resistance levels etc.

Dec 8, 2020 - 7:32am

The technical analysis is only going to be to express what is a fundamental trade in a better way.  Eg. if i want to go long X due to my fundamental analysis which is currently at price 620. If the charts show support levels at 600, I'm not going to have my stop at 605.

Dec 11, 2020 - 1:47pm

how active are you in the markets on a daily basis?  a few trades a day...dozens...hundreds?

just google it...you're welcome
Dec 12, 2020 - 3:45am

Working in tech and I've always traded as a hobby however. However last year I had around ~49% returns and this year hovering around ~80% returns at the moment. Never thought I could possibly trade full time I've noticed I'm pretty good at it. 

No margin or leverage via long options. I have gotten very good at looking at the software landscape and finding what companies will do well. 

Is getting a job based off my returns something that's possible? I don't need prestige or a big fund, just more capital to trade at a firm. I'm just not sure if this is realistic or something that happens that often. 

  • Analyst 1 in IB - Gen
Dec 13, 2020 - 11:34pm

Bullshit. There's no steady path. If you are actually good (and can talk to your thesis), then you have a shot with smaller places, could even have a shot at small buyside research shops (think Boston). Probably unlikely at a large HF or something, but very possible assuming you actually know your shit at a smaller buyside shop. 

Oh and ignore the above poster - he's a failed BB trader who just complains on the WSO forums all day about the doom and gloom of S&T instead of doing something useful to rebrand his career.

Dec 18, 2020 - 9:13am

how do you have the energy to trade while focusing on the dayjob? I'm beat after looking at code for 12+ straight

Array
Dec 12, 2020 - 10:28am

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