Preparing for Sales and Trading

This coming summer I was fortunate enough to land an S&T summer internship.

I was wondering, from your experience, what would be the best way to prepare for internship?

Are there specific books that I should read? Being a physics and economics major, should I start reading books about finance?

Due to being a physics major, we used formulas and applied it to excel to model objects that are in motion.
Other than that, I don't really have an idea how to apply my "excel skills" in sales and trading or in finance. In your opinion, what are key things that are essential in excel?

Is there a specific skill that will help me stand out?

Overall, I have no clue how to prepare for my internship so any advice would greatly be appreciated!

Thank you

 

Curiosity: Chicago, NY, or other?

I would recommend some brand name reads, maybe if even just to be well versed. Whether or not you agree with or see the utility in the content, some Michael Lewis reads (Liars Poker) and other classic finance books are usually somewhat expected to have under the belt (at least that is what I have noticed among S&T guys). I think it solidifies industry intellectual curiosity. Many are on audible too, so just knock a few out through the headphones at the gym.

 

Your internship is most likely a rotational program where you spend a couple weeks at each desk. Don't be the guy that asks stupid questions and doesn't know when to shut up. Like wilder01 said, prepare some smart questions ahead of time. Show genuine interest and be humble and you should be able to make a good impression.

Consumption smoothing is retarded. If you stay in this game for a handful of years, money will be the least of your worries. Live it up, because this is the one time in your life where you might actually have time to spare.
 

I actually disagree with most of the responses so far. If you know absolutely nothing about finance then you should absolutely try to learn some finance before you go in. Why would you not try to give yourself an advantage over the other non-finance majors by preparing? People will spew bullshit like "oh it doesn't matter, people will understand that you're a physics major so you aren't expected to no what dv01 is" but that absolutely is not true. I don't care how smart a kid is, if he's sitting next to me and doesn't understand a single word I'm saying because he didn't bother to learn the basics of financial math / trading jargon / etc. then I am not giving him a good recommendation. I suggest you read a book on markets-related finance and familiarize yourself with concepts like duration, convexity, yield, risk, types of financial products, how markets move, etc. There was an intern in my group when I was a SA that studied Econ at a great school but couldn't tell you the first thing about actual financial markets and I was blown away by how incompetent she looked. People want to hire people that they thing are going to help them make money. Prove that you can do that by knowing what the fuck is going on before you start.

 

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Likely excel skills won't matter you aren't in banking and won't be an excel monkey. Be competent but it's not a must by any means. Your research will guide that process if your on sales desk.

Ask your team (if you have access) what names you trade often, names under coverage, etc) and get to know them like the back of your hand. Being able to talk well about names that are traded a lot by the shop will be well received.

Same goes for different desks - if you are derivatives, get to know the products they trade often, know how they trade, what they trade and why they trade.

Also it's Canada, know your commodities and where they are headed - that will help guide how you see your names under coverage.

 

Thanks for the reply Inthepeleton. I'll still learn the basics of VBA just in case. Great idea about the names traded. One thing I did is I signed up for the google alerts of the Capital market side of the bank in order to know what they're doing. I'm also reading their weekly economic analysis. For the rest, commodities are a must, especially with what is happening in the market currently! Thanks again!

 

Simple things you can do is:

  1. Ask a ton of questions (they really appreciate this and shows that you are engaged). One of the questions that I try to answer every rotation is "how does this desk, person, or group make money?" From that, you can start to piece things and attempt to understand a system.

  2. You'll have a some sort of project that you will present (pitch, research, trade, etc.) Make sure you crush this part! Take complex ideas and make it easy for everyone to understand. You'll be surprised on how people quickly get bored-specially if you are taking about some complex math or whatever.

  3. Get to know the people in your desk. At the end of the internship, people will either vouch for you or not. If you connect with people then they will try their best to back you up.

  4. When they ask a simple question, make sure you really follow up. Messed up on this one! One of the traders asked me a quick math question while I was doing a coffee-run and told him I'll get back to him- didn't. At the end of the rotation, that slight screw up was one thing the group focused on.

Hopefully this helps! Don't stress out too much now, go in there and learn as much as you can. Keep in mind that the desk you rotate in might not even be hiring, so there are definitely a lot of things you cannot control. Good luck!!

Array
 

Thank you very much for the detailed tips! I'll make sure to keep them in mind. Basically, I must fit with the whole trading desk and fit with the culture. I'm a little bit stressed out, but I know the attitude I should have is that I'm aware that I know nothing (like Snow) and that I'll learn everything there; I just need the basics, be easy going and highly motivated. Thanks again!

