12/8/17

Hi, I'm a junior trader at a middle market bank, wanting to lateral to a BB/prop shop. Could anyone please share their knowledge or experience about lateralling to a trading job? While there seems to be some posts about lateralling for i-bankers, I haven't seen quite so for traders. Please direct me to one if I missed out :)

I see that sometimes aggressive networking like cold emailing/calling a team member of the bank you applied to sometimes wins an i banking job but I am not sure if it works the same for traders. Traders dont have to pitch to clients like bankers do so that doesnt seem like a desirable skill. Would be nice to have some personal contacts but I don't in many places that I want to apply to. So I found myself applying online and it feels like I am throwing my resume into a black hole.

Any advice much appreciated!

Comments (14)

11/22/17

trading tends to take much longer to learn than ibanking...its your P&L that does the talking. if you don't have lots of it...why would another firm want you? what is your unique value proposition?

Financial Modeling
11/23/17

Im a junior trader who is good at my work, has the required skills like can program, have quants background, some product knowledge etc.. and has some actual trading experience. Pnl of the work i was given improved but its not huge. Unfortunately this line of business i was given is not considered profitable and i dont know how to turn it hot and sexy. So i dont have immediate proposals and not an expert yet. My motivation is to learn profitable business models that work.

Are you a trader with many years of experience? Have you seen juniors lateralling to a better place? If so how did it happen?

12/8/17

What do you mean by it's your P&L that does the talking? that's not something that your future employer will ever know right? I guess I am suspect of the #s because when I was interning in sales, the the Salespeople's SC are never as big as what the they claimed they've done in the past, albeit the industry evolved but still suspect.

Best Response
11/26/17

yes, i have many years experience...most sell side..and some prop..at a few different BB firms, and a couple smaller shops...so i've seen a lot.

i've seen some juniors and mid level non-trading people lateral into BB trading role...for example, all the following people are now MDs, and they all started by lateraling onto a BB govt trading desk as a junior trader from non-trading roles.

1-software engineer/programmer from the mortgage IT group with 4-5 yrs of programmer experience lateralled onto the govt desk as a junior trader, working under a senior govt trader who made 20-80mm depending on the year. This junior trader was eventually given the responsibility of making markets in a less volatile book, under the supervision of the senior trader. Eventually, after not being a profitable prop trader, this trader took over the etrading book for the desk (was a natural transition) and then eventually moved to a HFT buyside firm that is very active.

2-quant programmer from rates IT moves onto a very large swaps desk and eventually became a senior swaps trader on the desk (this swaps desk had one main shared book for most of the flow and associated hedging, plus other side books). The role was probably more programming than trading in the beginning...but still a member of the trading desk.

3-etrading programmer from an outside firm hired to run the etrading desk, and also eventually trade high-medium frequency prop trading book. Now runs HFT and eTrading at one of the top BBs.

4-IB analyst (2nd-3rd year) hired to be the junior trader for a senior bond trader (who made 20-80mm depending on the year)...eventually became a very senior salesman (traders can make great salesman because of market knowledge) and was stolen with a very good pay package by another firm whose name you hear in the news (and on this site) every day.

5-IT developer that built spreadsheets for a different trading desk became a Desk Quant for the govt desk (less quant really..more excel jockey and programmer) lateraled to junior STRIPS trader...eventually became a senior STRIPS trader, and is now a prop-trader.

i've seen many others, but do you see a trend? These were almost all people with strong programming ability and experience, who used that ability as an "in" to get into a trading desk as a junior, and then they made their careers. Their unique value proposition was always programming ability (C++, excel/VBA, R, etc..)

However, there is no formula...most often these were internal transfers of young people who had somebody on the inside helping them out, and there happened to be an opportunity. Timing makes some people lucky. There are just very few open positions at any one time..even fewere that are filled with a junior lateral. However, they pop up from time to time. My advice is to get a software engineer/programming/quant job at a BB, and then use that as your "in" to a trading desk.

Most of those junior trading roles by the way are filled with summer interns..so you are already at a disadvantage by the numbers game. However, i'm sure that every month, there is a desk somewhere that is looking to hire a hungry, young, smart junior. I've seen this on Credit desks, Emerging Markets rates and FX (Latam, Asia, MiddleEast, etc..) and less often but still a few times per year on liquid US rates desks. The most often hired is somebody with programming experience that can build things fast and smart, who also has some markets knowledge.

11/26/17

I'm not in the same position as OP but am still trying to break into trading without any experience as of yet. I'm taking a C++ course currently, do a lot of reading and self-study, but I'm not sure that's enough to even get my application looked at, even with "inside" help.

