So we all know the classic job requirements...
-Bloomberg Proficiency
-Excel Power User
-Coding Languages (preferred)
-Knowledge of financial markets (yield curve, PnL, modelling, whatever else)
-Order management systems
^^^ This is obviously a generalization (Trying to be brief not naive)
My questions is: For someone who does not currently work on a desk but is trying to close the experience gap what things specifically should one try to cultivate? Like specifics about modelling, programming, researching products or coming up with trade idea generation.
I am open to any feedback as I know that many of you who have experience work in different capacities and on different desks, with different needs or skill sets required. With that being said if you can highlight what junior analysts do on you desk and how build a knowledge base in that area would be awesome.
I am primarily interested in fixed income (all types, mmkt to corps to EM you name it), Equities, and Commodities. It also doesn't matter where you work, I am interested in overviews of sell side, buy side, or dealers/market makers.
Currently I work in business development at a large asset manager so my day to day is not really technical or close to the markets besides providing color on products and solutions to clients. This is aimed at trying to build up some tangible skills on my downtime outside of work.
Thanks!
On the modeling front:
There are a lot of high quality modeling tutorials online. Search for them and you'll find some good stuff. I think that anyone who works in finance should understand modeling well.
I've been reading Damodaran's textbooks on valuation and would HIGHLY suggest. They are available through his page on NYU's website. Google something like "Damodaran textbook PDF" I would start with the intros to brush up/understand his approach to valuation.
As far as the on desk stuff: can't really be learned without experience. You will learn that stuff at work.
EDIT: Some books come to mind if you feel like reading...When Genius Failed, Trading in the Zone, Technical Analysis of the Financial Markets by John Murphy
Market Wizards (all of them) are worthwhile as well.
Honestly, excel is your best friend and I'm not going to give you a vague answer and simply say VBA. I'm talking about formulas, like conditions and etc. The reason why is because when I was a junior trader, we were considered "material risk takers" (proper term)... and this means we have inventory. So as you're trading in and out all day, your positions and risk changes constantly and what if your excel blows up and there is an error out of no where? You HAVE to fix it. Like for example, our trading platform is linked to excel and whatever we trade, real time positions get updated, which is fed from the platform and of course, there are conditions that need to be applied. Like let's say you bought an outright and it was Jan and you sold Dec. You're delta neutral but you just created a spread risk in between these months and obviously you have to type in a logic in excel to represent those risk. So my two cents, learn your formulas and conditions before you jump into VBA. Because if you don't know the formulas, you're going to get trained. Just how important is excel? Ask the credit traders at JP Morgan in NYC... All of their pricing logic is done on excel. This is I saw first hand when I was there.
You master excel and it doesn't have to be VBA... You'll be just fine because you're not expected to know pricing, hedging and any of that shit. But you're expected to fix shit and they will grow to entrust you more and you'll actually be useful to them.
Also just to add... I don't know if this is some thing you can learn as you go but you kind have to be a numbers guy... and I'm not saying you have to know 34245 times 342554 and figure it out in a split second but it helps to practice because there are times when the exchange called me to make a market for someone out in RFQ... YOU HAVE TO PRICE IT CORRECTLY OR YOU'RE FUCKED. Also let's say they want you to make a market for 100 combo spreads plus like 5 strips in the back year... What are you new risk and you're gonna have to calculate your new positions on top of your current positions in case excel goes down.
If you're aren't master of excel. You're going to get let go... I promise you that. And everyone bullshit their resume saying they're proficient but it's bullshit and what they think is advanced isn't really advanced.
Can you provide more color on what else you should be proficient/skilled in excel with besides VBA?
learn how to trace thru a complicated spreadsheet built by somebody else. Sometimes this means learning how to catch errors made by the builder....error conditions that they forgot to catch...how VBA and regular excel formulas can interact and be time/time series dependent. This is all stuff that is really classic software engineering...learning the basics of code (if/else/then statements, loops, data input/output, etc...) this basic code stuff is just the beginning of softwre engineering (and a complicated excel sheet can be a full on piece of software that interacts with other systems...like databases and realtime streaming event services).
There are books on the theory of software development...data structures and algorithms etc...but when it comes to catching and dealing with errors (such as when a user inputs a string when you are expecting a number....or a number is negative when you are expecting a positive...or has a decimal when you are expecting an integer, etc...when a database connection times out, dealing with all these issues and many more requires experience so that you can easily recognize them).
Lots of excel spreadsheets are built without thinking about any of this stuff...and then inherited by somebody else..and then a couple years later there is a problem and you have to trace thru the sheet to understand how it is supposed to work...and THEN you can find the error. Often the problem arises because of some related system changes outside of the excel sheet...so the error is not obvious...because to you it seems like the excel sheet has not changed, and so you need to dig into the input/output stream...stuff like that.
Hi , everyone!
I would like to continue this topic and would be happy to receive a piece of advice. Like what books , resources , maybe even forums , to read in order to build the theory base for fixed income (rates, inflation) trading ? What topics should be covered ?
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