 

also, start reading zerohedge...every article, every day...and follow them on twitter (they post lots of comments on twitter that are not part of longer articles). https://twitter.com/zerohedge will get you keyed into everything important global macro. If you don't understand something mentioned, google it and read different things until you do understand. You'll learn a lot, and by the summer, you will be well informed.

just google it...you're welcome
 

Thanks for the advise Want2trade. I do read Zero hedge and have been for a while. It's good to have their opinion, but it seems like it's really pessimistic (which I am as well and have been for 6 months or so). I just signed up for twitter and I can't believe I never used it before. It's crazy how much information there is. Look up Hedgeye, Livesquawk and Zeroleverage. I'm amazed by the amount of information and great insight. I'm also subscribed to Real Vision (look it up it's amazing; its founder is Raoul Pal and they invite great guests like Mark Yusko, Peter Brandt and such). I listen to podcasts as well (Chat with traders, Macro voices, Trend following and more).

 
Best Response

Start watching the markets. Who gives a shit if you've read some populist literature? I don't, and we're never going to talk about Liar's Poker on the desk.

Read The Economist and The Financial Times (Lex Column, Short View, and Long View--you can skip everything else). The WSJ is a piece of poo these days, so don't worry about it.

Are you an MBA? Can you do math? And not MBA math--real math. Are you going to think Options, Futures, and Other Derivatives is going to make you an authority on options trading? For your sake, I would hope not.

Maybe audit a financial econometrics course or an options theory course. Options theory is very different from options practice, but they're not entirely divorced from one another, and it's unlikely a practitioner is going to come to your school to 'show you the ropes.'

Can you price a swap? What about a simple FX forward? Do you know which countries have capital controls? Do you know the names of the currencies of those countries? Do you know which ones keep currency boards, and which allow their currencies to float? If you wanted to and had the cash, would you know how to invest in China? What about India? What about Korea or Brazil? Do you know the names of the major exchanges? Do you know the tax implications of investing in a particular country? Do you know the names of the major central banks and central bankers? Do you know which macro events traders watch and how they impact the market right now? Do you even know the difference between a bid and an offer? If I wanted to buy something in the market, would I put in a bid or an offer?

There is a lot of factual knowledge that you could research before showing up. There's nothing more annoying than some moronic MBA walking on the floor as a summer associate thinking they're hot shit because they read Bonfire of the Vanities and saw Wall Street.

Also, maybe research some good lunch places around your office. Because that's real added value. I'm not kidding. It would be great if a summer analyst/associate could find a few eateries on their own on the first day. A strong 'lunch game' = a strong chance at a full-time offer.

 

jtbbdxbnycmad,

It's simple--don't pretend like you know what's going on if you don't. It's much better to under-promise and over-deliver than to tell everyone how you've seen it all before in your MBA courses and then consistently get shown up by the analyst interns.

If you have some market-related experience, you'll be in much better shape. The problem with summer associates stems from the fact that anyone who had to do an analyst stint in markets is MASSIVELY better qualified for an associate role than someone who did 2-5 years of some irrelevant crap. Just because you're old doesn't mean that we should give you a book or a chance to trade any faster than we did the analysts.

That's why I prefer summer analysts--they (generally) know just as much as any of the summer associates (essentially nothing), but they don't pretend otherwise. And they are less likely to get angered by having to get people tea/coffee/breakfast/lunch. When you don't have any licenses to deal or speak with clients, though, how do you think you should add value on the trading floor?

In any case, the short answer to your question comes down to this: be humble.

 

I admit that I couldn't be bothered with reading your essay there, but by glancing past the fairly elaborate PhD course list, as someone with a farily quantitative background I must inform you that once you land a trading gig you'll soon come to terms with the fact that your background in intellectual masturbation won't be much more useful than that of a numerate english major. As for programming, try and learn MATLAB as well.

If you want to trade, then trade- everything else will fall into place. I'd suggest that you start with bondarb's schematic: //www.wallstreetoasis.com/forums/how-to-start-trading-compliments-of-bond…

 

You already will have waaaaay more skills a d qualification than 99.999% of trader. Are you trying to become a high frequency trader or something? In that case you just need to be a great programmer with a knowledge that you'll probably be getting given your coursework.

More importantly, you're getting too bogged down in classes and skills. You need to be applying to every firm that does the trading you want to do. Simple as that. Network, do informational interviews, etc and hit the ground hard. If you're trying to be a regular market maker, a phd may actually be a hindrance and you'll really need people to like you. They won't be fawning over you trying to hire you because you have an advanced degree.

 

I'm assuming you mean 'preparing to get a job as a trader':

Programming skills: VBA, SQL, Java/Matlab

Quantitatively, be able to understand the mathematics behind various products (and derivatives), depending on where you want to work.

Obviously not many candidates fit the above but if you can manage some mastery (would argue the math side slightly more important) then you should be set.

 

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