One thing I've been considering is a bootcamp of sorts, in fact there's a company called Lambda School that offers one that you only pay for once you have a job secured. I know this may not be your exact area of expertise, but do you think "non-traditional" education like this is valued at all when looking at any BB trading desk? Seems like it might not be, and I haven't heard good feedback on that from friends at HFs, trading shops. But not sure about banks.

"When you stop striving for perfection, you might as well be dead."

11/26/17

my one other thought is...if you have an original trading idea...you should be publishing that idea...sending it out in realtime to everybody who will listen. First give the idea to your internal desk (and put it on yourself if you can)...and then publish to the salesforce and anybody else you can. This is a way for you to create a track record. If you can't come up with original ideas...then what are you doing on a trading desk?

this is not a rhetorical question.....i'm really asking...what are you actually doing? whats the product? are you making markets and taking positions? do you take ANY risk? are you executing trades, or are you doing projects for the senior traders? what is your actual experience? if you have prop ideas...what are they?

12/1/17

Could you suggest some projects that a college student who knows C++/VBA can make that will make his profile stronger for a trading position?

"The markets are always changing , and they are always the same."

12/1/17

build a "what is priced in" excel spreadsheet...take market instruments (the strip of eurodollar futures and fed fund futures) and then calc how much hike/cut of rates is priced into each FOMC meeting. Then do this for other countries. (this is a function that already exists on bloomberg...but knowing how do to it yourself would be a useful skill)

build a relative value spreadsheet...take similar securities and on different time frames determine how to trade them as a spread, and chart the results. examples are ZB, GC, 6J futures contracts...but i'm sure you can find others.

in equities, find stocks that should trade together and figure out a pairs trade (google vs facebook....apple vs microsoft, Amazon vs alibaba, etc...)
chart price and other fundamental data that you find to be pertinant to the spread.

this is just a start...you should use your imagination to figure out other things. research price patterns and try to build a set of rules that define the pattern (wedge/trendline breaks, support/resistance patterns...when they work, when they fail) Try to code an algo on quantopian with these ideas.

12/1/17

Well since i'm currently studying options I was thinking I'll try and build a macro that shows how the greeks vary according to different values. But that is a good list.

"The markets are always changing , and they are always the same."

12/1/17

for options, i would look for mispricings of implied vol, for given price action patterns. For example...for flags and wedges...implied vol should spike for stop-runs...and if it doesn't...there is a trade idea. Do a backtest of this idea,and any other patterns with high hit rates (you'll need accurate historical data for pricing data for options) and see if this is a profitable strategy...and what the rules should be.

12/5/17

Thanks for answering with so many detailed examples! Thank you! And sorry for the late reply
I see that many were IT/quants who supported traders that got recruited on the team. In my case its a bit different because im already hired as a trader and the people i want to hire me are traders at another place.

Also to answer your questions:

What do i do?
I market make derivatives.
Do i take any risk?
As my inventory piles up i need to hedge. I dont execute orders from clients. So any position i take is mine (not clients')
Do i have my own trading ideas?
If i have a market view and the price is good then i may take some prop positions.
But this is not systematic as in the process could be automated. Actually it wasnt worth automating what i did. And all i have suggested so far is not a novelty, actually quite well known in the market. Like long-short. spreads. etc.

I guess by original trading ideas, you didnt mean something like this..
Hmmm original is original? Like a new algo? Or structure a new product?

Btw thanks again!

12/5/17

since you got a position as a trader, you now know that not all traders are geniuses...they don't all make money. The better traders are good at pattern recognition...and are able to participate in a pattern when they see it developing. This is a skill that takes many years to develop. Some patterns can be coded into an algo (and indeed, quant funds like TwoSigma and Renaissance have done exactly that). All you need is to find a pattern with a statistical edge, and you are golden (easier said than done...but they do exist...you just haven't found them yet).

How long it takes you to find such a pattern...is a function of time and effort spent searching...plus some degree of luck. If you have not found it yet...imagine you were on the other side of the hiring situation...why would you hire you? You need a good answer to that question...and only uo can really come up with that answer...this is deeply personal. Where you work should not have much of an impact on your search for good trading patterns...or your ability to execute on such patterns.

i wish you good luck in your quest

12/10/17

thanks..!!! frankly speaking, i am surprised. i didn't look at this situation from this angle... because at my firm i wasn't encouraged to come up with prop ideas. ive been told that keeping my duty is most important and i shouldn't worry about generating profits until i become more senior (despite that my pnl is + and is larger than when it was done by someone else) seems like i need to change my point of view a lot!

12/5/17

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